Judge Approves $1.25 Million Zara Overtime Settlement

A federal judge approved a $1.25 million settlement in a wage-and-hour lawsuit involving Zara USA Inc. and Inditex USA LLC. The case concerned allegations that hourly retail employees did not receive proper overtime compensation because commissions were excluded from their overtime pay calculations. Fitapelli & Schaffer attorneys Brian Schaffer and Hunter Benharris represented workers in the litigation.

Law360 reported on the proposed settlement on May 20, 2024. Bloomberg Law subsequently reported on May 22, 2024, that U.S. District Judge Katherine Polk Failla had approved the agreement. The settlement resolved disputed claims; it shouldn’t be described as a judicial finding that Zara violated wage laws.

Read More

• Law360 covers the settlement announcement.
• Bloomberg Law reports on court approval.
• FSL’s background post on the case.
• An earlier FSL update.
• The 2022 court opinion.

What Was the Zara Overtime Lawsuit About?

The lawsuit, Gillett v. Zara USA, Inc., alleged that Zara failed to include certain commissions when calculating overtime rates for hourly employees. The dispute involved sales associates, stock associates, cashiers, and other hourly retail workers. Under federal wage-and-hour rules, employers must include some commissions in an employee’s regular rate when calculating overtime, although the treatment depends on the compensation arrangement and applicable exceptions.

What Was the Outcome of the Zara Case?

In May 2024, a federal court approved a $1.25 million settlement. News coverage identified approximately 479 workers who had opted into the collective action. The headline settlement amount was not an amount paid entirely to workers, since it included attorneys’ fees, litigation expenses, a service award, and claims-administration costs. Individual payments depended on the settlement terms.

Why Does This Case Matter to Hourly Retail Workers?

The case illustrates why employees who earn hourly wages plus commissions may want to examine how their overtime rate is calculated. Whether a particular payment must be included in the regular rate depends on the facts and the governing law. The outcome of this lawsuit doesn’t determine whether another worker has a claim.

The lawsuit also raised claims concerning the timing of wage payments under New York law. The legal framework governing remedies for certain manual-worker pay-frequency violations changed in 2025, after this settlement. Those later developments don't change the historical account of the claims resolved in this case.