California agrees to a total of $4.8 million in back wages to some CalFire firefighters

The State of California has agreed to pay almost 2000 firefighters a total of $4.8 million in back pay after shortchanging their regular rate over the past several years. According to The Sacramento Bee, the back wages will be going to approximately 1,900 CalFire firefighters that received cash payments in lieu of accepting employer sponsored medical benefits from May 2015 thru June 2018. According to Cal Fire’s union president, Tim Edwards, the state “acted quickly to resolve the problem and limit more damages.” once the firefighters brought it their attention.

The FLSA requires virtually all the money an employee receives from his or her employer included in the employee’s regular rate. In 2016, a federal circuit court of appeals found for the first time, money paid to an employee in lieu of receiving employer sponsored health benefits must be included in that employee’s regular rate of pay. In the wake of that decision (i.e. over the past 4 years), tens of millions of dollars in back wages have been granted to a wide variety of firefighters and other first responders.

Including cash-in-lieu payments in an employee’s regular rate can be especially challenging for individuals responsible for paying firefighters and other emergency service workers. First, due to the nature of 24/7 shift work and most organization’s minimum staffing requirements, many firefighters and other first responders work a significant number of overtime hours on a weekly basis. As a result, even a small regular rate error can lead to significant sums of back wages for impacted employees.

Second, health insurance is expensive. Some employers provide a significant monetary benefit to employees that opt to decline coverage. As an example, paying an employee fifty percent of the actual cost of some medical insurance plans can raise that employee’s regular rate $3 or even $4 per hour. This could increase the employee’s FLSA overtime rate by as much as $6 per hour. In the event of an FLSA violation and lawsuit, that number will likely be doubled. The employee may be owed a total of 12 additional dollars for every hour of overtime due. . .

Third, these types of “in-lieu” payments are often made in arrears. The employee usually receives the payment after he or she declined health benefits for a period of time. This requires the employer look-back over the period of time the payments were intended to compensate the employee and make retroactive regular rate calculations. That can prove a time-consuming and challenging endeavor depending upon the circumstances.

Click here for more on the story from The Sacramento Bee.