Jackson Hewitt Faces Wage and Hour Suit Regarding Reduced Commissions

Jackson Hewitt is facing a wage and hour suit filed by employees who allege they were unfairly bilked out of part of their commission pay.

Jackson Hewitt tried to wriggle out of the putative class action wage and hour suit by claiming its employees had waived their litigation rights, but U.S. District Judge Jose L. Linares of New Jersey rejected the claim.

According to the plaintiffs, Jackson Hewitt forced employees to sign a paper that employees would have to report any discrepancies regarding their commission pay within 30 days of the payment.

“It appears to the Court that limiting a period to 30 days, when the statute of limitations in New Jersey for contract claims is usually 6 years, is unreasonably short, taking into account the nature of the parties, as Defendants are the second largest tax preparation service company in the United States and Plaintiffs are individual employees of the corporation,” stated the judge.

Defendants in the wage and hour suit are Jackson Hewitt Tax Service Inc. (JHTSI), Jackson Hewitt Inc. (JHI), subsidiary Tax Services of America (TSI), and unknown franchisees.

The wage and hour suit includes a breach of contract claim against TSI and unknown franchisees and an unjust enrichment claim against JHI and JHTSI.

Basis of Wage and Hour Suit

The plaintiffs drafted and filed income tax returns for Jackson Hewitt clients. The plaintiffs earned commission based on the net revenue each tax preparer generated.

Beginning with the 2013-2014 tax season, Jackson Hewitt encouraged employees to distribute $50 to $100 gift cards to customers who used Tax Services of America and franchisee locations for tax preparation, according to the complaint. The promotion was meant to encourage client loyalty and generate new business, the plaintiffs say.

The employees claim breach of contract, alleging that their commission payments were substantially reduced because the cost of the gift cards they distributed was deducted from the commission pay. They allege commissions were similarly reduced at the end of the 2014-2015 and 2015-2016 tax season.

The plaintiffs’ complaint alleges wage and hour violations because of the reductions.

“As a result, TSA and Franchisees have breached their contracts with Plaintiffs, JHTSI and Jackson Hewitt have been unjustly enriched, and Defendants have violated the wage and hour laws of certain states,” says the complaint.

The plaintiffs previously worked or now work at offices in Kentucky, Illinois, Tennessee, New Jersey, Pennsylvania, California, South Carolina, Florida, Texas, Louisiana, North Carolina and Oklahoma.

According to the wage and hour suit, “Plaintiffs were required to provide customers with a $50-$100 prepaid gift card, per Defendants’ franchise agreements and manual. At no time did tax preparers have discretion over whether to provide a gift card to the customer.”

The Wage and Hour Suit is Wanda Mardis, et al. v. Jackson Hewitt et al, Case No. 2:16­-cv­-02115, in the U.S. District Court for the District of New Jersey.

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