Costco Sued for Denying Junior Managers Overtime Pay (Copy)

Three former Costco employees say the retail giant denied them overtime wages they were legally owed. Their federal class and collective action accuses Costco of misclassifying junior managers in a way that let the company skip out on overtime pay entirely.

Case: Lock et al. v. Costco Wholesale Corporation

Court: U.S. District Court, Eastern District of New York

Case No.: 2:23-cv-07904

Get to Know the Plaintiffs: Lock v. Costco

Kai Lock, Michael Nickich, and Kyle Straker are the named plaintiffs bringing this case on behalf of themselves and other similarly situated Costco employees. All three previously worked for Costco, and their lawsuit is filed as both a class action and a collective action — meaning it seeks to represent a broader group of workers who experienced the same alleged pay practices. According to the case docket, additional plaintiffs have since opted in as parties to the collective action, signaling that the pay practices at issue may have affected a sizable group of Costco workers.

Get to Know the Defendant: Lock v. Costco

Costco Wholesale Corporation is one of the largest membership-based warehouse retailers in the world, operating hundreds of warehouse locations across the United States, including throughout New York. Costco employs a large workforce of hourly and salaried staff, including the junior management roles at the center of this lawsuit. As a major national employer, Costco is expected to comply with both federal wage and hour law and the wage laws of every state in which it operates.

What Are the Allegations in the Complaint?

The plaintiffs' complaint, filed in October 2023, centers on Costco's alleged failure to properly pay junior managers for overtime hours. According to the filing:

● Costco classified junior managers in a manner that denied them overtime pay they were legally entitled to receive

● Junior managers regularly worked more than 40 hours per week without receiving time-and-a-half compensation for those extra hours

● The alleged pay practices affected a class of similarly situated employees, not just the named plaintiffs

What Was the Main Question in the Case?

At its core, this case asks whether Costco's junior managers were properly classified under federal and state wage and hour law. Employers are only permitted to withhold overtime pay from employees who meet specific, narrowly defined exemption criteria — typically employees with genuine managerial authority over hiring, firing, scheduling, and other core business decisions. The central legal question is whether Costco's junior managers actually performed those exempt-level duties, or whether their day-to-day responsibilities more closely resembled non-exempt hourly work that should have come with overtime protections.

Costco has already sought to have part of the case dismissed, filing a partial motion to dismiss in March 2024, which signals the company intends to fight the claims rather than settle early.

Why Does the Case Matter to California Employees?

While this case was filed in New York, California workers experience similar situations. Misclassification suits like this one are common across the country, and are one of the most common reasons for employment law complaints in California.

● California has some of the strongest overtime protections in the country, and employers who misclassify managers to avoid paying overtime violate both federal and California Labor Code protections

● This case reinforces a pattern seen in California courts: employers giving workers a "manager" title without giving them real managerial authority, then using that title to deny overtime pay

● A ruling against Costco could influence how similar misclassification claims are evaluated in California, where wage and hour class actions are especially common

● It's a reminder that job titles alone don't determine whether overtime pay is owed — actual job duties do

A Brief Overview of the Case

● October 23, 2023: Kai Lock, Michael Nickich, and Kyle Straker file a class and collective action complaint against Costco Wholesale Corporation in the Eastern District of New York

● October 26, 2023: Michael Nickich formally consents to join the collective action

● December 2023–January 2024: Case is reassigned to Judge Nusrat J. Choudhury; Costco requests a pre-motion conference ahead of a planned motion to dismiss

● March 5, 2024: Additional named plaintiffs formally consent to join the collective action

● March 7, 2024: Costco files a partial motion to dismiss one of the plaintiffs' claims

● Ongoing: The case remains in active litigation as the parties brief the motion to dismiss

FAQs: Lock v. Costco Wholesale Corporation

Q: What is a "collective action" under federal wage and hour law?

A: A collective action is a type of lawsuit under the Fair Labor Standards Act (FLSA) where employees must affirmatively "opt in" to join the case, unlike a traditional class action where people are automatically included unless they opt out.

Q: Can Costco legally avoid paying overtime just by calling someone a "manager"?

A: No. Under both federal law and California law, a job title alone doesn't determine whether an employee is exempt from overtime. What matters is the employee's actual day-to-day duties and level of independent authority.

Q: How is this case different for California workers versus New York workers?

A: While the underlying facts are similar, California workers who are misclassified may also have separate rights under the California Labor Code, which in some respects offers broader protections than federal law.

Q: What should I do if I think I've been misclassified and denied overtime?

A: Keep records of your actual job duties, your hours worked, and any communications about your role. Then consult with an employment attorney to evaluate whether you may have a wage and hour claim.

Q: Does a company have to settle once a wage and hour lawsuit is filed?

A: No. As seen in this case, employers frequently fight these claims through motions to dismiss and extended litigation rather than settling early.

Q: Is this case a class action, an individual lawsuit, or both?

A: It's both — the plaintiffs are pursuing overtime claims as an FLSA collective action and, depending on the applicable state law claims, potentially as a class action as well.

Have You Been Denied Overtime Pay You're Owed?

Misclassification and unpaid overtime cases like Lock v. Costco Wholesale Corporation show just how often employers get workers' pay wrong; whether by accident or by design. If you believe you've been denied overtime you rightfully earned, you don't have to figure out your options alone. Contact Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Knowledgeable employment law attorneys are ready to assist you in law firm offices located in Riverside, San Francisco, Sacramento, San Diego, Los Angeles, and Chicago.