UMass Memorial Health has agreed to pay $1.2 million to settle wage and hour claims stemming from a ransomware attack that took down its timekeeping system, according to court documents filed Friday.
The outage had Kronos, a UKG platform, offline for weeks starting in late 2021 and derailed timekeeping and payroll for many clients.
UMass cites a ‘difficult situation’
A UMass Memorial executive previously told HR Dive it quickly shifted to backup timekeeping methods, but ran its first payroll during the outage based on data for the last pay period on record — duplicating it while making adjustments for new hires and departures.
Vacation time, leave and shift differentials posed issues, Sergio Melgar, executive vice president and chief financial officer, said in the March 2022 interview. A labor union representing some employees pointed to errors involving overtime and bonuses.
But Melgar said UMass Health chose the best option available “given the difficult situation we were in.”
At the time, UMass said it was still a Kronos customer but was working on a backup timekeeping system. On Monday, the organization declined to provide additional comment.
Lawsuit ‘amicably resolved’
In a putative class-action lawsuit, Pallotta v. University of Massachusetts Memorial Medical Center, Kronos Incorporated and UKG, Inc., UMass Memorial employees alleged they weren’t paid the full amount due in a timely manner, as the Fair Labor Standards Act requires.
Last week’s agreement, if approved by a court, would settle that lawsuit for $1.2 million. The plaintiffs’ attorneys said they plan to request $8,500 in incentive awards for each named plaintiff, and up to $400,000 in attorneys’ fees. Individual workers are expected to receive an average of $245 each.
According to the proposed class notice, UMass Memorial denied wrongdoing and said it believes it paid employees correctly.
“The matter was amicably resolved,” according to an attorney for the plaintiffs, Jeremiah Frei-Pearson, a founding partner of Finkelstein, Blankinship, Frei-Pearson & Garber.
UKG entered into a separate agreement last month that overlapped with Pallotta, but details were not made public. Attorneys for UKG did not respond to a request for comment by press time.
The settlement resolves one of several lawsuits related to the Kronos outage. Employers such as Honda, Cargill and New York City’s transit operator have faced similar claims.