Incentive Award (Service Award)

An incentive award, increasingly called a service award, is extra money paid to the class representatives who put their names on a lawsuit. It is meant to compensate them for the work and risk of representing the class, such as gathering documents, sitting for depositions, and staying informed, and to encourage people to come forward. Awards are typically modest compared with the whole settlement, often a few thousand dollars per person, though amounts vary.

Awards must be disclosed in the settlement notice and approved by the judge, who checks that they are reasonable and do not create a conflict between the representatives and the rest of the class. A very large award could tempt a representative to accept a weak deal for everyone else.

Not every court allows them. On September 17, 2020, the U.S. Court of Appeals for the Eleventh Circuit held in Johnson v. NPAS Solutions that incentive awards to class representatives are prohibited, relying on Supreme Court decisions from the 1880s about paying named plaintiffs. The ruling applies in federal courts in Alabama, Florida, and Georgia. The case involved a TCPA settlement in which the named plaintiff sought a $6,000 award. Most other federal appeals courts that have considered the issue continue to allow reasonable service awards.

For ordinary class members, incentive awards are a small deduction from the fund, and you can object if you think one is excessive. See our guides on the rights of a class member and how class action money is divided, and the lead plaintiff entry.