Why it matters: Providing a $1.25 million lesson in the importance of correctly classifying employees, the Oakland Raiders settled a lawsuit brought by the team’s cheerleading squad, the Raiderettes. The cheerleaders filed suit in January, alleging the team failed to pay them for all the hours they worked, did not provide overtime, failed to provide meal and rest breaks, did not reimburse them for business expenses, and took unlawful deductions from their wages. The highly publicized suit launched a trend, with similar cases filed against other National Football League (NFL) teams, including the Cincinnati Bengals, the Buffalo Bills, the New York Jets, and the Tampa Bay Buccaneers. After negotiating a new contract with the current Raiderettes in July that reportedly tripled their pay, the team agreed to settle the class action and pay a class of about 90 plaintiffs $1.25 million. Employers other than professional football teams should take note of the size of the settlement and ensure that workers are properly classified to avoid a lawsuit.

Detailed Discussion

A member of the Oakland Raiders’ cheer squad, Lacy T., worked as a Raiderette for the 2013-2014 NFL season. Like all Raiderettes, she signed a written employment contract that she would be paid a flat fee of $125 per home game, or $1,250 per season.

The contract set forth several requirements for the Raiderettes, including attendance at all home games, rehearsals, fittings, photo sessions, meetings, and workouts, with an average of an additional 10 compulsory events (such as charitable appearances) during the season. Raiderettes were also responsible for additional expenses such as travel and false eyelashes and could have their pay docked for tardiness or absence.

According to the complaint, the flat rate paid by the Raiders resulted in less than $5 per hour for game appearances – which didn’t even take into account the time spent rehearsing, performing at charity events, and participating in the annual swimsuit photo shoot.

After some motion wrangling, the parties attended mediation and entered settlement negotiations, reaching a deal totaling $1.25 million. Class members – estimated at 90 current and former Raiderettes – will receive between $2,459.63 and $6,832.30 per season.

The deal requires the team to foot payroll taxes separately from the settlement fund, which does include $400,000 for attorneys’ fees and two $10,000 incentive awards for the named plaintiffs. Also part of the settlement: $10,000 allotted for payment of Private Attorney General Act (PAGA) penalties, 25 percent of which will be distributed to the class, with the remainder paid to the California Labor and Workforce Development Agency.

The $792,000 of the total settlement fund set for the class (approximately 63 percent of the total amount) will be allocated based on factors such as the amount paid by the team to the cheerleaders in a given season, the amount of travel expenses, and the number of seasons worked.

“Class counsel has calculated that for each season in which a class member worked as a Raiderette, the class member will receive full pay for all hours worked at the minimum wage rate of $8 per hour for all hours worked, between $800 and $1,100 for unreimbursed expenses, interest on unpaid wages and unreimbursed expenses calculated at a rate of 10 percent per annum,” according to the parties’ joint motion in support of preliminary approval of the deal.

Given that the total payments to the class members will range from $2,459.63 to $20,633.54, the parties told the court that the settlement provided a “significant amount for part-time employees at minimum wage.” Calling the settlement “fair, adequate and reasonable,” the parties requested that the court preliminarily approve the deal.

To read the joint motion in support of preliminary approval of the settlement in Lacy T. v. The Oakland Raiders, click here.