“Regular Rate” Class Action Settlement

After being threatened with a class action, we assisted an Orange County company in performing a confidential internal audit of its overtime regular rate calculations.  We determined that the company had not properly considered bonuses in the regular rate for overtime pay.  This resulted in substantial liability for unpaid wages and penalties.  After receiving a pre-litigation demand, we negotiated a tolling agreement and agreed to mediation.  The amount due to employees was relatively simple to calculate and undisputed.  The employer chose to pay the undisputed amount due with interest.  Other claims were disputed.  The employer met with each current employee and informed him or her of the error with the bonus calculation and the amount that would be paid on the next paycheck.  The employer separately offered a settlement of the disputed claims and penalties.  Almost all current employees accepted the settlement, which significantly lowered the settlement value at mediation.