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IKEA agrees to pay $7.5M to resolve break policy lawsuit

By Wayne D. Garris Jr., J.D.

U.S. District Court Judge Cormac J. Carney has granted preliminary approval of the settlement for over 6,000 California-based IKEA employees.

On June 17, a federal district court in California granted preliminary approval of a settlement to resolve class claims brought by 6,400 hourly IKEA employees alleging that the company’s written break policy prohibited employees from leaving the employer’s premises during their breaks. The class brought multiple claims under the California Labor Code.

Terms. Under the terms of the agreement, IKEA will pay $7.5 million into a common settlement fund—25 percent of which will go to the plaintiffs’ attorneys and 75 percent to the class. The employer will also separately pay all employer-side payroll taxes due as a result of the settlement.

Rule 23 requirements. The proposed settlement class includes all current and former hourly, non-exempt IKEA employees in California at any time during the class period. The court found that the class of 6,400 met the numerosity requirement. Further, because the lawsuit arose from a written IKEA policy to which all employees were subjected, the proposed settlement class also met the commonality, typicality, and adequacy requirements.

Fairness. The court also found the proposed settlement met a preliminary fairness requirement. The average class member will receive approximately $820, with the highest payment to a class member being $2,500. The 25-percent attorneys’ fee award was in line with the Ninth Circuit’s benchmark for a reasonable fee award. Lastly, the named plaintiff’s request for a $15,000 incentive award was higher than typically awarded; however. the court granted preliminary approval of the amount in light of the amount of time the plaintiff dedicated to the case and the significant amount of the award.

PAGA. Lastly, the court approved the employer’s payment to resolve the employees’ California Private Attorneys General Act claim. IKEA will pay $37,500 to the California Labor and Workforce Development Agency and $12,500 to the class.

The case is Cahilig v. IKEA U.S. Retail, LLC, No. CV 19-01182-CJC (ASx).