Guitar Center Settles Employee Lawsuits

0

Guitar Center Inc. has agreed to pay $3.5 million to settle two class-action lawsuits claiming its California employees were denied meal and rest breaks.


The payment will go to class members, attorneys for their fees and a third-party administrator.


As a result of the settlement, Guitar Center anticipates recording an after-tax charge of $2.5 million to $3 million, or 5 to 6 cents per diluted share, in the fourth quarter.


Wage-and-hour lawsuits, which claim employees are owed overtime or rest and meal breaks, have forced several California companies to pay tens of millions of dollars in settlements. Among those hit by such suits have been Starbucks Corp., the Coca-Cola Co. and Hot Topic Inc., which took a third-quarter charge of 2 cents per share because of two California wage-and-hour lawsuits.


Both of Guitar Center’s suits were filed in late 2004 in Los Angeles Superior Court, according to the company’s filings with the Securities and Exchange Commission.


In a statement, Guitar Center’s executive vice president and general counsel, Leland Smith, said: “While the company denies all liability or wrongdoing in these cases, we chose to settle these lawsuits in order to put them behind us and avoid the distraction and additional, unnecessary legal expenses that we would otherwise incur.”

No posts to display