$1M Settlement Agreement to Resolve the Tesla Overtime Lawsuit

by Norman B. Blumenthal on July 10, 2018

blumenthal nordrehaug & bhowmik, california employment law, california employment law attorneys, overtime class action, overtime lawsuit, overtime class action lawsuitThe parties in the Tesla overtime lawsuit have agreed on a $1 million settlement amount. The lawsuit was originally filed by car sales advisers for the company that alleged Tesla failed to provide both required breaks and overtime required by law. The proposed settlement agreement would provide $550,000 of the funds to Class Members with named plaintiffs receiving an additional $30,000 in incentive awards. It would also provide the $37,500 payment in accordance with the California’s Private Attorney General Act.

Plaintiffs’ legal counsel will be able to apply for up to 33% in attorney’s fees plus an additional $20,000 for court costs associated with the case. Leftover funds from the settlement amount once initial payments are distributed would be assigned to Class Members according to how many weeks they worked during the class period designated. None of the settlement amount would revert to the Defendant, Tesla.

There was uncertainty regarding the case’s status due to a U.S. Supreme Court decision that was seen as potentially damaging to the proposed Class’ standing. The pending lawsuit, Epic Systems Corp. v. Lewis, asked the question of whether or not employees are bound by class action waivers that were included in employment agreements with the company and signed by the employee prior or during employment with the company. Tesla made this argument during the case – that the employees were bound by class action waivers signed during their application/employment process with the company. If the United States Supreme Court decision found that the class action waivers included in arbitration agreement portions of employment contracts should be upheld, the Tesla class members would have to initiate their arbitration on an individual basis rather than as a class in order to seek recovery for any claims.

The uncertainty of the outcome of Epic systems Corp. v. Lewis was a significant factor in the parties in the Tesla overtime suit reaching a settlement agreement.

At the end of May 2018, the Supreme Court issued its decision in the Epic systems Corp. v. Lewis case upholding class action waivers in employment agreements. The class of Tesla over and sales advisers agreed to settle with Tesla less than a year after their original complaint was filed in order to avoid the necessity following this Supreme Court ruling of filing individual Tesla overtime lawsuits for each class member.

If you are not compensated for overtime that you are due or if you have questions about how to qualify for a class action member, please get in touch with one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.

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