The City of Petaluma, California, has settled claims made by seventy current and former police department employees for unpaid overtime. The original complaint was initially filed by only two police department employees in August of 2016. These two original plaintiffs sought to have money paid in lieu of receiving city sponsored health insurance included in their regular rate of pay for FLSA overtime purposes.
However, during the course of this litigation, attorneys representing these original two plaintiffs discovered another alleged regular rate violation. According to the plaintiffs, the city also failed to include a non-discretionary “bonus” paid to the original two plaintiffs and numerous other police department employees in 2016, in the regular rate of pay.
Partly due to this additional discovery, the total number of plaintiffs grew from the original two to a total of seventy. In an effort to avoid the uncertainty and significant cost of a trial, the city and plaintiffs reached the following settlement. The city will pay a total of $274,794 to settle both claims. The seventy plaintiffs will receive a total of $104,794 to settle all claims against the city. This represents a median payment of $400 per plaintiff. Additionally, attorneys that represented the plaintiffs will receive a total of $174,000 in fees and costs.
Proper calculation of the regular rate is critical, since all FLSA overtime must be at least time and one-half of the employee’s regular rate of pay. Failure to include all compensation, or as the FLSA refers to it, remuneration, in an employee’s regular rate of pay can result in employee’s being short-changed on their overtime rate of pay.
There are a couple of valuable take-aways from this settlement. First, if you are asking yourself whether there could be fire department implications from a dispute like this? Here is your answer.
Next, what started as a simple potential regular rate violation from two employees quickly escalated into a lawsuit with over seventy plaintiffs. One error led to the discovery of another alleged error, an error that impacted a greater number of employees. This undoubtedly increased costs associated with the litigation. Costs the city was ultimately responsible to pay.
Finally, it is not uncommon in FLSA litigation for legal fees to exceed the actual amount of back wages and damages. Here the portion of the settlement dedicated for back wages only accounts for approximately thirty-percent of the total settlement. As is the case for successful FLSA claims, the employer is responsible for paying the employee’s legal bills. Here, the city was responsible for paying the officers’ back wages, paying the officers’ legal fees and costs, and also paying the attorney, or attorneys, the city hired to defend itself from these allegations.
Here are copies of the original 2016 complaint and eventual settlement.