Health Provider Faces $16.5 Million Hit in Proposed California Overtime Pay Settlement

Los Angeles, CAA national health care provider headquartered in Kentucky but sued in California with regard to overtime pay laws and other alleged violations of employment statutes is looking at a $16.5 million bill to settle those allegations. Amongst the claims against Kindred Healthcare Inc. (Kindred), are allegations that Kindred failed to pay overtime in accordance with California overtime law, and failed to compensate employees for missed meal breaks.

According to court records, the settlement has yet to receive judicial approval. Plaintiffs in the multi-class litigation report they reached the proposed settlement this past June, about a month before trial in the overtime pay class action was scheduled to start.

No fewer than five subclasses of workers were granted certification in March of last year by US District Judge Dean Pregerson. Amongst the claims against Kindred were allegations the employer coerced employees to waive their rights to certain meal breaks as a condition of their employment with the health care provider. Additional allegations involve failure to follow waiting time pay rules normally observed by the state of California, and the unfair evasion to pay overtime to hospital workers with schedules.

In May, about a month prior to the $16.5 million settlement having been reached, Kindred petitioned Judge Pregerson to decertify two of the subclasses due to the fact that, in Kindred’s view and according to Kindred’s allegation, the employees at the center of the decertification petition had allegedly waived their right to a second meal break during a 12-hour hospital shift.

According to the petition, Kindred sought to have the two classes decertified while it gathered information on whether or not the employees having signed the waiver did so voluntarily or under an interpretation of duress as a condition of employment. That information, Kindred said, would have to be gleaned individually from each employee, and would take some time.

It was reported that judicial reaction to the petition was skeptical at best.

According to the proposed settlement in the unpaid overtime class action, class members will receive about $400 to $500 in compensation, or an amount based on their gross earnings according to which of the five subclasses for which they qualify. About $6 million of the proposed $16.5 million settlement will go toward attorney’s fees and costs.

“The settlement amount is, of course, a compromise figure,” the plaintiffs said in a motion seeking preliminary approval of the overtime laws settlement. “It…took into account the possibility that if a settlement were reached after many months or even years of appellate process, the great expenses and attorneys’ fees of litigation may cause defendants to decrease what it was willing to offer.”

The cases are Flordeliza Escano et al. v. Kindred Healthcare Operating Co. Inc. et al., Case No. 2:09-cv-04778, and Debbie Fitzpatrick Seckler et al. v. Kindred Healthcare Inc. et al., Case No. 8:10-cv-01188, both in the US District Court for the Central District of California.