-2- Respondent determined a $5,164 deficiency in income tax for petitioners’ 1995 taxable year. The sole issue for our consideration is whether proceeds received by Joni J. Ramey (petitioner) in settlement of an action under the Fair Labor Standards Act of 1938 (FLSA), ch. 676, secs. 1, 16(b), 52 Stat. 1060, current version at 29 U.S.C. secs. 201, 216(b) (1994), are for personal injury or sickness and excludable from her gross income under section 104(a)(2). Background2 In 1993, 267 employees (the class) of PayLess Drugstores, Inc. (PayLess), filed a class action lawsuit under the FLSA in the U.S. District Court for the District of Idaho (the lawsuit). One of these employees was petitioner. The class alleged that, despite managerial-sounding titles and job descriptions, they were, in fact, hourly employees who were required to work overtime without compensation. As relief, the class sought to be paid time-and-a-half for all the hours worked in excess of the statutory limit of 40 hours, liquidated damages in an amount equal to the unpaid overtime compensation, and attorneys’ fees and costs. In January 1995, the class action was settled for $5 million, and the plaintiffs sought judicial approval of the settlement. In a memorandum in support of their motion, 2 The facts were fully stipulated.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
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