Disney Settles Wage Lawsuit for $233 Million

An Orange County judge has approved a $233 million wage theft settlement involving more than 51,000 current and former Disneyland employees. This decision, made on Tuesday, September 16, brings an end to a six-year legal dispute concerning employee pay at the Anaheim theme park. The settlement is expected to provide an average of $3,000 to each eligible worker by the summer of 2026.

The class-action lawsuit centered on Disneyland's compliance with Anaheim's "living wage" ordinance, Measure L, which was approved by voters in 2018. This significant settlement marks a key moment for labor rights in the region and is considered one of the largest wage class action settlements in California history.

Settlement Details and Employee Impact

Judge William Claster of the Orange County Superior Court granted final approval for the settlement. This action concludes a long legal battle that began when employees challenged Disney's initial stance on Measure L.

Richard McCracken, the lead attorney representing the employees, stated,

"This is the end of the lawsuit. We believe this is the largest wage class action settlement in California history."

The total settlement amount of $233 million will be distributed in various ways. Approximately $179.6 million is allocated for back pay and retirement contributions directly to the plaintiffs. Additionally, $17.5 million will be paid in penalties to the California Labor and Workforce Development Agency. Attorney fees will account for $35 million, with the remaining funds covering administrative costs of the settlement.

Lawyers representing the class members, including McCracken, Stemerman & Holsberry in Oakland, and Hadsell, Stormer Renick & Dai in Pasadena, are required to submit a final report on the actual amounts paid by June 30, 2026. This timeline ensures all eligible individuals receive their due compensation.

McCracken highlighted the significance of the average payment. He noted that an average of $3,000 per current and former employee is substantial for a class action settlement. "Have you ever heard of a class action settlement like that? It's usually a coupon to buy an ice cream," he remarked, emphasizing the impact of this financial outcome for the workers.

Background of the Wage Dispute

The lawsuit originated from Disney's initial claim that it was exempt from Measure L. This initiative, passed by Anaheim voters in 2018, mandated that businesses in the city's resort district receiving tax subsidies must pay workers a minimum of $15 per hour starting January 1, 2019. The ordinance also stipulated annual wage increases of $1 through 2022.

Several Disney-based unions supported employees in filing the lawsuit in 2019. Initially, a judge in 2021 sided with Disney. However, the unions appealed this decision. In July 2023, a three-judge panel for California’s Fourth Appellate District overturned the lower court’s ruling, disagreeing with Disney's exemption claim.

Disney stated that it had already begun increasing worker wages. In October 2023, the company confirmed it had adjusted the pay for all cast members who were below the Measure L rate to $19.40 per hour. This amount reflected the prevailing rate under the ordinance at that time.

Further demonstrating a commitment to higher wages, Disney reached an agreement with unions in July 2024. This agreement raised the minimum hourly rate to $24 for over 13,000 cast members working in attractions, custodial, and merchandise roles. This new wage exceeds the Measure L requirement of $19.90 per hour by more than $4, and it is $8 higher than California’s state minimum wage of $16.50.

The Roots of Complex Litigation

The legal action, filed on behalf of 51,478 Disneyland workers, had complex origins. Discussions between Disney and Anaheim city officials predated the passage of Measure L. About a month before the vote, Anaheim City Attorney Robert Fabela announced that Disney would not be subject to the ordinance's rules. This was because Disney had canceled tax incentive deals that would have redirected millions of dollars in hotel guest taxes from the city back to the company.

These canceled deals involved a proposed luxury hotel complex. City leaders at the time had aimed to encourage such investments, citing a shortage of luxury accommodations in Anaheim. The city itself was not a defendant in the lawsuit.

The core of the legal challenge questioned Fabela's determination. It specifically scrutinized whether a 1996 agreement, under which Anaheim borrowed $546 million to construct the Mickey & Friends parking garage and implement other resort area improvements, qualified as a "subsidy" as defined by the ballot initiative. The court's final approval of the settlement confirms the legal interpretation that Disney was indeed subject to the ordinance's requirements, despite previous claims of exemption.

A Disney spokesperson provided a statement to the Southern California News Group, indicating the company's perspective:

"[Disney] cares deeply about our cast members and was pleased that this matter is nearing resolution."

This statement reflects the company's position as the long-standing dispute concludes.

Looking Forward

The resolution of this lawsuit marks a significant event for thousands of Disney employees and for labor law in California. It reinforces the importance of local wage ordinances and their impact on large employers within designated districts. The substantial financial settlement underscores the legal and economic implications for companies operating under specific municipal regulations.

The process of distributing funds will now proceed, with the final report due in mid-2026. This period will allow for the accurate calculation and disbursement of payments to all eligible class members, ensuring that the terms of the settlement are fully met.