Lithia Motors Inc. settled lawsuits filed against DCH Auto Group Inc. over service technicians' wage-and-hour claims for $3.6 million. Including previously settled claims, the total payout was $4 million.
The Los Angeles Superior Court on May 18 said that the settlement will be divided among more than 400 mechanics from 19 California dealerships.
The settlement resolved residual lawsuits filed against DCH, some as far back as 2012, before Lithia acquired the group in 2014, Lithia attorneys said.
The litigation alleged "wage theft," saying the automotive group violated California Labor Code standards, including refusing to pay all wages earned and failing to pay the minimum wage.
DCH also was accused of falsifying time records to reflect breaks and meals the workers were not granted. According to court documents filed by the workers' attorneys, "Defendants did not want to pay premium wages [for missed meal and rest breaks] to their auto dealership employees. But instead of simply permitting their employees to take meal and rest breaks, Defendants achieved their goal by falsifying time records to make it appear that employees were getting breaks, even though Defendants knew they were not."
While the settlement concludes litigation for service workers, lawsuits are still outstanding on behalf of other employees, including service writers, service cashiers, salespeople and clerical workers.
The lawsuits that have been resolved originated after a 2013 case that altered dealership pay plans in the state. The California Court of Appeal ruled in favor of technicians in a class action against Downtown L.A. Motors on the grounds of unresolved payment issues, unleashing a domino effect of litigation against dealerships.
To ward off lawsuits and still pay technicians wages equivalent to what they had been paying, dealership groups statewide reworked their pay plans, instituting an hourly wage with an added flat-rate component smaller than traditional flat-rate plans.
Before the acquisition, DCH operated exclusively on a flat-rate system — just as the majority of dealerships did throughout the state — in which service technicians were paid only for hours of labor and nothing for inactive periods.
The acquisition was one of the reasons for the delays in reaching a settlement.
Lithia litigators also said the case was prolonged because multiple actions against the dealership group were consolidated. Lawyers for the staffers said that the dealership group at one point sought to coerce employees into signing settlement agreements, which offered pennies on the dollar, over the claims without the benefit of counsel and in violation of the law.