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$23M proposal would resolve consolidated California wage-hour class litigation against Walgreens

By Pamela Wolf, J.D.

Walgreens Co. will pay $23 million to settle nine wage and hour class lawsuits filed on behalf several categories of the company’s workers in California, according to a proposed settlement filed on Tuesday, March 25. The agreement, if approved by the court, would head off years of litigation and subsequent appeals.

The first of the consolidated actions was filed in May 2011 and removed to federal court the following month by Walgreens. Eight other actions were filed on behalf of various classes of Walgreens workers through California in state and federal courts. They were consolidated in the Central District of California in July 2013. A settlement in principal was reached after two all-day mediation sessions and additional negotiations. After seven months of contentious negotiations, the details of the $23 million settlement were finally worked out, and a motion for preliminary approval of the deal was filed with the court on Tuesday, March 25.

The motion seeks conditional certification under Rule 23 of an estimated 40,000 class members consisting of non-exempt and store manager retail employees, including pharmacists, pharmacy staff, and other staff. The company purportedly had a uniform policy requiring pharmacists and others to execute on-duty meal period agreements as a condition of employment. Walgreens also purportedly required class members to submit to bag checks performed during off-duty times without compensation. Class members were additionally required to travel for company meetings, bank runs, and inter-store transfers, according to the plaintiffs, without reimbursement for mileage or compensation when performed during off-duty times.

Walgreen’s alleged liability in the nine consolidated actions stems from four primary claims rooted in the company’s uniform policies and procedures: (1) off-the-clock claims; (2) meal and rest break claims; (3) overtime claims; and (4) expense reimbursement claims.

The gross settlement amount of $23 million will be reduced by court-approved attorneys’ fees and costs, Service Enhancement Payments to the Class Representatives, claims administration expenses, a payment to the Labor and Workforce Development Agency of $22,500 for the release of Labor Code Private Attorneys General Act claims, and legally required withholding and employer taxes on the settlement payments. The Settlement also establishes a $1.5 million fund to pay claims under California Labor Code section 2802, which will be deducted from the net settlement amount. Walgreens would pay at least 50 percent of the net settlement amount less the Labor Code Sec. 2802 Fund.

$6.4 million is carved out for attorneys’ fees (28 percent of the gross settlement amount), and Walgreens has agreed not to oppose costs of up to $75,000.