As you may be aware, L.A. County employees had the opportunity to join a lawsuit against the County of Los Angeles for underpaying overtime. Specifically, the Fair Labor Standards Act (FLSA) – the Country’s basic wage-and-hour law – describes how the overtime rate must be calculated and in a case known as Flores v. City of San Gabriel, the Federal Ninth Circuit Court of Appeals held that the FLSA requires that health insurance cash-back payments (the amount of taxable cash you receive in your paycheck if unused to buy benefits in the Choices Plan) must be included in the overtime rate. The County had not included cash-back payments in calculating employees’ overtime rates as required under the FLSA as clarified in the Flores case.
Thanks to the courage of the members who signed up to be represented in the lawsuit, the County has now settled the FLSA lawsuit for all overtime-eligible County employees. We anticipate the judge will rule on the motion and the settlement will be finalized before the end of the year.
The process that eventually led to the settlement began in early 2018, when County Unions raised the County’s non-compliance with the Ninth Circuit’s decision in Flores v. City of San Gabriel. After raising the issue multiple times, the County made an initial payment to all overtime-eligible employees in July 2018. The payment recalculated overtime by now including the amount of cash-in-lieu of health care payments in the overtime rate. However, the County’s payments only went back to January 1, 2018, and the FLSA’s three-year statute of limitations would have required payments retroactive to July 2015. Also, the County’s payments did not include the liquidated (or double) damages the County would owe in a lawsuit.
The Unions notified the County of the inadequacy of the payments, but the County made no move to correct the problem, the lawsuit was filed by two ALADS members; more than 7,500 County employees eventually joined the lawsuit. The Unions assembled an experienced team of lawyers and the day after the lawsuit was filed, the County authorized a second recalculation of overtime. This time, the County’s recalculation went back to July 2018, but it still did not include liquidated damages. The litigation continued…
In April 2019, a mediation in the lawsuit produced the framework of a settlement whereby the County would pay the liquidated damages it owed. In a June 2019 surprise move, and without announcing its intentions, the County unilaterally made the liquidated damages payments but only to individuals who had not joined the lawsuit. The settlement reached in the lawsuit now extends those payments to everyone who joined the lawsuit.
How much has the County paid as a result of this case? Once the settlement is approved, the County will have paid $27 million through the recalculation of overtime. $6.6 million of that amount will have been paid to those who joined the lawsuit. No one, whether they joined the lawsuit or not, will have to pay attorney fees or litigation costs as the settlement calls for the County to pay those amounts once they are awarded by the court. Further, all County employees who bravely joined the lawsuit are protected from retaliation.
Congratulations – when we fight, we win!!!
