UIHC settles $15 million lawsuit with employees

Employees claimed they did not receive overtime pay on time in a class action lawsuit filed in 2019, which was settled for $15 million


Grace Kreber

University of Iowa Hospitals and Clinics is seen on April 2, 2022.

Emily Nyberg and Hannah Pinski

The state Board of regents has agreed to pay $15 million to settle a class action lawsuit with $11 million going to former and current employees from University of Iowa Hospitals and Clinics. 

In 2019, UIHC employees alleged that managers didn’t pay overtime, bonuses, or accrued leave as fast as state and federal laws require. 

Overtime and additional payments are mandated by the Fair Labor Standards Act. In Iowa, employees must be paid within 12 days of the end of the pay period, the workers argued that two of the UIHC’s payment schedules violated that law. 

While managers are supposed to pay support services to employees on the first of each month, the workers alleged they waited two months to receive paid overtime.

Additionally, health care employees received payments every six weeks. Managers allegedly didn’t give overtime payments until the following pay cycle, meaning a worker could wait up to 11 weeks for their compensation. 

UIHC lawyers argued employees were aware of the delays in additional payments and the workers union had agreed to delayed overtime payments. U.S. District Court Judge Stephanie Rose ruled union officials had objected to the overtime payment schedule in 2018. 

A significant factor in her ruling was employee complaints about the payment schedule beginning in 2018. She said because of this, UIHC was aware of the dissatisfaction but did not take action. 

The lawsuit was led by six employees, who will each receive $10,000 in incentive payments. Additionally, 22.5 percent of the gross settlement will be awarded to the class counsel to cover fees and expenses in litigating the lawsuit. 

The remaining $11.6 million of the settlement will be shared among 11,000 workers as follows, according to documents filed on Friday: 

  • $100 will be allotted to each member of the Overtime Class who worked over 40 hours in a week and was eligible to receive overtime pay under the FLSA who opts-in to the settlement.
  • $50 will be allotted to each member of the Termination Class who has not opted out of this class
  • The remaining funds (approximately $10.9 million) will be distributed to members of the Wages Class on a pro-rata basis correlated to the amounts of adjustments and overtime pay that were paid late to them and how much each individual could have recovered in liquidated damages pursuant to Iowa Code 91A.3

The state regents decided not to appeal the judge’s ruling. The regents’ lawyers had arguments prepared in case the lawsuit went to the U.S. Court of Appeals or the Iowa Supreme Court. 

The UIHC employee’s lawyer wrote their side could have won $64 million, but they worried if the higher court overturned a significant amount of the claim they would be left with $11 million, so they settled for $15 million.