June 20, 2023
City Attorney's Office
DATE: June 20, 2023
TO: Mayor Martinez and Members of the City Council
FROM:
Dave Aleshire, City Attorney
Nickie Mastay, Deputy City Manager
Sharrone Taylor, Interim Director of Human Resources
Subject:
Request Authority for the City to Settle Potential FLSA Claims
FINANCIAL IMPACT: City to issue one-time back payments in an amount up to approximately $510,000 to up to 168 current and former
City police officers in FY 23-24. City to change overtime calculation practices on a prospective basis that will
increase overtime compensation by approximately
$52,000 per year.
PREVIOUS COUNCIL
ACTION:
None
STATEMENT OF THE
ISSUE:
Under the Fair Labor Standards Act (FLSA), 29 U.S.C.
201, et seq., employee overtime rates must be calculated to include the value of all compensation paid to the
employee unless expressly excluded by the statute
itself. At issue is whether the FLSA permits the City to exclude the value of the holiday payments officers
receive per their labor agreement from the overtime rate calculation. This settlement resolves employees’
individual claims to recover back pay and liquidated
damages under this theory in exchange for the one-time
payments and prospective changes identified above.
AGENDA
REPORT
June 20, 2023
RECOMMENDED ACTION:
APPROVE a settlement agreement in the amount up to
$510,000; and AUTHORIZE the city manager to execute
the settlement agreement on behalf of the City – City
Attorney’s Office (Dave Aleshire/Nickie Mastay/Sharrone Taylor 510-620-6509).
DISCUSSION:
The City of Richmond must comply with the legal requirements of the Fair Labor Standards Act (FLSA), 29 U.S.C. 201, et seq., which regulates minimum and overtime wages owed to employees. One of the requirements of the FLSA is that overtime compensation must be paid at 1.5 times the “regular rate,” (29 U.S.C. 207(a)), which is an hourly rate calculated to include the value of all compensation earned by an employee for their regular work. Over the past four years, the City has been evaluating FLSA compliance with regard to the overtime rate paid to members of Local 188 and the Richmond Police Officers’ Association (RPOA). After evaluation and negotiation, the City has agreed to modify its pay practices to address possible FLSA concerns with the overtime rate calculated for Local 188 and RPOA. Having already resolved the claims with Local 188, the City and RPOA, on behalf of its members, have now come to a resolution of possible claims RPOA members could have brought against the City under the FLSA regarding the overtime rate calculation. Under the negotiated settlement terms, the City will make prospective changes to its overtime calculation practices for RPOA members and will issue one-time payments to current and former employees in exchange for their release of FLSA and other unpaid overtime claims against the City.
The settlement with RPOA is consistent with the settlement terms the City negotiated with Local 188. The City recommends approval of the settlement agreement.
DOCUMENTS ATTACHED:
Attachment 1 – Settlement Agreement