SAN FRANCISCO (CN) – Kaiser Foundation Hospitals and hospital services firm Xanitos will pay $500,000 to settle a class action accusing them of not paying workers overtime wages after they misclassified them as salaried employees and independent contractors.
U.S. District Judge William Orrick III granted final approval of the settlement in an order Thursday, calling it “a fair and reasonable resolution of a bona fide dispute.”
“The court approves the agreement and finds that it is a reasonable compromise of the claims of plaintiff and the settlement classes,” Orrick wrote in the 8-page ruling. “It achieves a definite and certain result for the benefit of the settlement classes that is preferable to continuing litigation.”
Lead plaintiff Paula Donald sued Kaiser and Xanitos in Contra Costa County Superior Court in November 2014. Donald, who worked for Xanitos at Kaiser’s Richmond Medical Center in California, claimed she was classified as an independent contractor when she was hired in 2010, but was later reclassified as an exempt employee.
In a 2015 amended complaint, Donald said she and other employees often worked 12-hour shifts and more than 40 hours a week, but weren’t paid overtime because they were reclassified.
According to Donald, Kaiser and Xanitos also failed to record the number of hours their employees worked, and refused to allow them meal and rest breaks.
Under the settlement, Kaiser and Xanitos will pay $500,000 to individuals who provided environmental services to Kaiser and Xanitos in California as contractors for Xanitos, and whom Xanitos classified as independent contractors; and individuals who provided environmental services to Kaiser and Xanitos in California as supervisors or managers as employees of Xanitos, and whom Xanitos classified as exempt employees.
Xanitos will pay the employer’s share of all payroll taxes, separate from the settlement fund.
Class counsel will receive $150,000 in attorney’s fees, and Donald a $2,500 enhancement award.
Kaiser contracts with Xanitos for services at 13 hospitals in California. Donald had claimed that Kaiser was liable for damages to the class because it controlled the terms of their employment with Xanitos, including disciplinary and termination decisions.
“Because Xanitos had been contracted by Kaiser, all employees were told that they had to follow Kaiser’s instruction,” Donald said in her amended complaint.
The class was represented by Leonard Emma with Hoffman Employment Lawyers, and Kaiser and Xanitos by Sara Moore with Gordon & Rees, both in San Francisco.
Neither attorney could be reached for comment Friday.