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Kaiser Permanente willing to pay $11.5M to settle race-based pay, promotion class action

By Pamela Wolf, J.D.

After allotted allocations, about $7.5M would remain for distribution to about 2,225 African-American current and former employees.

Under a proposed settlement, Kaiser Foundation Health Plan, Inc., Kaiser Foundation Hospitals, The Permanente Medical Group, Inc., and the Southern California Permanente Medical Group (collectively, Kaiser Permanente) would pay $11,504,759 to settle race-based pay and promotion class claims under Title VII, Section 1981, the California Employment and Housing Act, and other California laws.

The settlement would cover about 2,225 African-American employees in two job families (Administrative Support and Consulting Services) at each of the Kaiser Permanente entities. The settlement agreement and the class action were both filed on April 22, 2021. The named plaintiffs are African Americans who are either current, or recently departed, long-term employees.

The agreement between the parties was reached after more than two years of negotiations.

Workplace practices. In addition to providing the monetary relief, Kaiser Permanente would institute comprehensive workplace programs to ensure that African-American employees’ compensation and opportunities for advancement are fair and equitable. Among other things, Kaiser Permanente would:

  • Retain an independent consultant, agreed upon by all parties, to develop and manage a thorough job analysis review to be completed within one year, which will be used to create additional equitable opportunities for African-American employees, including career development guides and developmental resource guides for roles within the job families.
  • Conduct an annual pay analysis for employees in the defined job classifications performed by an independent consultant for three years, in which base pay, incentive pay, and promotions will be reviewed with an eye toward equity and swift remediation of any existing disparities.
  • With the guidance of the findings and input and oversight by plaintiffs’ counsel, make several enduring structural changes, including investing in more leadership development initiatives for historically underrepresented groups, and additional training for employees and management on racial bias and equity, including Upstander Intervention and racial equity trainings, and debiasing programs for those engaged in enforcing company policy on equal employment opportunity.
  • Appoint an internal compliance officer to oversee the implementation of these practices, continued compliance with the settlement agreement, and to meet with plaintiffs’ counsel twice each year for a three-year compliance period to report on implementation of the terms of the settlement.

Settlement fund allocations. From the $11,504,759 settlement fund, $86,285.70 would go to the California Labor & Workforce Development Agency (under the Private Attorneys General Act). Up to $45,000 is earmarked for fees and costs of the Settlement Administrator, including but not limited to the cost of notice. Service awards of up to $75,000 would go to one named plaintiff, and $60,000 each would go to three other named plaintiffs. Attorneys’ fees of up to $3,451,427.70 (30 percent) would go to class counsel. Another $50,000 would be set aside as a contingency fund.

After all of these allocations are taken into account, about $7,552,045.60 would remain for individual settlement awards to class members.

Hearing. The plaintiffs expect the court to set a hearing date for preliminary settlement approval, which if approved will result in the third-party administrator issuing notice to the 2,225 class members. If the court later grants final settlement approval, the third-party administrator will allocate settlement amounts based on an objective formula to each qualifying class member.

Statements about the settlement. “This settlement is a tribute to the fortitude and resilience the Plaintiffs exercised throughout this lengthy, hard process where, for the good of the class, they told their truths and demanded change,” said Felicia Medina (Medina Orthwein LLP), counsel for the plaintiffs. “The settlement reflects Kaiser Permanente’s willingness to listen to its employees, and should serve as a model for other corporations that truly desire to reckon with this country’s racially unjust past and ongoing systemic issues.”

“As a mission-driven organization, we hold ourselves accountable for living our values by strengthening our inclusive culture and expanding our work to address any disparities and their root causes. That is why we invited Plaintiffs to participate in a negotiation process that led to this settlement,” said Christian Meisner, Senior Vice President and Chief Human Resources Officer, speaking on behalf of the Kaiser Defendants. “Across Kaiser Permanente we are increasing our efforts to advocate for fair and just treatment, opportunity, and advancement as well as embedding accountability for equity at all levels of the organization. We will continue to promote positive change, equity, and total health for all—inside our organization and within our communities.”

The lawsuit, Stewart v. Kaiser Foundation Health Plan, was filed San Francisco County Superior Court in San Francisco, California; the case is No. CGC-21-590966.