Wage and Hour Class Action Settlements Explained

Wage and hour settlements pay current and former employees who, according to a lawsuit, were not paid everything they earned, such as overtime, minimum wage, time worked off the clock, or required meal and rest breaks. If you worked for an employer that settled during the class period, you may receive a payment based on how long you worked there, sometimes without filing anything.

The laws behind these cases

The federal Fair Labor Standards Act sets the federal minimum wage and requires overtime pay for most non-exempt workers who work more than 40 hours in a week. Many states set higher minimum wages or add rules, such as daily overtime and required meal and rest breaks in some states. Wage claims can be brought under federal law, state law or both.

Common wage and hour claims

• ✓Misclassification: workers labeled exempt salaried employees or independent contractors when the law says they are owed overtime.
• ✓Off-the-clock work: time spent on security screenings, booting up computers, putting on gear or finishing tasks after clocking out.
• ✓Missed breaks: meal and rest breaks that were not provided or not paid as some states require.
• ✓Rounding and auto-deductions: time clock rounding or automatic meal deductions that shortchanged workers.
• ✓Tips and minimum wage: improper tip pooling or tip credits.
• ✓Final pay and expenses: late final paychecks or unreimbursed work expenses where state law requires reimbursement.

Class actions vs collective actions

This affects whether you need to act. Under state law, wage cases usually proceed as Rule 23 class actions, where you are included unless you opt out. Federal FLSA claims proceed as collective actions, where you must opt in, usually by returning a consent form. Many settlements combine both. You may be paid for the state claims automatically, but must sign or cash a check to join the federal portion.

How payments are calculated

Wage settlements usually use payroll records to calculate each person's share, often based on workweeks or shifts worked during the class period. People who worked longer generally receive more. A portion is often treated as wages, with tax withholding and a W-2, and the rest as interest or penalties reported on a 1099. Our guide on whether settlements are taxable explains more.

Who qualifies

Classes are defined by job title, location and dates, for example all hourly warehouse workers in one state during a set period. Former employees are usually included. You typically do not need proof, since the employer's records determine who is in the class and how much each person receives.

Can you be fired for participating?

Federal and state laws prohibit employers from retaliating against workers for asserting wage rights, including taking part in a class or collective action. If you think you have been retaliated against, contact class counsel or a labor department.

How to make sure you get paid

1. 1Keep your address up to date with the settlement administrator, especially if you left the job.
2. 2Return any consent or claim form before the deadline.
3. 3Deposit checks promptly, after reading what depositing means.
4. 4Keep your W-2 or 1099 for taxes.

PAGA claims in California

California has its own law, the Private Attorneys General Act, that lets workers seek civil penalties for labor code violations on behalf of the state. Many California wage settlements include a PAGA portion. Most of that money goes to the state, and the rest is split among affected employees. You generally cannot opt out of the PAGA part, so you may receive a small PAGA payment even if you opt out of the class claims.

If the amount in your notice looks wrong, for example it credits fewer workweeks than you actually worked, most wage settlements let you dispute it. You usually need to send pay stubs, schedules or other records to the administrator by a stated deadline. Check the notice for the dispute process.

Our guide to settlements for employees covers other workplace cases. Add your current and past employers to SettleScout, and it will flag matching wage settlements and remind you before any deadline.