$1.65M Settlement in Wage and Hour Class Action
Table of Contents
Case Background
From August 30, 2022, to October 18, 2023, Jorge Solis Flores had worked as a non-exempt employee for the historic apple juice manufacturer S. Martinelli & Company in Santa Cruz County. During his tenure, Mr. Flores had earned various forms of non-discretionary pay, such as shift differentials and performance bonuses. While he had performed his duties as required, he began to notice discrepancies in how the company calculated his earnings and managed his work schedule. On May 22, 2024, Mr. Flores initiated a class-action lawsuit on behalf of himself and hundreds of other current and former non-exempt employees who had worked for the company since May 2020.
Cause
The legal action arose from what the Plaintiffs described as systemic and illegal employment practices. Specifically, the lawsuit alleged that S. Martinelli & Company had maintained corporate policies that knowingly denied workers their basic rights under California labor laws. The core of the dispute centered on the company’s failure to include non-discretionary bonuses in the "regular rate of pay" used to calculate overtime, meal and rest break premiums, and sick leave.
Injury
The employees suffered ongoing financial harm because they had received lower wages than the law required. By undercalculating overtime and premium pay, the company effectively kept money that rightfully belonged to its staff. Furthermore, workers reported that they had frequently worked through their legally mandated breaks without receiving the required "premium" compensation, leading to increased fatigue and a direct loss of income.
Damages Sought
The lawsuit requested a wide range of financial remedies to make the employees whole. The Plaintiffs sought the recovery of all unpaid overtime and minimum wages, along with premium pay for missed meal and rest periods. They also asked for penalties related to inaccurate wage statements and "waiting time" penalties for those who had left the company but had not received their final pay in full. Finally, the group sought the reimbursement of work-related expenses and the return of all funds the company had "unlawfully acquired" through these unfair business practices.
Key Arguments and Proceedings
The proceedings highlighted a significant gap between the company's payroll practices and the strict requirements of the California Labor Code.
Legal Representation
Plaintiff(s): Jorge Solis Flores and a class of current and former non-exempt California employees.
· Counsel for Plaintiff(s): Edward W. Choi | Justin Lo
Defendant(s): S. Martinelli & Company.
· Counsel for Defendant(s): Bruce E. Copeland | Gabriel A. Mendoza
Key Arguments or Remarks by Counsel
Counsel for the employees argued that the company had acted with deliberate indifference to the rights of its workforce. They pointed out that by using only the "base rate" instead of the "regular rate" for overtime calculations, Martinelli had gained an unfair competitive advantage over businesses that followed the law. They characterized the missed break premiums and inaccurate wage stubs as part of a broader "off-the-clock" work culture that cheated employees out of their earned time.
The defense team for S. Martinelli & Company denied every allegation of wrongdoing. They argued that the company had complied with all applicable laws and that any minor discrepancies were "de minimis"—meaning they were too small or insignificant for the law to bother with. They further claimed that Mr. Flores and the other employees had failed to "mitigate" their damages and that the claims were barred by the statute of limitations.
Claims
The legal team for the workers brought several distinct claims:
Overtime and Regular Rate Violations: They alleged the company had failed to include shift differentials and bonuses when calculating overtime and sick pay.
Meal and Rest Break Failures: The suit claimed employees had often worked more than five hours without a proper meal break or had missed rest periods without receiving premium pay.
Wage Statement and Records Violations: The Plaintiffs maintained that the pay stubs provided by the company did not accurately reflect the hours worked or the correct rates of pay.
Unfair Competition: They argued the company’s labor law violations constituted an unfair business practice under California law.
Defense
Martinelli's defense relied on 15 separate "affirmative defenses". They argued that the lawsuit failed to state enough facts to even move forward and that the employees had consented to their working conditions. The company also claimed that if any overtime was missed, it was because the employees had failed to follow reasonable directions regarding their work schedules.
Settlement
After reviewing the extensive payroll documentation and facing the prospect of a lengthy class-action trial, S. Martinelli & Company chose to resolve the matter. The parties reached a comprehensive settlement totaling $1,650,000. This fund was established to pay out the back wages, penalties, and interest owed to the hundreds of affected employees, ensuring they finally received the full compensation they had earned during their time at the company.
Court documents are available upon request at jurimatic@exlitem.com