Groupon Agrees to Settle Working Overtime Without Pay Claims

Groupon hasagreed to settle a class action working overtime lawsuit for $2.5 million.

The e-commerce company offers a marketplace where customers can explore the discount deals of local merchants.

Groupon Faces Working Overtime Class Action Lawsuit

A proposed class of Groupon sales representatives who claimed they were misclassified as exempt and thus were denied pay for working overtime has reached a settlement agreement with their employer for $2.5 million.

Under the Fair Labor Standards Act (FLSA) as well as the Illinois Minimum Wage Law, the plaintiffs claim that their time spent working overtime under an exempt employee classification was unfair.

The two named plaintiffs, Sean McDonnell and Kenisha Webb, represent a proposed class of over 2,000 employees and former employees of Groupon. 

In an unopposed motion, they recently asked presiding U.S. District Judge Edmond E. Chang for the preliminary approval of the settlement for the November 2014 lawsuit. 

The motion seeks preliminary approval of the proposed settlement, certification of the proposed class and appointment of plaintiffs McDonnell and Webb as class representatives among other requests. 

One of the attorneys for the plaintiffs noted, “This recovery is an outstanding result for the settlement class given the risks of obtaining a similar recovery if the litigation continues and particularly the possibility that a class would not be certified.”

Of the $2.5 million approved by Judge Chang, $1.57 million will be distributed to class members. The remaining money will be used for service payments for the class representatives, attorneys’ fees and settlement administration fees.

This is not the first time Groupon has had to settle a lawsuit with employees who claimed they were working overtime and denied proper compensation.

In August 2011, also under Judge Chang, four individual plaintiffs brought similar claims against Groupon. The four plaintiffs moved for class certification, but were denied 3 years later in August 2014.

However, plaintiffs Ranita Dailey, John Daley II, Eric Hall and Dominic Poggi reached individual settlements with Groupon totalling $180,000.

McDonnell’s working overtime lawsuit was filed just after the original Groupon lawsuit was denied class certification in November 2014. McDonnell and Webb allege that Groupon misclassified account representatives and account executives as exempt employees and failed to pay them for working overtime.

These account representatives and account executives are paid a salary plus commission, however they claim they were not paid for working overtime. Groupon responded by saying that their sales reps were treated fairly and the exempt status was correct.

Groupon claims that their regular rate of pay is in excess of one and one-half times the Illinois minimum wage and that the employees’ main work directly related to the general business operations of the e-commerce company.

According to Groupon, the employees exercised discretion and independent judgment “with respect to matters of significance,” thereby supporting the exempt classification.

The proposed class covers applicable employees who worked for Groupon from Aug. 24, 2011, through June 30, 2015.

The Groupon Working Overtime Class Action Lawsuit is Sean McDonnell et al v. Groupon, Inc., Case No. 1:14-cv-09028, in the U.S. District Court for the Northern District of Illinois.

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