G4S PLC (LON:GFS) came under pressure on Wednesday after the outsourcer revealed late on Tuesday that it has agreed to pay at least US$100min to settle a class action against the firm in California.
In a statement, the FTSE 250-listed firm said its G4S Secure Solutions (USA) Inc. - previously The Wackenhut Corporation – had agreed the full and final settlement of the class action which related to claims for meal and rest breaks under California law, covering approximately 13,500 employees over the period 2001 to 2010.
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The group added that it will pay between US$100mln and US$130mln, with the precise amount to be finalised during the settlement administration process.
The class action is the third such litigation G4S has faced in recent years in California. In 2015 and 2017, it paid a combined US$7.6mln to settle similar claims in the US state.
The company commented: "G4S has continuously updated its standard operating procedures in California in order to eliminate the circumstances giving rise to these labour claims.” The group has no other significant labour claims in California or elsewhere in the United States.”
It added: "The company estimates that financial settlement will occur in the second half of 2019. The appropriate provision for the cost of the settlement will be recognised as a specific item in the 2018 full year results.”
However, G4S re-iterated its guidance for full-year underlying 2018 pre-tax profit to be in line with the prior year.
In early morning trading on Wednesday, G4S shares were down 4.9% at 197.30p.