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McDonald’s Reaches $26 Million in Wage and Hour Class Action (1)

Nov. 25, 2019, 3:44 PMUpdated: Nov. 25, 2019, 6:00 PM

McDonald’s Corp. agreed to pay $26 million to settle a class action filed by more than 38,000 cooks and cashiers at corporate-owned restaurants in California, after workers threatened to protest if there was no resolution to the long-running litigation and extended negotiations.

The company also agreed, as part of the preliminary settlement agreement, to change its training and overtime system to prevent such alleged wage theft in the future. Advocates for the Fight for $15 movement called the settlement the highest ever against McDonald’s for alleged wage violations in the U.S.

The settlement stems from a 2013 class action that accused the company of violating overtime laws through a system that kept track of time based on the day a worker’s shift started, not when the work was actually performed. It also accused the restaurants of not providing rest breaks and requiring workers to clean their uniforms without paying them or reimbursing them for those expenses.

In a statement, McDonald’s said it will “continuously roll out additional training and resources across corporate-owned restaurants to promote continued compliance with all wage and hour laws.

“We take our responsibility as an employer seriously and are deeply committed to the fair treatment of all of our employees,” McDonald’s said. “While we continue to believe our employment practices comply with the California Labor Code, we have decided to resolve this lawsuit filed back in early 2013.”

The company also agreed to create a mechanism to pay a one-hour wage premium if a worker isn’t given a full or timely break; to permit crew members to leave the restaurant during breaks; to maintain detailed time records; and to provide uniforms to crew members.

McDonald’s also will be required to provide training to managers and crew members about the changes agreed to in the settlement.

The fast-food giant has faced litigation alleging wage and hour violations for years in state and federal courts. These are in addition to an ongoing U.S. Labor Department investigation that digs into the fast-food chain’s liability for its franchisees. Class actions against the fast-food chain have been filed in New York, Ohio, and Michigan that allege employers shaved off work hours, denied meal and rest breaks, and failed to pay overtime at corporate and franchise restaurants.

The settlement in California comes days after McDonald’s workers in New Zealand announced they’d reached an agreement with the company and the country’s Ministry of Business, Innovation and Employment to return $29 million in unpaid holiday pay to tens of thousands of workers, according to the Fight for $15 campaign.

The settlement in California should signal to companies to be aware that violations against individual workers add up and it can be costly for those who don’t comply, said Michael Rubin, with Altshuler Berzon, who represents the workers in the class action.

“This is a compromise settlement, it’s indicative of the need to aggressively police wage theft for McDonald’s and other companies that take advantage of low-wage workers,” Rubin told Bloomberg Law.

Cohen, Milstein, Sellers & Toll and Matern Law Group also represent the workers. Jones Day represents McDonald’s.

The case is Sanchez v. McDonald’s Restaurants of Calif., Cal. Super. Ct., No. BC499888, Unopposed Motion for Settlement 11/22/19.

To contact the reporter on this story: Erin Mulvaney in Washington at emulvaney@bloomberglaw.com

To contact the editor responsible for this story: John Lauinger at jlauinger@bloomberglaw.com