According to a class action lawsuit filed by a former sales representative at Groupon, overtime pay was not part of the company's compensation package, despite requirements imposed by federal law.
Ranita Dailey, the woman behind the suit, alleges that nearly 1,000 U.S.-based sales representatives received no overtime pay until March 2011, when Groupon executives were alerted to the problem.
At that point, they began making payments, albeit at rates lower than those mandated by law.
Low on details, the Groupon overtime lawsuit doesn't explain why the company failed to pay overtime for its first three years, but it likely has something to do with a misunderstanding of federal overtime exemptions regarding commissioned employees.
Employers often mistakenly believe that employees who receive a wage/salary and a commission are exempted from overtime wage laws.
The truth is that federal law only exempts employees of retail or service establishments who make more than 1 1/2 times the minimum wage and who receive more than half their monthly income from commissions.
If a commissioned employee does not meet both of these requirements, or falls under one of the other wholesale exemptions, he or she must be paid overtime in accordance with federal and state laws.
Groupon clearly recognized this in March, and according to Crain's, informed employees of the oversight, promising to provide back pay in a bid to prevent legal action.
Nearly five months later, no compensation has been provided, and lackluster compliance has allegedly ensued, leading Dailey to file the Groupon overtime suit.