The U.S. District Court for the Eastern District of California has recently rejected a proposed settlement in a wage and hour lawsuit against AT&T Mobility Services. The settlement, totaling $575,000, was reached in March with store workers in California who alleged wage and hour violations by the telecommunications company. The lawsuit accused AT&T Mobility Services of various violations, including unpaid wages, failure to provide premium pay for missed breaks, miscalculated regular rates of pay, underpaid overtime wages, and failure to pay all wages upon termination of employment.
The class action lawsuit was filed under California’s Private Attorneys General Act, allowing employees to sue on behalf of themselves and others for labor code violations. The proposed settlement was intended to cover over 5,000 individuals who worked for AT&T Mobility Services in California between November 2, 2021, and September 21, 2022. However, the court rejected the settlement due to a crucial issue: the named plaintiff in the case was not a member of the settlement class.
The plaintiff, a former sales representative, believed his termination by AT&T Mobility Services in June 2018 was unlawful. However, since his employment ended before the relevant time period, he did not qualify as a member of the settlement class. The court deemed the settlement as a “headless class” because it excluded the plaintiff’s claims.
Corey Cabral, an attorney with CDF Labor Law, suggested that the parties involved would likely revise the settlement provisions to address this issue while preserving the settlement’s value and an enforceable release for the employer, anticipating the potential for future claims.
The lawsuit highlighted California’s compensation laws, which require employers to pay overtime for nonexempt employees who work over eight hours in a day or more than 40 hours in a week. Employers must also provide meal and rest breaks, and failure to do so results in a break premium payment. The regular rate of pay used for calculations includes various forms of compensation, such as hourly wages, differentials, piece-rate and incentive compensation, commissions, and nondiscretionary bonuses.
To ensure compliance with wage and hour policies, Christine Baran, an attorney with Fisher Phillips, recommended that companies regularly audit employees’ time records, address noncompliant breaks, and ensure managers understand the company’s policies and practices. Additionally, Cabral advised simplifying compensation structures and seeking legal counsel when developing nonhourly forms of compensation to navigate potential pitfalls and ambiguities in the law.
The rejection of the settlement serves as a reminder to companies to carefully address inclusion issues and comply with wage and hour regulations to avoid potential legal disputes and ensure fair treatment of their employees.
