The City of Modesto, California, has agreed to settle an FLSA lawsuit filed by several current and former city firefighters. The 2016 suit alleged the city failed to include cash payments made to some firefighters in lieu of receiving health benefits in the firefighters’ regular rate of pay. While not all firefighters opted out of city sponsored medical benefits, those that did received an additional $525 per month in their paychecks.
The FLSA requires virtually all remuneration paid to an employee included in the regular rate. This includes various wage augments, such as longevity, educational incentives, shift differentials, and money paid to employees in lieu of medical benefits. Very often an employee’s base or contract rate is not the regular rate. The regular rate can only be determined after considering all applicable wage augments in addition to the base or contract rate of pay.
While FLSA regular rate violations are common in the fire service, the additional costs associated with litigation can often rival or even exceed the amount of back wages. In this settlement, in which the city denies any wrongdoing, the firefighters are receiving a total of $100,086 in back FLSA wages. However, the settlement also includes approximately $43,000 to pay the law firm that represented the firefighters. In addition, the city estimates it has spent almost $30,000 for legal services defending the firefighters’ claims. . . That results in the city paying almost $175,000 in total. Failing to include all remuneration in the regular rate can prove costly.
The regular rate is one of many topics covered in depth at all of the upcoming FLSA for Fire Departments seminars. Please consider joining us.
Here is a copy of the settlement.