California Overtime: Judge Declines to Settle Wage-and-Hour Class Action Case

Recently, a California federal judge refused to approve a proposed $3.5 million agreement to settle a wage-and-hour class action against steel product manufacturer USS-Posco Industries located in Pittsburg, California. A former employee of the defendant, USS-Posco Industries (“Posco”), plaintiff Carl Cody alleges that Posco denied workers compensation for time spent donning protective order and clocking in before their shifts began, denied employees meal and rest periods, failed to provide itemized wage statements, and failed to timely pay wages upon termination or resignation.

California overtime and labor laws are generally more favorable to workers than any other state, offering minimum wage at $8 per hour, as opposed to the current Federal minimum wage rate, which is $7.25 per hour. Workers are also paid overtime for any hours worked over 8 per day at 1 ½ times the regular pay rate, as well as any hours worked over 40 per week at 1 ½ times the regular pay rate. Because of the unique and important nature of disputes over workers’ pay, “extra” protections are in place, requiring the settlement of California Overtime class action lawsuits be reviewed and approved by a judge to insure that the settlement is fair and reasonable.

The judge found that the settlement might contain “obvious deficiencies,” putting certain class members at a disadvantage and, therefore, declined to approve it. The judge found issues regarding the scheme for distribution of money to the class due to the fact is was based primarily on the number of weeks that each member worked. The judge also noted that there were some claims in which the extent of damages did not appear to be proportional to the amount of time worked.

The judge also questioned why it was fair and reasonable to measure the class members’ recovery in terms of weeks worked, as opposed to hours, days, or shifts. Because of these outstanding questions, the judge could not make a decision regarding whether or not it would be fair to compensate all employees only on the basis of their time worked. Sixty days was given to the lawyers to file a new motion for preliminary approval of the proposed settlement that clears up these issues.

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