On Tuesday, Judge Yvonne Gonzalez Rogers certified a class of health care employees who alleged that their employer, RCM Technologies (USA), Inc., a health care staffing company, violated California law for failing to pay overtime. The court’s order noted that while the defendant did not oppose the plaintiff’s motion, it did request a modification to the proposed class notice regarding possible negative tax implications for class members should the plaintiffs prevail.
The plaintiff, a travel nurse employed by the defendant, argued that RCM’s policy of “excluding the value of weekly per diem payments from the regular rate used to calculate overtime, notwithstanding that the payments are based on hours worked rather than expenses incurred,” violated unpaid overtime, unlawful business practice and waiting time penalty provisions of California law. The plaintiff sought to certify a class of non-exempt hourly California RCM employees, who, “within four years prior to the filing of this lawsuit through the date of class certification, worked one or more work weeks in which they were paid overtime and received a weekly per diem or stipend.”
The court held that the plaintiff satisfied the four threshold requirements of Federal Rule of Civil Procedure 23(a). It explained that “liability on each asserted claim hinges upon the common questions of whether (the) defendant adopted a policy of excluding the per diem payments from the regular rate when calculating overtime, and whether this policy violates California law.” The court found that the predominance and superiority requirements were also satisfied, writing that “ ‘this case presents the classic case for treatment as a class action.’ ”
The defendant took issue with the proposed class notice to the extent that it “fail(ed) to inform class members about tax liabilities that could arise if the class prevails in this litigation” and proposed a clause for insertion. The plaintiff argued that the proposed clause would give claimants the misimpression that the tax implications warned of could be avoided by opting out of the class.
In weighing the question, Judge Gonzalez Rogers noted “the importance of striking an appropriate balance between ensuring that putative class members have sufficient information to decide whether to participate in the litigation, and at the same time, not dissuading them from making either choice.”
The court expressed concern that the defendant’s proposed language, which included references to “harmful” and “adverse” tax consequences, “raise(d) a serious risk of dissuading those with meritorious claims from joining the action.” Thus, Judge Gonzalez Rogers denied the defendant’s specific request but agreed to the insertion of a more benign clause to the same effect, reasoning that “(i)t is not unusual for language related to taxes to be included in class notices.”
The plaintiff is represented by Hayes Pawlenko and RCM by Littler Mendelson.
