SAN DIEGO – A federal judge on the bench of the U.S. District Court of the Southern District of California granted preliminary approval of a $700,000 settlement agreement that could end a class action complaint alleging federal labor law violations.
Maria Gonzalez sued LabCorp and Examination Management Services (EMSI) on May 24, 2017, alleging the companies improperly classified her and other phlebotomists as independent contractors, causing them to be underpaid. According to Gonzalez, the misclassification violated state and federal labors laws, including failure to pay minimum wage, provide accurate wage statements and timely payment of remaining money owed at the end of employment.
Gonzalez said she and others were paid a $175 daily wage and “denied a panoply of work-related benefits that are afforded to employees under California labor laws,” the ruling states.
On Nov. 10, 2017, EMSI added Soko United as a third-party defendant, citing indemnity-based claims. Gonzalez later amended her complaint to add Soko, alleging it was a joint employer of her and the proposed class.
After a telephone conference and mediation, the parties reached a proposed settlement, which Judge Janis Sammartino addressed in an opinion issued April 30.
Under the terms, the companies would establish a $700,000 settlement fund — $410,000 from EMSI, $150,000 from Soko and $140,000 from LabCorp. That would pay for $175,000 in legal fees for class counsel Haeggquist & Eck, as well as $5,000 in expenses, $6,500 in administrative expenses, $5,000 for a class representative service award and $10,000 to the California Labor and Workforce Development Agency, leaving $498,500 for class members.
The class would include 118 people who worked for Soko as a phlebotomist, examiner or PST specialist who also worked at a LapCorp facility under the Soko-EMSI independent contractor agreement from May 24, 2013, through the date of the preliminary settlement approval order. The money would be apportioned based on weeks worked during the class period. Should there be any money left over, it would go to the Legal Aid Society of San Diego.
Any of the employees who continue to work for the defendants would be reclassified as W-2 employees under Internal Revenue Service guidelines, and will not be required to get to work 10 minutes before their billable start time, unless they are paid for those minutes.
According to Sammartino, although the companies “steadfastly deny any wrongdoing,” Gonzalez “is obtaining a near equivalent to the recovery initially suspected.”
Class certification is appropriate because “if the settlement class members’ claims were considered on an individual basis, more than 100 cases would follow a similar trajectory and each would come to a similar result,” Sammartino wrote, while consuming “a significant amount” of resources of the court and all parties.
Further, individual workers would be unlikely to seek to recover damages through litigation because of the high costs associated with pursuing an individual claim.
She also said settlement is appropriate at this time because proceeding would expose all parties to “substantial risk and a strong likelihood of protracted and contentious litigation.”
Sammartino set a final approval hearing for Thursday, Aug. 22 and appointed Phoenix Class Action Administration Solutions as the class administrator, giving it 30 days to disseminate notice to all class members of the proposed settlement.