Employees Sue Harbor Freight

January 5, 2011

Dozens of employees of Calabasas-based Harbor Freight Tools have joined a federal class action lawsuit against the company.

The workers claim the company illegally classifies menial workers as “store managers” to exempt them from overtime compensation.

The workers at the Camarillo facility join employees in Kanasas, Nebraska, and Missouri.

The Fair labor Standards Act is a federal law that requires employees to receive 150% wage compensation for overtime unless the employer meets one of several exception requirements.

In September 2010, a family feud erupted at the tool supply company when founder Allan Smidt, 81, sued his son and current company CEO Eric Smidt, 50, alleging he was swindled into transferring ownership of the company.

According to court documents, in 1999, the father and son agreed to a complicated transfer agreement in which controlling interest in the company was sold to Eric at a below market price. Eric would be come CEO, Allan would become chairman, and the profits would be divided together.

Allan claims Eric then missed multiple payments and borrowed $500 million from Credit Suisse First Boston and used some of the money as “dividends” to pay for a $46 million dollar home in Beverly Hills, a $100 million dollar addition to his art collection, and a $20 million dollar apartment in New York City.

Allan also says that an attempt was made earlier this year to remove him as chairman of the board. When Allan visited the company to access payroll records, he was escorted out of the building by a new management team.