District Court Approves Backpay Settlement for Richmond Firefighters

DAVID E. MASTAGNI
Partner
Mastagni Holstedt, APC

In a decision that will benefit public safety employees throughout the country, a district court has approved a backpay settlement for firefighters. On April 28, 2022, the court published its ruling on the motion to dismiss in Padilla v. City of Richmond (N.D. Cal. 2020) 509 F.Supp.3d 1168. This is the only decision in the entire country addressing and invalidating a Department of Labor regulation passed specifically to exclude cash in lieu of health insurance from firefighter overtime.

On July 10, 2020, Mastagni Holstedt, APC filed Padilla v. City of Richmond, seeking backpay for the underpayment of overtime. The plaintiff’s complaint asserted the City of Richmond was required to include its holiday-in-lieu payments in the “regular rate of pay” for the purposes of overtime payment. Employers typically argue FLSA section 207(e)(2) excludes holiday-in-lieu payments. However, numerous California federal district courts, including cases handled by Mastagni Holstedt, APC, have determined section (e)(2) does not exclude holiday-in-lieu payments. 

The City filed a motion to dismiss the plaintiff’s complaint based on the Department of Labor’s “firefighter example,” which, at the time, was a new adoption of policy that stated that cash outs of leave banks could be excluded from the regular rate of pay, and added the example that holiday-in-lieu payments made to firefighters working a 48/96 schedule can be excluded.

On December 23, 2020, Judge Hamilton denied the defendant’s motion to dismiss, reasoning that although the language in 207(e)(2) was ambiguous, the firefighter example was only entitled to deference to the extent it had the “power to persuade.” The court found that the firefighter example was not persuasive because it contradicts section 207(e)(2)’s requirement that the payment is “made for occasional periods when no work is performed.” Similarly, the firefighter example conflicts with the regulation, which requires employees be “entitled” to paid leave and “forgo” the use of the leave.

The publication of the case creates mandatory authority for the court and lower courts in its jurisdiction to follow, which means that this case may be referenced to resolve any potential future issues over a city’s failure to include holiday-in-lieu payments in the regular rate of pay for public safety employees.

The inclusion of holiday pay in FLSA overtime is a complex issue that also requires close consideration of the governing labor contracts and pay practices. The Richmond firefighters appreciate the court’s thoroughness in examining these legal issues and the City’s willingness to reach an amicable resolution after the court ruled on the DOL regulation.

 About the Author

David Emilio Mastagni is a partner with the law firm of Mastagni Holstedt, APC. His labor and employment law practice includes administrative hearings, trial court and class actions, and appellate litigation in California and the federal courts of the Ninth Circuit. David is an experienced panel attorney for the Peace Officers Research Association of California (PORAC) Legal Defense Fund and frequently lectures on police reforms, constitutional rights, collective bargaining and police discipline. He provided legal analysis and advice on behalf of law enforcement stakeholders during legislative negotiations and hearings over AB 392, SB 230 and SB 1421