Judges have many things to consider when deciding whether to approve a proposed settlement agreement. The most obvious considerations are whether both parties agree to the agreement and whether the agreement is fair to both sides. Part of that includes making sure both parties can uphold their part of the agreement.
In a recent class action wage and hour lawsuit against Wash.io, a laundry app that allows users to request laundry to be picked up, cleaned, and dropped off back at their homes, the judge is concerned Wash.io won’t be able to pay the class of plaintiffs anything.
The lawsuit alleges Wash.io’s delivery drivers (which it referred to as “ninjas”) were improperly classified as independent contractors. As a result, they were allegedly denied the proper minimum wage, overtime compensation, and regular meal and rest breaks, which are required by California labor law.
In addition to the federal Fair Labor Standards Act (FLSA), which protects workers by doing things like providing a federal minimum wage, defining overtime, and requiring a higher compensation for overtime hours, there are also state and local laws that employers need to be aware of and abide by.
The FLSA defines overtime as any time spent working after eight hours a day or forty hours a week. All hourly, nonexempt employees are entitled to one and one-half their normal hourly wages for all the overtime they spend working. However, independent contractors are exempt from minimum wage and overtime regulations, which is why the allegation that the drivers were misclassified is a key part of the wage and hour lawsuit.
In addition to the federal wage and overtime laws, each state has their own labor laws to protect employees working within the state. California is one of the most worker-friendly states in the country, because it does things like require employers to provide all hourly, nonexempt workers with regular breaks throughout the day. Under California law, each employee is entitled to one paid, uninterrupted rest break lasting at least ten minutes for every four hours they spend working. For every five hours of work, they are entitled to one unpaid, uninterrupted meal break of at least half an hour. If an employee misses or is interrupted during one of these breaks, for any reason, they are entitled to one hour’s worth of wages in addition to all wages, tips, bonuses etc. earned that day.
Like the FLSA, independent contractors are also exempt from these requirements. It provides a significant incentive for employers to classify their workers as independent contractors, even if they don’t meet all the requirements. But the FLSA is very specific about the qualifications workers need in order to be labeled independent contractors. If Wash.io’s drivers did not meet all the requirements, they could potentially have a very large, very valid claim.
Attorneys for the plaintiffs submitted a request for the judge to approve a settlement agreement, but there are a few issues that the judge says prohibits him from being able to approve the settlement. Particularly the fact that the terms don’t provide any clear promise that the plaintiffs will ever receive any compensation for their claims.
Under the terms of the settlement, the plaintiffs would receive between $450,000 and $675,000, but the amount would be contingent on whether Wash.io’s value could be placed at $60 million within 30 months of the settlement agreement receiving final approval.
The judge pointed out that neither the settlement agreement, nor Wash.io can guarantee the company will even exist next month or the month after. As a result, the value of the agreement is not sufficient to justify sending out notices to the class members and he refused to approve the agreement.
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 Hoffman Estates and Schaumburg We protect unpaid workers who haven’t received overtime throughout the Chicago area including in DuPage, Kendall, Lake, McHenry, Kane and Cook Counties.
Our Rolling Meadows and Palatine 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.