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Groupon is sued for failure to pay overtime wages

Hundreds of sales representatives at Groupon, owner of the website which offers discounted gift certificates for use at local and national companies, have filed a lawsuit against the company alleging that it filed to pay overtime to its employees.

The suit was filed last month in Illinois North District Court in Chicago, nearly five months after Groupon promised to provide back pay to employees. As of yet, though, the company has not provided any compensation. According to Ranita Dailey, the lead plaintiff in the case, Groupon owes its employees three years of back wages, as well as punitive damages for failing to pay overtime.

Nearly 1,000 U.S.-based sales representatives say they received no overtime pay until March 2011 when Groupon executives were notified about the problem. That was around three years after the company was launched.

Sources said the suit did not explain why the company failed to pay overtime for its first three years of operation, though it is speculated that there may have been a misunderstanding of federal overtime exemptions as they apply to commissioned employees.

Under federal law, employees who work for retail or service establishments are only exempted if they that make over 1 ½ times the minimum wage and receive over half of their monthly income from commissions. Employees who don't meet both these requirements or fall under other exemptions must be paid according to federal and state law, but many employers believe mistakenly that employees receiving both a wage/salary and a commission are exempted from overtime pay requirements. Misclassification of employees is not an uncommon occurrence, as many companies struggle to understand the often complex rules that must be followed to do it properly.

Source: Reuters, "Groupon Sued Over Unpaid Overtime Pay," Stephanie Rabiner, Sep 12, 2011.

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