Our Point of View

April 11, 2007

Kaiser Permanente Receives Approval for Overtime Settlement

Oakland, Calif., - Kaiser Permanente recently received preliminary approval for a settlement in a class action lawsuit regarding the way in which the company calculates overtime pay for a class of approximately 145,000 current and former hourly employees in California.

We have let our employees know that we regret the impact this calculation error may have had on them. Our employees give their all for Kaiser Permanente members, and we know they put their trust in us to be sure they are compensated accurately.

While many of the employees included in the class were paid correctly, some may have been underpaid.

Here's what Kaiser Permanente is doing to address the issue:

• As part of the settlement, we will be paying current and former (as defined by the settlement) California-based hourly employees an average, one-time pay-out of approximately $50 per employee covering a five-year period. These payments will occur later this year after final approval of the settlement and apply to employees who are represented by unions and those who are not. These payments will vary depending on each employee’s circumstances – so some will get more than the average, and some will get less.
• We are implementing corrections to our HR and Payroll systems and processes in California as well as in the rest of our regions. This will be a complex set of system adjustments. We will know about the timing of our systems work in the next few months.
• We also are working with union leaders and others to determine a fair interim payment to impacted employees to cover the time between the court’s approval of the settlement and when the system is fixed.
• The miscalculation has been unintentional on Kaiser Permanente's part, caused by certain systems limitations, multiple and complex labor contract provisions covering overtime, and historic pay practices. We regret that any of our employees may have been underpaid even by small amounts, and we are making every effort to rectify the situation and correct it for the future.

Former employees who are eligible for the one-time payout will receive a letter in the mail from Kaiser Permanente in late April followed by a settlement claim form from a third-party administrator within a couple of months.