Facts

Robert Weist, a firefighter employee of the City of Davis filed suit against the City after the U.S. 9th Circuit Court of Appeal decided the case of Flores v. City of San Gabriel (9th Cir. 2016) 824 F.3d 890, regarding that city's failure to include cash in lieu (CIL) payments for health insurance in the regular rate of pay as required by the Fair Labor Standards Act (FLSA) for the calculation of overtime. After the suit was filed, the City of Davis attempted to pay all the damages it owed to all eligible City employees for its failure to include CIL in the overtime rate by paying approximately $320,000 in backpay and liquidated damages retroactively for three years. However, the City did not take into account the failure to pay the correct overtime rate for the cash out of compensatory time off. Additionally, the plaintiffs asserted that the IRS 125 cafeteria plan was not a bona fide plan pursuant to the FLSA due to the high percentage of CIL payments in relationship to the total amount of benefits paid out by the cafeteria plan in certain years.

PLAINTIFF'S CONTENTIONS: Plaintiffs claimed that the city failed to include in the regular rate of pay for overtime under the FLSA, cash in lieu of health insurance. The city further failed to pay overtime based on a non bona fide cafeteria plan.

DEFENDANT'S CONTENTIONS: The city correctly paid employees by making whole eligible employees for cash in lieu. The city cafeteria plan was bona fide and the city did not act willfully or in bad faith in failing to pay overtime.

Settlement Discussions

MEDIATOR: John True.

Result

The case settled for $1,268,912, of which $943,912.04 was in backpay and liquidated damages. About half of the damages are to be paid to 31 firefighters who opted into the collective action at the outset. The other half of the damages will be paid to 222 other current and former employees of the City who will receive notice of the settlement of the action and the opportunity to join in the settlement. The City also agreed to pay attorney fees and costs in the amount of $325,000.