How Does a Big Company Like Groupon Overlook Overtime Payments?

The recent Groupon overtime lawsuit is a good example of the care companies must take to follow FLSA regulations.

Groupon has quickly grown their sizable company to almost 10,000 employees. But because they were careless in their payroll practices, their future is bleak.

About 1,050 past employees are now in the process of a couple of class action overtime lawsuits. If the lawsuits prove valid, this could cost the company big. Depending on individual awards, the payouts themselves could exceed $2 million.

How Could a Company Let This Happen?
There are a couple of factors which often get businesses into trouble.

  1. A company may classify employees incorrectly for two reasons
    1. to avoid paying overtime (exempt vs non-exempt employees)
    2. to avoid paying payroll taxes (contractor vs employee).
  2. The company may not understand record keeping laws.
    1. Employees must record their hours
    2. Companies must retain all wage computation records for at least two years.

Timekeeping Fraud Protection
Familiarity with FLSA guidelines and the use of a time clock is a company’s best insurance against these kinds of lawsuits.

Making sure the employee is classified correctly and then keeping stringent records complete with an audit trail can help protect a company if they ever are taken to court.

Time keeping software like ours will calculate the hours and overtime so that so that even if a company does payroll in-house, calculation errors will never arise. Additionally, all clock punches, edits, and requests will be saved alongside the record.

These days in our sue happy world, employers need to take greater care to protect themselves against lawsuits. Digital, third party records take the slant off of either party’s claim, making the whole process much simpler and safer.


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