Court Approves Settlement of Overtime Claims Brought by California Battalion Chiefs

The City of Encinitas has agreed to settle an FLSA lawsuit with four current and former battalion chiefs. The chiefs filed suit last year claiming they were wrongly classified as exempt executives ineligible for overtime.

The parties engaged in Early Neutral Evaluation Conferences with a federal magistrate that ultimately led to a settlement whereby the chiefs would receive $145,000 total in damages and $25,000 in attorneys fees. US District Judge Cynthia Bashant approved the settlement Tuesday, concluding first that a bona fide dispute exists and second, that the settlement is fair and reasonable. Quoting from the decision (citations, quotation and certain punctuation marks removed for clarity of reading):

• As a threshold matter, the Court finds that a bona fide dispute exists between the parties over potential liability under the FLSA.
• The parties disagree as to whether Encinitas Battalion Chiefs are FLSA-exempt employees. Plaintiff [Battalion Chief] relies on regulations that clarify the scope of FLSA exemptions [that say the] FLSA [white collar] exemptions do not apply to fire fighters who perform work such as preventing, controlling or extinguishing fires of any type.
• Plaintiff maintains that Battalion Chiefs actively engage in fire-fighter responsibilities and regularly respond to calls for rescuing fire and accident victims; medical calls for services, and regularly carry and use fire suppression and medical equipment.
• Defendants, by contrast, take the position that managerial fire employees like Battalion Chiefs are properly exempt, so long as they meet the requirements of the executive or administrative exemption.
• To qualify for the exemption, the employee must meet a minimum salary and the employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer.
• The parties point to recent Fourth Circuit caselaw and a 2005 Department of Labor Opinion Letter that both determined fire department battalion chiefs were properly classified as exempt.
• Defendant asserts that Encinitas Battalion Chiefs are always responsible for supervising both Captains and the other firefighters and that preliminary discovery confirmed they rarely if ever engage in actual firefighting.
• Based on the foregoing, the Court finds that whether Battalion Chiefs were properly exempt is a legitimate question about the existence of Defendant’s FLSA liability.
• Satisfied that a bona fide dispute exists, the Court next considers the relevant factors in determining whether the Settlement Agreement is fair and reasonable under the FLSA.
• Plaintiff seeks three years of back pay, liquidated damages, and attorneys’ fees.
• Early in this litigation, Defendant retained an economics and accounting expert, [who concluded] the overtime allegedly due to Plaintiffs would [be] $184,515.80 if they prevailed at trial.
• Under the Settlement, Defendant will pay a total of $145,000.00 to Plaintiffs. The Court finds that the total Settlement Amount has a “reasonable relationship” to Plaintiffs’ maximum recovery.

As part of the settlement, the chief will retain the right to make claims under California wage and hour law. Here is a copy of the decision:

Here is a copy of the joint motion to grant the approval that offers additional insight into the issues: