One of the largest wage-and-hour settlements in recent memory secured approval earlier this month from a federal judge in Colorado.
District Judge Christine Arguello on July 18 gave final approval to the agreement between a group of more than a dozen au pair agencies and a plaintiff class of about 100,000 childcare workers who claimed the agencies conspired to suppress their wages and kept them in the dark on their ability to negotiate pay. Under the agreement, the defendant agencies will pay $65.5 million to end the nearly five-years-long litigation. Arguello also approved the plaintiffs’ counsel’s request for $22.9 million in attorneys’ fees.
The plaintiffs’ attorneys at Towards Justice and New York-based firm Boies Schiller Flexner announced the proposed settlement Jan. 9. The final agreement is largely unchanged from when the court gave it preliminary approval Jan 23. Having struck the deal, the parties avoided a trial that was scheduled for Feb. 25.
The litigation, Beltran et al. v. InterExchange et al., stemmed from a lawsuit filed in November 2014. Au pairs alleged they received less than the required minimum wage under the Fair Labor Standards Act and U.S. Department of State regulations. According to the complaint, the 15 defendant companies hired the au pairs from overseas on work visas and arranged for host families in the U.S., who provided room and board, to pay them as little as $195.75 a week for up to 45 hours of work, or $4.35 an hour.
The subsequent four years spawned a “massive” discovery effort on both sides, “scores of motions” and two 10th Circuit appeals, according to the settlement motion. Last summer, Arguello had denied each side’s motion for summary judgment, and months-long settlement negotiations ensued.
In addition to the eight-figure payout, the settlement requires the companies to notify au pairs and host families of the former’s right to negotiate their wages.
“This historic settlement delivers justice to young childcare workers from all over the world and brings much-needed reform to the au pair industry,” class counsel and Boies Schiller partner Peter Skinner said in a statement.
The July 18 order, which concludes the “lengthy, labyrinthine history” of the case, also certified the FLSA classes that were conditionally certified in the action.
The settlement means Beltran v. InterExchange won’t be a vehicle to resolve legal questions of joint-employer liability, as well as whether the Labor Department’s au pair wage regulations preempted state and federal labor laws. Theoretically, the State Department could promulgate rules to clarify how its au pair program interacts with those laws.
Under the final agreement, any residual funds that are too small to redistribute directly to class members won’t revert to the defendants but rather be distributed to the International Institute of Education. The IIE is setting up a scholarship fund to help class members complete their educational requirements in the au pair program.
The court also approved the plaintiffs’ request for expenses and for $22.5 million in attorneys’ fees, or a 35% share of the qualified settlement fund. The plaintiff firms declared a total of $3.3 million in expenses, 99.3% of which was declared by Boies Schiller Flexner.
Towards Justice’s Nina DiSalvo, Alex Hood and David Seligman declared for a combined $233,910 in fees. Boies Schiller Flexner declared $11,125,031 in billings, including nearly $1 million by paralegals, summer associates and other non-attorneys who’d done work for the firm on the case. The plaintiffs’ counsel logged a total of more than 15,000 billable hours on the case, according to their May 16 motion.
Beltran v. InterExchange also led to an 11th Circuit decision last month, which involved a coverage dispute between one of the au pair agencies and its insurance company. The appellate panel held that Berkley Assurance Company doesn’t have to indemnify Expert Au Pair for the lawsuit. Berkley argued that agency knew about the grounds for the lawsuit prior to the liability policy’s start date, so the policy’s “prior-knowledge” exclusion applied. A federal court granted Berkley a declaratory judgment, and an 11th Circuit panel affirmed.
— Doug Chartier