LOS ANGELES — A federal court disapproved a $2.94 million settlement of Fair Labor Standards Act (FLSA) wage claims filed by CVS pharmacists against the company. The pharmacists filed suit claiming that they worked more than six days without receiving overtime pay in the company’s greater Los Angeles district. Notably, another $2.3 million settlement of pharmacists’ claims in Northern California is pending federal court approval, and similar wage violations are at issue.
Sufficiency of Settlement Amount and Terms
The federal court, after evaluating the proposed settlement, indicated that the gap between the pharmacists’ initial $4.26 million claim and the $2.94 million proposed settlement amount was too large considering the potential total recovery and the specific risks of litigation. The court required the plaintiff to explain the specific risks of prevailing on each of his or her claims, and then explain why the proposed settlement amount is an appropriate balance considering that it only represents about a $202 payment for each week a CVS pharmacist worked more than six days without overtime pay.
Additionally, the court questioned the methodology used to calculate the settlement amount and the term that the settlement would include a release of all state claims if an individual opts in to the class and receive payment. The court stated with regard to the release that not enough was paid for the release of these claims.
Approval of FLSA Settlements
Parties cannot enter into private settlements of FLSA claims without the approval of either a federal district court or the U.S. Department of Labor. Federal courts apply an extra level of scrutiny to FLSA settlements to prevent workers from waiving the protections of FLSA. In order to ensure workers maintain their rights under the FLSA, courts will only enforce these settlements if the settlement amount is for the full amount claimed, or if less, there is a bona fide dispute between the parties regarding the actual amount owed by the employer.
Settlements of FLSA claims should amount to a full and fair resolution of a party’s claims. These settlements must achieve the goal of preventing employers from deriving a competitive advantage by violating FLSA.
Settlements of FLSA claims should make employees whole and provide them with wages that were unjustly withheld from them. A proposed settlement agreement that does not fully compensate employees should be challenged. You should call (855) 754-2795 or complete the Free Unpaid Overtime Case Review form on the top right of this page if you feel your employee wage rights have been violated and your employer’s proposed settlement does not adequately compensate you. Our top-rated team of wage lawyers will evaluate your situation to determine your best course of action. We will also determine if it is in your best interest to file a lawsuit against your employer. There are strict time limitations for filing, so it is important that you call our experienced attorneys today