85 Richmond Firefighters Win $464,521 Settlement After Court Rejects Federal OT Guidance

Richmond firefighters work 48-hour shifts on a schedule that runs through holidays without a day off. In place of holiday leave, the City of Richmond paid them cash, known as holiday-in-lieu (HIL) pay, in two lump-sum installments each year, covering 13 recognized holidays. The City calculated overtime without counting that cash as part of the employees' regular rate of pay. Under the Fair Labor Standards Act, overtime must be calculated on a worker's full regular rate, and plaintiffs argued the City's method shorted their paychecks every pay period they worked overtime.

In July 2020, David E. Mastagni of Mastagni Holstedt filed a collective action on behalf of Luis Padilla, president of Richmond Firefighters Association IAFF Local 188, and dozens of co-workers. The City moved to dismiss, leaning on a January 2020 Department of Labor amendment that included a 'firefighter example' expressly permitting employers to exclude HIL payments from regular-rate calculations under FLSA section 207(e)(2).

On December 23, 2020, U.S. District Judge Phyllis J. Hamilton denied the motion to dismiss. The court found the DOL regulation lacked 'power to persuade' because it contradicted the statutory requirement that excluded payments be 'made for occasional periods when no work is performed.' Richmond firefighters received HIL cash specifically because they worked through holidays, which placed those payments outside the scope of the exemption. The published opinion at 509 F.Supp.3d 1168 was, at the time, the only federal decision in the country to invalidate that DOL regulation.

With the legal theory validated, the parties proceeded to resolve the case. On April 28, 2022, the court approved a collective-action settlement of $464,520.51, distributed among 85 Richmond firefighters as backpay for the overtime that had been undercalculated over the covered period.

The published ruling carries weight beyond this case. California federal district courts had already rejected HIL exclusions in prior decisions, and Judge Hamilton's opinion added formal precedent in the Northern District that employers in the jurisdiction cannot rely on the DOL's 'firefighter example' to shave overtime costs for workers on holiday-pay arrangements.