$3M Settlement Resolves Nursing Home Employees’ Unpaid Overtime Lawsuit

The plaintiff in a class action lawsuit alleging Five Star Quality Care Inc. forced employees to work unpaid overtime and committed other California labor law violations has asked a federal court to approve a multimillion-dollar settlement.

The lead plaintiff claimed that, in addition to unpaid overtime, the nursing home failed to provide employees proper rest breaks, and subtracted expenses from their pay. The class action lawsuit sought to represent 250 current and former Five Star employees.

Under the terms of the settlement, Five Star admits no wrongdoing, but will pay $3,062,000 to pay the plaintiff’s award, attorney fees, and awards to eligible Class Members, as well as civil fines under California employment laws. Just over $500,000 will go to employees who were allegedly affected by Five Star’s labor law violations, working out to reimbursement of approximately $17 per pay period for each employee over a five year time span.

“After evaluating the factual allegations and legal issues that would arise prior to and during trial, including a review of the data and information discussed above, and considering the uncertainties and expenses of further protracted litigation in a case that had already been pending for five (5) years, the Parties settled the case in an amount that reflects a fair compromise that confers substantial benefit upon the State of California and the aggrieved employees,” says the plaintiff’s motion.

Settlement documents detail some 5,000 records reviewed by the plaintiff’s attorney, totaling $180,000 pay periods. The plaintiff’s motion estimates that, if her claims were successful at trial, Five Star could be assessed a $18 million fine under California labor laws for the alleged violations. However, the settlement motion pointed out that winning at trial was not guaranteed, especially as the coronavirus pandemic continues to rage on.

“[I]t cannot be overstated that this settlement was achieved under challenging circumstances of a pandemic and the risks and uncertainties created by COVID-19,” states the motion. “Litigation risks include the dangers of witnesses becoming unavailable due to tragic health circumstances or loss of employment, further significant delays in conducting discovery and proceeding to trial, and uncertainty over financial condition.”

Lawsuit Alleges Unpaid Overtime

The lead plaintiff initiated the class action lawsuit against Five Star in 2015. Five Star is a senior living provider in California and the plaintiff began working for the company as a personal care assistant in 2015.

The complaint detailed a litany of labor law violations by Five Star, including failure to pay overtime, unpaid meal and rest breaks, failure to pay wages on time, unpaid business expenses, and non-compliant pay stubs.

The class action lawsuit claimed an additional hour of wages on behalf of Five Star employees who allegedly did not receive meal or rest breaks. In addition, the plaintiff argued that the nursing home company should disgorge expenses that were deducted from employees’ paychecks in violation of California labor laws.

The plaintiff brought claims under California’s Private Attorneys General Act (PAGA), which allows “aggrieved employees” to file lawsuits on behalf of themselves, other employees, and the state, in addition to class and individual claims. In 2019, the plaintiff’s individual claims went into mandatory arbitration, but the lawsuit continued on the PAGA claims.

“After extensive premediation disclosures and exchange of wage and hour data and discovery, and with the engagement of the neutral mediator, the parties reached a settlement of the PAGA claims” states the plaintiff’s motion.

PAGA has come under fire for supposedly hurting business in the state, but advocates say it is an important way for workers to hold employers accountable. According to research conducted by Popular Democracy, in 2019 alone, California collected over $88 million in PAGA penalties.

The Nursing Home Labor Law Class Action Lawsuit is Case No. 5:15-cv-01305 in the U.S. District Court for the Central District of California.

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