By Pamela Wolf, J.D. On May 2, a California federal district court released the terms supporting a $3.75M deal that it reviewed under seal when, on April 20, it granted preliminary approval to a class action settlement in a suit brought by FedEx line-haul drivers who alleged they were not properly paid for nondriving time and were denied rest breaks, among other California Labor Code violations. According to the order unsealing the terms of the agreement, FedEx had previously made an unopposed request to seal the proposed settlement until the court issued an order preliminarily approving the agreement. The $3,750,000 deal includes settlement payments to the class members, administration of the settlement, a service fee to the class representative, PAGA penalty payments, and attorney’s fees and costs, according to the motion for preliminary approval. The representative plaintiff will request a $25,000 service fee and class counsel will request attorneys’ fees of $1,125,000 and costs incurred, not to exceed $25,000. The maximum net settlement amount for distribution to drivers is an estimated $2,530,000. Proceeds from the settlement would be distributed to a class that includes about 1,600 drivers: 800 road drivers and 800 drivers who did not regularly work as road drivers, but rather, performed road services only on an occasional basis. As the court noted in its order granting preliminary approval of the deal, if the litigation were to proceed, both sides would face significant risks. The class’ potential recovery might be limited by recently enacted Labor Code Sec. 226.2, for example, which was effective January 1, 2016. The new Labor Code section, relating to piece-rate compensation, clarifies pay requirements for mandated breaks and other nonproductive time going forward; it also provides a brief window for employers to make back wage payments in exchange for relief from statutory penalties and other damages. The legislation came in response to recent California appeals court decisions addressing whether piece-rate compensation properly compensates employees for mandated breaks and other nonproductive work time. Here, the parties would likely dispute whether cases filed prior to March 1, 2014, were excluded from the new law’s penalty relief provisions. The hearing for final approval of the class action settlement is set for August 29, 2016.
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