Barnett v. QW Insurance: $450K Wage Theft Class Action Settlement

Case Background

Vernon Barnett filed a class action and representative lawsuit against QW Insurance Solutions, LLC, LendingTree, Inc., and LendingTree, LLC in the Superior Court of California, County of San Diego on May 25, 2022. The case number was 37-2022-00019924-CU-OE-CTL. Barnett brought claims both individually and on behalf of other current and former employees under the Private Attorneys General Act (PAGA). The lawsuit alleged multiple violations of California labor laws affecting non-exempt workers employed by the Defendants in their insurance business operations.

Cause

Barnett worked as a non-exempt employee for the Defendants in San Diego County from June 22, 2020, until his involuntary termination on April 8, 2022. The lawsuit arose from alleged systematic wage and hour violations that affected Barnett and other similarly situated employees throughout their employment. The complaint stated that the Defendants engaged in unlawful employment practices that violated numerous provisions of the California Labor Code and Industrial Welfare Commission Wage Orders.

Injury

The Plaintiff and class members suffered financial harm through unpaid wages, missed overtime compensation, and denied meal and rest breaks. Workers also incurred unreimbursed business expenses from working at home, including internet costs and home office expenses. The Defendants allegedly issued inaccurate wage statements that failed to properly record overtime hours worked. Additionally, the complaint alleged violations of the California Investigative Consumer Reporting Agencies Act related to background check procedures during the hiring process.

Damages Sought

The Plaintiffs sought recovery of unpaid minimum wages, overtime compensation, meal and rest break premiums, unreimbursed business expenses, waiting time penalties, and statutory penalties under PAGA. The complaint also requested liquidated damages, interest, attorneys' fees, and costs. Individual claims under the California Investigative Consumer Reporting Agencies Act sought statutory damages of at least $10,000 per violation.

Key Arguments and Proceedings

Legal Representation

Plaintiff: Vernon Barnett, individually and as an aggrieved employee on behalf of the State of California and other aggrieved employees

·       Counsel for Plaintiff: Thomas D. Rutledge

Defendants: QW Insurance Solutions, LLC | LendingTree, Inc. | LendingTree, LLC

·       Counsel for Defendants: David A. Wimmer | Meghan E. O'Kane

Claims

Failure to Pay Minimum and Regular Wages

The complaint alleged that the Defendants paid workers at rates below what state and local law required. This violation formed the basis for derivative claims including waiting time penalties and inaccurate wage statements.

Failure to Pay Overtime Compensation

Barnett alleged that the Defendants failed to include earned commissions and bonuses in calculating the regular rate of pay for overtime purposes. The complaint detailed multiple pay periods where Barnett received commission payments but the overtime rate remained at the base hourly rate of $19.25 or $19.44, rather than incorporating the additional earnings as California law required.

Meal and Rest Break Violations

The lawsuit claimed that work demands and customer requirements prevented employees from taking compliant off-duty meal breaks. For rest breaks, the complaint stated that employees were required to keep their phones on and remain available for calls or emails even during break periods, which violated California's requirement for duty-free rest breaks.

Failure to Reimburse Business Expenses

The Defendants required employees to work from home but allegedly failed to reimburse them for internet connections, home office space, and work-related supplies and equipment.

Inaccurate Wage Statements

Multiple wage statements issued to Barnett showed overtime pay amounts but recorded zero overtime hours worked, making the statements confusing and non-compliant with Labor Code Section 226.

Background Check Violations

Barnett brought individual claims under the California Investigative Consumer Reporting Agencies Act, alleging that the disclosure forms used by the Defendants failed to comply with statutory requirements and that the Defendants did not provide proper certifications to the consumer reporting agency.

Defense

QW Insurance Solutions, LLC filed an answer denying all allegations and asserting 35 affirmative defenses. The defense argued that the complaint failed to state facts sufficient to constitute any cause of action. The Defendants contended that they had no obligation to ensure employees actually took meal and rest periods, only to authorize and permit them. They asserted that any alleged violations were not willful, which would bar waiting time penalties. The defense challenged class certification on grounds of lack of commonality, numerosity, and typicality among putative class members. They also argued that PAGA penalties would be unconstitutional and that the Plaintiff failed to properly comply with administrative notification requirements. The Defendants maintained they acted in good faith reliance on administrative regulations and interpretations.

Settlement

The parties reached a settlement after intensive negotiations. On March 22, 2024, Judge Katherine Bacal of the San Diego Superior Court granted preliminary approval of the class action and PAGA settlement at a hearing in Department C-69.

The defendants agreed to pay $450,000 to resolve all claims.

The court found that the settlement amount appeared fair and reasonable when balanced against the probable outcome of further litigation regarding class certification, liability, damages, and potential appeals. The court noted that significant investigation, research, and litigation had been conducted, allowing both parties to reasonably evaluate their positions. The settlement resulted from intensive, serious, and non-collusive negotiations between the parties.

The settlement established two classes for settlement purposes only. The Fair Credit Reporting Act Class included all persons who were applicants or employees of QW Insurance Solutions, LLC or LendingTree, LLC anywhere in the United States who completed background check disclosures from May 25, 2020, through the preliminary approval date. The Wage and Hour Class covered all persons employed by either defendant who worked in California as non-exempt employees from May 25, 2018, through the preliminary approval date. The Aggrieved Employees for PAGA purposes included California non-exempt workers from May 25, 2021, through the order date.

The court appointed Vernon Barnett as Class Representative and the Law Office of Thomas D. Rutledge as Class Counsel and Counsel for the Aggrieved Employees. Phoenix Settlement Administrators was appointed to administer the settlement. The court approved notice procedures and set deadlines for class members to request exclusion or submit objections.

The settlement provided that defendants could withdraw if valid exclusion requests exceeded ten percent of either class. Non-participating class members who were Aggrieved Employees remained bound by the PAGA release and eligible for individual PAGA payments. The court scheduled a final approval hearing to determine whether to grant final approval of the settlement as fair, reasonable, and adequate.

Court documents are available upon request at jurimatic@exlitem.com