Groupon sued over Fair Labor Standards Act violations

Internet darling Groupon has recently been sued by a former employee for allegedly violating federal overtime law under the Fair Labor Standards Act. The Fair Labor Standards Act sets the federal rules on minimum wage, overtime compensation for eligible employees and rules on employees under age 18. The former Groupon sales representative alleges she was not paid overtime for the period of time she worked for the company.

According to the former sales representative, the deal-of-the-day company failed to pay overtime to 1,000 sales representatives who worked for the company in the United States. The employees allegedly were not paid for overtime from the time they started working with the company until March 2011 when Groupon was made aware of the issue. After Groupon was alerted to the issue, the lawsuit alleges the company paid overtime rates below the rate required by the Fair Labor Standards Act.

The overtime lawsuit does not explain why the group coupon company failed to meet the standards of federal overtime law during its first three years in business.

The misunderstanding could have resulted from confusion that often surrounds federal overtime exemptions for employees who receive commission. Sometimes employers mistakenly classify employees who receive a wage or salary and commission as exempt from overtime. Generally employees who work in retail and service, make more than one and one half times minimum wage and receive over 50 percent of their monthly income from commissions are exempted from federal overtime laws.

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Alan Olson practices employment law throughout the United States from his offices in New Berlin, Wisconsin. Attorney Olson may be contacted at [email protected] with questions about the information posted here or for advice on specific FLSA claims.

If employees do not meet the exemption, then they should generally be paid overtime under the direction of federal and state laws. When Groupon discovered the issue, the company promised back pay, but so far back pay has not been issued.

Source: Reuters, “Groupon sued over unpaid overtime pay,” Stephanie Rabiner, Sept. 12, 2011

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