Delta Overtime Lawsuit Settled for $3.5 Million

In recent news, Delta Airlines agreed to pay $3.5 million to settle a class action lawsuit including approximately 3,300 former and current Delta employees (Fan v. Delta Air Lines, Inc.). The settlement agreement settles a number of claims made against the airlines including overtime pay violations.

 According to the class action lawsuit, Delta Airlines failed to provide employees with overtime payment as required by California labor law. The employees’ claims were focused around a complicated pay formula that included profit-sharing payments, shift differential pay, non-discretionary bonuses, and the fair market value of employee travel passes.

The Delta overtime lawsuit is a good example of two types of California overtime cases/disputes that have been common recently: 1) claims focused on how hours are counted, and 2) claims focused on how the “regular rate of pay” is determined. The suit also serves as a reminder to employees to check their overtime calculations. Workers should periodically check both elements to ensure they are receiving all the overtime pay they are due. 

Howard Fan, plaintiff, worked customer service for Delta Airlines at the Los Angeles International Airport from September 2010 to August 2018. During his employment with Delta customer service, he regularly paid shift differentials to employees for each hour worked during afternoon and evening shifts. Delta Airlines also provided additional compensation through the company’s incentive program called Shared Rewards. The Shared Rewards program allowed workers to earn cash bonuses if company-wide operations met or exceeded agreed upon goals and metrics in various areas: baggage handling, percentage of scheduled flights that were successfully completed each month, and on-time arrivals. Cash bonuses through Shared Rewards were distributed to employees monthly and were included on wage statements in the pay period during which they were paid. Class members also received compensation from Delta through the profit-sharing plan, and additional compensation in the form of travel pass privileges (Travel Companion Passes for free or reduced-fare travel).

However, shift differentials, incentive program payments, profit-sharing contributions, and the taxable value of any travel passes, were not included when calculating the employees’ regular rate of pay that was used as the basis for overtime pay calculations. According to California law mirroring the federal Fair Labor Standards Act (FLSA), the “regular rate of pay” includes “all remuneration for employment paid to, or on behalf of, and employee.” Employees in the case argued that Delta was violating labor law by failing to include all compensation provided to employees into their regular rate of pay.

If you need to discuss violations of overtime pay requirements or if you need to file an overtime lawsuit, please get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in any one of various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.