Groupon Agrees to $2.5M Unpaid Overtime Settlement

In Chicago last summer marketplace discount giant Groupon agreed to a $2.5 million unpaid overtime settlement for its sales reps who claim they were denied overtime pay and were misclassified as exempt employees.

Groupon is a global e-commerce company that first launched in the Chicago market in 2008. Groupon connects local merchants with their subscribers by by offering activities, travel, goods and services at a discount. Groupon has millions of subscribers in over 28 countries.

Groupon’s Unpaid Overtime Settlement

The unpaid overtime settlement was granted preliminary approval by U.S. District Judge Edmond E. Chang in a joint motion for approval for the settlement and certification of the Class.

The proposed Class includes over 2,000 Groupon account representatives and executives who claim that Groupon violated both the Fair Labor Standards Act and Illinois Minimum Wage Law. The Class includes those who worked as account representatives and account executives from from Aug. 24, 2011, through June 30, 2015.

The gross settlement was for $2.5 million, but $1.57 million will be distributed to Class Members. The remainder will be used to pay attorneys and other service and administrative fees.

According to the agreement, each Class Member in this unpaid overtime settlement would receive compensation calculated based on their work hours. The average payout would be $777. Both of the lead plaintiffs, Sean McDonnell and Kenisha Webb, will each receive an incentive award of $12,500.

Judge Chang noted that because of the prolonged discovery process involving nearly 200,000 documents and numerous depositions, the payout amounts, including the amounts for the lead plaintiffs, are fair. 

The Fair Labor Standards Act

The Fair Labor Standards Act (FLSA) was established in 1938 as a way to ensure the proper treatment of employees in the U.S. The FLSA set into place the 40-hour work week, created a national minimum wage, ensured overtime pay for non-exempt employees and governed youth and child employment.

Under the FLSA, non-exempt employees “must receive overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rates of pay.”

The FLSA does not limit the number of hours a person age 16 or older can work, nor does it require payment at an overtime rate for hours worked on weekends or holidays.

The Groupon employees in this unpaid overtime settlement claim that even though they were classified as “exempt” employees, they should have been classified as non-exempt. As an exempt employee, overtime and work week limits do not apply.

The Class Members of the Groupon overtime settlement feel as if by nature of what they were required to do as sales representatives, they should have been classified as hourly employees — and therefore qualified to earn overtime.

This is not the first time Groupon has been sued for unpaid overtime. In 2011 a group of employees sued Groupon for unpaid overtime but were denied class certification in 2014. Four plaintiffs went on with individual cases and eventually each received an unpaid overtime settlement.

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