Proposed Settlement Agreement Considered by Court in Hilfiger Wage Suit

Proposed Settlement Agreement Considered by Court in Hilfiger Wage Suit

SAN FRANCISCO — Tommy Hilfiger Retail LLC and a group of employees lead by Jessie Chavez and Anabel Armenta have reached a settlement agreement in a class action suit for alleged California Labor Code wage violations in the amount of $1.8 million. The parties have submitted the proposed settlement agreement to a California federal district court for approval. The parties have previously attempted to settle the matter, but the court rejected initial attempts because the first agreement allowed Hilfiger to keep up to 20% of unclaimed settlement funds while the plaintiffs’ attorneys collected a quarter of the total settlement amount. Additionally, the court indicated that the parties were unclear regarding the settlement’s impact on related concurrent lawsuits. In the current motion for approval submitted by the plaintiffs, they emphasized to the court that both issues have been resolved. According to the request for approval, the parties engaged in vigorous and substantial negotiations and, therefore, the settlement was proper, fair, and adequate.

Fair Wage Settlements

In the initial attempts to gain court approval of the settlement, the court denied preliminary approval. The court stated that the structure of the agreement, which allowed the company to keep up to 20% of the unclaimed settlement amount, had the potential effect of causing the parties to discourage potential class members from participating in the suit. Even if the company were to pay only 80% of the net settlement amount to class members who opted in, they would still have to pay 25% of the total settlement to plaintiffs’ attorneys. This, according to the court, could have created a conflict of interest in which the plaintiffs’ attorneys would bargain for a higher total settlement amount from which to request attorneys’ fees in exchange for a low payment obligation from the company. The parties had to allow all unclaimed funds to be distributed to class members in order to gain court approval.

Payment of Debit Card Usage Fees

According to the suit, the company violated the state wage laws by paying workers with ATM cards that required them to pay usage fees. Therefore, employees could not access all the money on the cards. Additionally, the plaintiffs claimed that the company did not obtain consent before paying the plaintiffs using ATM cards and failed to provide accurate wage statements that provided the start date of each pay period and the correct legal name of the employer.

The California Labor Code prohibits employers from paying wages using any instrument unless it is negotiable and payable in cash, on demand, without discount, at some established place of business in the state. With regard to payroll debit card programs, the California Division of Labor Standards Enforcement opined that such programs must provide for at least one transaction per pay period without a fee, thus satisfying the law’s requirement of immediate and free access to an employee’s wages in full.

Employers have to ensure that the manner by which they pay employees do not illegally deprive employees of all wages earned. They must ensure that employees are paid for all compensable time worked. If you believe your employer is unlawfully withholding your pay, you should call (855) 754-2795 or complete the Free Unpaid Overtime Case Review form on the top right of this page. Our top-rated team of wage lawyers will evaluate your situation to determine the best option. We will also determine you should file a lawsuit against your employer. Call our experienced attorneys today.

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