Disney To Pay $233 Million To Settle Class Action Over Underpaid Workers

After a lengthy five-year legal battle, Disney has agreed to settle a class-action lawsuit by paying $233 million to over 50,000 Disneyland workers. 

The lawsuit alleged that Disney failed to comply with minimum wage requirements, stemming from a 2018 local California law, according to The Hollywood Reporter. 

The lawsuit was triggered by Anaheim voters’ approval of Measure L in 2018, which mandated that businesses receiving tax rebates increase their minimum wage to $15 per hour, with annual raises tied to inflation. 

In response to the measure, Disney attempted to avoid the mandate by canceling a $267 million subsidy for a luxury hotel. 

Additionally, Disney pushed to end a long-standing ban on entertainment taxes in the city.

The case began when workers filed a class-action lawsuit in Orange County Superior Court, pointing to a series of tax rebate deals with Anaheim from 1996. These agreements helped finance the construction of California Adventure and a parking garage, with over $200 million in tax rebates granted to Disney. 

The workers who filed the case reported earning between $12 and $14.25 per hour.

Initially, Disney argued it wasn’t subject to Measure L, claiming that the term “rebate” in the ordinance only applied to the return of taxes paid by local residents. A court sided with Disney, ruling that the company didn’t benefit from a city subsidy.

However, in 2023, the California 4th District Court of Appeal reversed that decision. The court found that the 1996 agreements did indeed qualify as subsidies since they gave Disney the “right to receive a return of taxes.” 

The California Supreme Court declined to hear the case, solidifying the lower court’s ruling.

Both Disney and the workers’ attorneys filed a motion on Friday seeking court approval for the $233 million settlement, which will be considered by a judge next month.

Disney has since clarified that all Disneyland workers currently earn at least the Measure L requirement of $19.90 per hour, with 95% of employees earning more. A Disneyland spokesperson also expressed relief that the matter was nearing resolution.

In a separate move earlier this year, Disney reached an agreement with Master Services, the largest union representing Disneyland cast members. This agreement raised the minimum wage for workers in attractions, custodial, and merchandise roles to $24 per hour.

A 2018 survey by Occidental College and the Economic Roundtable revealed that many Disneyland employees faced financial hardships, including high rates of homelessness and food insecurity. 

The survey found that nearly 75% of respondents earned too little to cover basic expenses, with 10% reporting recent homelessness. Additionally, more than 85% of union workers earned less than $15 per hour.