When two or more parties decide to settle a legal dispute outside of court, it’s common for the settlement amount agreed upon to be less than the original value of the claims made by the plaintiff. That’s what makes it a compromise, but if the settlement amount is too much lower than the value of the alleged violations, they may not get approval for the settlement from the court judge.
When determining whether to approve a settlement agreement, the court judge presiding over the case is responsible for determining whether the agreement is fair to both parties. A settlement amount that is too much smaller than the original value of the claims provided might not be fair to the plaintiffs.
A California court judge presiding over a class action wage and hour lawsuit against Frito-Lay has refused to certify a proposed settlement because he says the $600,000 it provides is much too small to be fair to the plaintiffs.
The overtime lawsuit was filed by Eliazar S. in 2014 on behalf of all employees who worked as maintenance mechanics for Frito-Lay from April 11, 2010 to March 10, 2015. The wage and hour lawsuit alleges Frito-Lay denied the mechanics working at its distribution centers in California the proper meal and rest breaks required by state law. It further alleges the major snack company failed to pay them the proper overtime compensation when they worked more than eight hours a day or forty hours a week.
Under California labor law, employers are required to provide all their hourly workers with one paid, uninterrupted rest break of at least 10 minutes for every four hours they spend working. For every five hours of work, employers must provide an unpaid meal break lasting at least half an hour. For every day an employee does not take one of these breaks, for any reason, she is entitled to one hour’s worth of wages, in addition to all wages, tips, and bonuses earned that day.
Less than a year after the filing of the lawsuit, Frito-Lay and the class representatives reached an agreement to settle the dispute for $600,000, which is less than half the estimated value $1.4 million for Frito-Lay’s alleged violations. The judge refused to grant preliminary approval of the settlement agreement, saying the plaintiffs had failed to provide enough information to define the class of plaintiffs or to show whether the proposed figure fell within the range of possible approval.
The plaintiffs responded by filing an amended proposal for the settlement agreement that showed how the plaintiffs’ counsel came up with the amount of $600,000, which includes $150,000 for attorneys’ fees and $7,500 for the award for the named plaintiff.
But the judge took issue with the method used to calculate the violation rate of the allegations against Frito-Lay. Instead, he maintains the plaintiffs’ counsel had miscalculated the value of the allegations and mistakenly estimated them to be about half their actual value. As a result, he said the settlement amount was less than one quarter of what Frito-Lay actually owes the plaintiffs, and as such, might not be a fair settlement for the plaintiffs. The judge therefore refused to approve the settlement at this time and left the question of whether the plaintiffs’ counsel is able to adequately represent the interests of the class in negotiations.
The Chicago class action and employment law attorneys at the Chicago Overtime Law Center have three decades of experience fighting to help employees who are victims of wage, overtime and tip theft by their employers. We have a team of Chicago unpaid overtime lawyers who concentrate on prosecuting state and nationwide class action lawsuits. Our attorneys work out of Chicago and Oak Brook offices and pursue claims for workers all over the Chicago area including Bollingbrook and Evanston. We protect unpaid workers who haven’t received overtime throughout the Chicago area including in DuPage, Kendall, Lake, McHenry, Kane and Cook Counties.
Our Hoffman Estates and Elkgrove Village overtime and employment lawyers are intimately familiar with the issues that arise during wage claim litigation, and we know the laws that govern overtime cases well. Many employers mis-classify employees as being exempt from overtime laws and pay workers salaries instead of hourly wages in order to avoid paying them overtime. Some employers mistakenly classify employees as exempt and others intentionally do so in order to circumvent the law. In either case, workers do not receive the wages they should, and a lawsuit may be the only way to recover their earned wages.
The Chicago Overtime Law Center is based in Chicago and Oak Brook, and represents clients throughout the country who have unpaid overtime and other employment right claims.