A California federal court gave final approval to a $2.91 million settlement between Kaiser Foundation Hospitals and approximately 500 information technology employees in Smith v. Kaiser Foundation Hospitals, Inc. The settlement amount includes the settlement fund for class members’ claims, payments under California’s Private Attorney General Act (PAGA), attorneys’ fees, costs, and enhancement awards for the named plaintiffs.

The class members, who are Business Application Coordinators and Analysts, claimed they were misclassified as exempt under both the Fair Labor Standards Act and California law, and denied overtime for working through meal periods and working in excess of 40 hours per week, 8 hours per day or on the 7th consecutive day of a workweek. The employees had been assigned to provide training and technical support to hospital staff on a new computer system implemented at Kaiser hospitals. Kaiser maintained that the employees were properly classified as exempt under the administrative exemption because they spent the majority of their time engaged in work directly related to the general business operations of Kaiser.

The plaintiffs had calculated damages of $6.46 million based on the assumption that they were each not paid for three hours overtime per week, one missed meal break and one missed rest break. After payment of attorneys’ fees, the PAGA payment, named plaintiffs’ enhancement awards, and costs, the settlement fund available to the plaintiffs will be approximately $2.07 million, which is about one third of the plaintiffs’ damages estimate.

The Kaiser class action is yet another example of the rash of wage and hour class actions that have spread throughout the healthcare industry and expanded beyond employees engaged in direct patient care.  For example, as we recently reported here, security guards have filed class actions against hospitals for misclassification as well as for failure to pay for meal periods during which their activities were allegedly so restricted that they were actually working during the meal periods.

This entry was written by Michele Malloy.

Photo credit: Bartek Szewczyk