Another California city settles FLSA claims made by firefighters over alleged regular rate violations

The City of Palo Alto, California continues to settle claims for unpaid overtime with city firefighters. The city has paid more than $1.5 million in the past year to firefighters and other city employees for failing to include all remuneration in the regular rate of pay for FLSA overtime purposes. Some of these payments stem from a 2016 lawsuit filed by several city firefighters. The firefighters argued payments made in lieu of receiving health benefits should be included in their regular rate of pay for overtime purposes.

Properly calculating the regular rate is critical since all FLSA overtime is based on time and one-half of the regular rate. Virtually all money paid to an employee must be included in the regular rate. While there are a few very limited exceptions to this general rule, it is the employers responsibility to prove money paid to an employee does not need to be included in the regular rate.

In the summer of 2016, the U.S. Ninth Circuit Court of Appeals determined money paid to police officers in lieu of receiving employer sponsored health benefits must be included in the regular rate. Soon after that decision a small group of Palo Alto firefighters filed a similar lawsuit seeking to have money paid to them in lieu of receiving health benefits included in their regular rate.

While the original complaint only included a small number of firefighters, attorneys representing these firefighters speculated the eventual number of plaintiffs could rise to over forty. It is common in some FLSA actions for the number of potential plaintiffs to be unknown at the outset of the lawsuit. After the first group of plaintiffs initiate the lawsuit other “similarly situated individuals” will “opt-in” to the suit. The final settlement included over 90 “opt-in” plaintiffs. Additionally, as is almost always the case with successful FLSA claims, the city was required to pay the plaintiffs attorneys’ fees and costs associated with filing the lawsuits.

Finally, since this original settlement with the firefighters, the city has been actively settling similar claims made by other city employees. According to news reports the total payouts have exceeded $1.5 million to date.

For more on the story. Plus, copies of the original complaint and settlement are below.

Palo Alto FF FLSA Complaint

Palo Alto FF FLSA Settlement

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