Former City of Palo Alto claims investigator Casey O'Neill will receive $335,000 from the city in exchange for retiring next June, according to a federal-court settlement agreement approved today.
The lucrative settlement stems from a lawsuit filed in August 2005 relating to overtime O'Neill claimed she was owed for her work in the city attorney's office and for alleged later retaliation against her for filing the suit.
The settlement "resolves all of Plaintiff's claims … without any admission of liability by the City," U.S. District Court Judge James Ware wrote.
The city agreed to settle the case following a "cost-benefit analysis, given that litigation is expensive and the outcome is uncertain," Suzanne Solomon, an attorney representing the city, explained in an e-mail to the Weekly.
Court documents showed that O'Neill had been classified as "exempt" from overtime and accepted that for some time. But O'Neill later claimed she was not exempt and deserved to be paid overtime -- after then-new City Attorney Gary Baum enforced a "rigid work schedule" to prevent her working more than 40 hours a week.
When she filed the suit, O'Neill originally sought to recoup unpaid overtime and ensure she was properly classified. But according to court documents O'Neill alleged she then suffered retaliation for filing the suit and suffered from ongoing discipline, including the elimination of 40 percent of her job in July 2006.
The Weekly outlined the situation in an article published Aug. 15 .
In the settlement, O'Neill will receive $51,000 for unpaid overtime, $51,000 for damages, $190,000 for attorneys' fees and $42,000 in severance pay. The settlement agreement was signed by O'Neill Oct. 16 and by City Manager Frank Benest on Oct. 17. It was made public Thursday following the court's sign-off.
The city also paid Solomon's firm, San Francisco-based Liebert, Cassidy & Whitmore, $75,335 for representing the city, according to Assistant City Attorney Don Larkin.
Neither O'Neill nor her attorneys from the San Francisco-based Long & Levit law firm responded to requests for comment.
O'Neill was hired in July 1993 as a claims investigator for 60 percent of her time and a paralegal for 40 percent. As a paralegal, O'Neill was expected to draft basic legal documents and gather information for litigation, according to a paralegal job description written by the city.
As a claims investigator, O'Neill obtained statements from people involved in claims against the city, negotiated with insurance carriers and organized claim information.
Until 2005, O'Neill said she worked about 55 hours a week, was not paid overtime and received positive performance reviews.
She has said she believed her position was classified as "exempt" from overtime compensation under terms of the U.S. Fair Labor Standards Act.
Non-exempt employees have less professional latitude and are paid overtime.
The city considered O'Neill's position non-exempt in its November 1992 job description, but its 2006 description lists her position as exempt.
Working conditions changed for O'Neill when Baum joined the city in July 2004, court records indicate.
"Mr. Baum imposed upon her a rigid work schedule in an attempt to prevent her from working any more overtime hours," a memo written by O'Neill's attorneys alleges.
O'Neill also began receiving numerous written and verbal warnings about her performance and working hours, the memo states.
On Aug. 10, 2005, O'Neill filed a suit against the city and the warnings and discipline continued, culminating in the elimination of 40 percent of her job, a move the city has said was intended to save money and outsource all litigation.
In response, O'Neill added complaints of retaliation to her suit.
But O'Neill's trials in the City Attorney's office are now over. The agreement states that from Oct. 15 to April 13, O'Neill will work as an industrial waste investigator in the Public Works Department.
She will go on paid leave with no duties from April 14 to May 13. From May 14 to her June 1 retirement, O'Neill will use accumulated vacation, sick and management leaves, the agreement states.
O'Neill agreed to dismiss her claim of retaliation.
The city cannot eliminate the claims investigator position before June 1, 2008, the agreement states.