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IBM, Universal Music Group Workers Say Employers Cheated Them Out of Overtime Pay

Jul 27, 2007 | Parker Waichman LLP Unpaid overtime is at the heart of class action law suites filed in California against two high-tech giants this week.  Sales specialists at IBM and information technology (IT) employees at Universal Music Group claim that the companies failed to pay their workers overtime as required by law.  The IBM case alone could cost the company as much as $5 million.

Under the Fair Labor Standards Act (FLSA) employers must pay overtime to employees who work more than 40 hours per week. The rules do allow for some management positions to be classified as “exempt”, making them ineligible for overtime pay.  Both the IBM and Universal employees claim that the companies illegally classified them as exempt as a way to avoid paying overtime.  Both groups maintain that they are not management.

The IBM lawsuit alleges that the company broke California law by forcing its sales specialist to work more than 8 hours per day, and that IBM also denied its workers mandatory breaks for rest and meals.  The lawsuit alleges that the IBM sales specialists had no management responsibility, and that the classification was a way for their employer to avoid paying overtime.  

This past November, IBM settled a similar lawsuit with 32,000 IT workers.  While IBM ended up paying those employees $65 million in back overtime, it refused to admit that it had acted improperly.  Rather, IBM claimed that it was cheaper to settle the claims than fight the lawsuit.

The Universal Music IT workers also claim that their employer has classified them as exempt to avoid paying overtime.  Both California and Federal law require that many types of IT workers be paid overtime, even if the employees are paid on a salary basis.  In California, companies do not have to pay overtime to technology employees if they make more than $41 an hour and engage in advanced work that is creative or intellectual in nature.  The Universal Music workers, who are employed in computer network support, say that their jobs do not meet both criteria.  They are seeking back wages from Universal Music, as well as civil penalties under California’s Private Attorney General Act.  Those penalties alone could reach hundreds of thousands of dollars.  

Overtime has been a contentious issue in the high-tech industry.  While workers are usually well-paid, they must put in long hours to meet project deadlines. Working 16 hour days on a regular basis is not unusual in this industry.  Many advocates for technology workers claim that the issue is less about money than it is about the employees' quality of life.   The Universal Music lawsuit is only the latest to bring attention to this controversy.  Recently, lawsuits were filed against Sun Microsystems and Electric Arts, a maker of video games, by IT workers who said they had been cheated out of overtime.  

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