- The city of Santa Clara has agreed to pay firefighters $2.7 million over allegations that the municipality miscalculated their overtime rate because it failed to include the cost of certain benefits when calculating overtime pay (Gaffney, et al. v. City of Santa Clara, No. 18-cv-06500 (N.D. Cali. Oct. 17, 2019)).
- The plaintiffs said the city excluded from the regular rate of pay calculation — which is the basis for determining overtime pay — cash payments made to city employees in lieu of health benefits, the city's contribution to the employees' medical premiums and certain types of specialty and overtime pay in violation of a previous ruling by the 9th U.S. Circuit Court of Appeals.
- The plaintiffs also said that during the lawsuit it was discovered that a group of firefighters had additional claims under the Fair Labor Standards Act (FLSA) because of their work as Fire Recruits during fire academy training for several years and that settlement of those claims is included in the agreed upon amount.
The firefighters' lawsuit is based on a 2016 ruling in the 9th Circuit, Flores v. City of San Gabriel, in which the court ruled that the employer improperly excluded from the regular rate of pay payments to workers who opted for cash in lieu of health benefits. The Fair Labor Standards Act generally requires that non-exempt employees receive overtime for hours worked in excess of 40 in a workweek, at the rate of at least one and a half times their regular rate of pay.
However, regular rate of pay doesn't just include an employee's hourly wages — it generally includes all remuneration, with only a few exceptions. Delta Air Lines, Inc. recently agreed to pay $3.5 million to settle class action allegations that it incorrectly calculated overtime pay under California law for certain nonexempt employees. The attorneys in the case noted that California law mirrors the FLSA when calculating the regular rate of pay. The airline was accused of failing to include items such as such as shift differential payments, "Shared Rewards" bonuses, profit-sharing payments and the fair market value of airline passes it provided in calculating employees' regular rate of pay for the purpose of determining overtime premiums.
Changes to what should be included in the regular rate of pay is could be in the works. DOL said in a factsheet published in March that it is looking to "clarify and update the regulations governing the regular rate requirements." Under the new rules, employers would be able to exclude certain items when calculating the regular rate of pay such as the cost of wellness programs, unused leave or reimbursed expenses.