Facts

Plaintiffs Eric Kelley, Patrick Hesters, Eric Dunnick are non-exempt firefighters for defendant the City of San Diego. Seven hundred and five (705) Plaintiffs encompassing positions that are all within the City of San Diego Fire-Rescue Department joined a class action, wage-and hour- lawsuit against the City. Plaintiffs argued that they were entitled to overtime compensation under the Fair Labor Standards Act and sought unpaid overtime compensation, liquidated damages, and reasonable attorney's fees on the basis of the Ninth Circuit decision Flores v. City of San Gabriel, 824 F.3d 890, 895 (9th Cir. 2016).

Flores held that employees who did not spend the whole of their allocated flex benefit plan dollars received the unused portions as cash, sometimes referred to as "cash-in-lieu" (CIL) payments, and that the employee's CIL payments must be included in the calculation of the regular rate of pay for overtime payments under FLSA. Flores additionally held that the total value of flex benefit dollars provided by the flexible benefits plan (FBP) became eligible for inclusion in the regular rate of pay when calculating overtime payments under FLSA because it was not a "bona fide" plan.

PLAINTIFFS' CONTENTIONS: Plaintiffs primarily contended that the City violated the FLSA by failing to include CIL payments in the firefighter's regular rate of pay when calculating overtime compensation, by not including all flexible benefits cash payments in the firefighter's regular rate of pay, by using compensatory time off to compensate Plaintiffs for overtime hours worked because the City's cash payments for unused CTO were not paid at the FLSA's regular rate of pay and that the City had miscalculated the firefighter's regular rate of pay.

DEFENDANT'S CONTENTIONS: The City disputed Plaintiffs' allegations and maintained that it had complied in good faith with the Ninth Circuit's decision of first impression in Flores concerning the inclusion of flexible benefits plan remuneration in the regular rate of pay.

Result

Defendant agreed to pay plaintiffs $3.4 million in settlement of the case.