A class-action lawsuit filed by a former employee against Downtown Streets Inc. for nonpayment of wages was preliminarily settled on June 25 for $170,000, according to court documents filed in San Francisco Superior Court. A final settlement could be decided by the court on Sept. 23.
The nonprofit corporation runs the Downtown Streets Team, which provides street cleaning services in Palo Alto and other Bay Area cities to help uplift homeless and low wage workers to find employment and housing.
Jaclyn Epter, a former employment specialist at the nonprofit, filed the class-action lawsuit in December 2019 on behalf of herself and other employment specialists and case managers. The legal action alleged wage theft or wage abuse for nonpayment of overtime, break and lunch time compensation and late payment of wages after termination or resignation between Oct. 11, 2015, and March 31, 2020. Epter is represented by the law firm Advocates for Worker Rights LLP.
The nonprofit allegedly misclassified its employment specialists and case managers, who support its programs, as salary workers who are "exempt" from the protections of the California Labor Code.
Under the labor code, certain salaried employees such as executives, administrators and professionals aren't protected by laws requiring additional compensation if they work more than 40 hours a week. The lawsuit alleged the employment specialist and case manager "salaried" pay rate was below statutory levels to qualify them as exempt employees. These employees didn't receive overtime pay and lawful rest and meal breaks, and they weren't given accurate, itemized wage statements in accordance with labor laws, the lawsuit claimed.
Epter claimed she was specifically instructed by Downtown Streets leadership to only write down her work as eight hours in a day or 40 hours in a week, regardless of how many hours she worked. Employees were also discouraged from taking meal and rest breaks, the lawsuit alleged.
Under California labor law, employees who aren't taking a meal or rest period are entitled to a full hour of extra pay. An employee who works in excess of eight hours a day or 40 hours per week is entitled to one-and-a-half times their regular rate of pay and two times their pay if working in excess of 12 hours in a day. An employee who works eight hours on the seventh consecutive day is entitled to "double time" pay.
An estimated 72 employees were affected by the pay disparities, according to the settlement agreement.
The allegations claimed millions of dollars in losses, Downtown Streets board member Owen Byrd said by phone on Wednesday. The $170,000 settlement was therefore a good one, he said.
No public agency funds are being used to pay the settlement, including any from Palo Alto, he added. "The settlement money was raised from private donors," he said.
Byrd said some employees had written their hours from 9 a.m. to 5 p.m. on their pay sheets without accounting for clocking in and out for lunch, breaks and overtime.
"Staff didn't catch it. To minimize the potential exposure for the organization, the board voted to settle," he said.
Under the settlement agreement, Downtown Streets denied the allegations. The nonprofit will examine its records for any additional employees who were improperly compensated.