Cerner will pay $4.5 million to settle a class action lawsuit that had spent three years in court, after employees charged that it had improperly avoided paying overtime wages.

U.S. District Judge Fernando J. Gaitan, Jr., of the United States District Court for the Western District of Missouri, approved the settlement – which Cerner had first agreed to back in April – earlier this month.

Cerner, which denies any wrongdoing but wants to avoid the expense and disruption of ongoing litigation, had asked that the terms of the settlement agreement be kept under seal.

The case, Speer et al v. Cerner Corporation, was first filed back in 2014, alleging that the company was in violation of the Fair Labor Standards Act – with plaintiffs Fred Speer and Mike McGuirk saying that Cerner used "an unlawful company-wide payroll processing system," according to the lawsuit.

With that system, "defendant allegedly (1) paid its nonexempt employees’ overtime wages a full pay period late; and (2) systematically miscalculated overtime wages by failing to include all remuneration into nonexempt employees’ regular rate of pay," according to the suit.

"Additionally, plaintiff alleges that defendant unlawfully paid plaintiffs and hundreds of other non-exempt employees using the 'fluctuating workweek' method of pay, even though those individuals were not paid a fixed salary because they received varying amounts of pay to perform other job functions such as on-call work."

Cerner asked that the case be dismissed because: "(1) named plaintiffs had not filed written consents to join the litigation at the time of filing the motion; (2) the statute of limitations bars named plaintiffs’ two-year FLSA claims; (3) the classes plaintiffs seek to certify are overbroad and the policies identified by plaintiffs do not violate the FLSA; (4) the Court should apply a heightened standard of proof rather than the typical lenient standard; and (5) plaintiffs have not demonstrated that other potential class members have an interest in proceeding with a collective action."

Cerner employees are classified into three separate groups, according to the case: salaried exempt; hourly non-exempt and salaried non-exempt. As of February 2015, it employed salary nonexempt employees in more than 120 different business units across 18 states nationwide, with hourly non-exempt employees working in more than 200 business units in 32 states.

Speer and McGuirk worked as service center analysts, salary non-exempt roles, at Cerner's Columbia, Missouri-based ITWorks division.

Epic also faced overtime allegations

This is the second recent major labor law case involving the top two electronic health record vendors. On May 21, the U.S. Supreme Court handed down its decision in Epic Systems Corporation v. Lewis, which asked whether the National Labor Relations Act allowed for collective redress in arbitration situations.

This case also centered around overtime pay and employment status classification: A technical writer at Epic has filed the lawsuit, alleging that it violated the Fair Labor Standards Act and Wisconsin state law by failing to compensate him and other similar employees for overtime.

In its 5-4 decision on Epic v. Lewis, the Supreme Court ruled that companies can require labor and wage disputes to be hashed out individually, and not allow workers to collectively bring class action lawsuits against their employers.

Twitter: @MikeMiliardHITN
Email the writer: mike.miliard@himssmedia.com