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IBM Crisis Averted: Suit Settled

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IBM announced last week that a settlement had been reached in a civil suit with a very high price tag.

IBM agreed upon a $65 million settlement to former technical support employees in a class action lawsuit on November 22.

The lawsuit, filed by the former IBM employees in January of 2006, is titled Rosenburg et al. v. IBM and was filed in the federal court of the Northern District of California, located in San Francisco.

Charges brought by the plaintiffs alleged that IBM unlawfully classified its Technical Service and Information Technology specialists, to avoid paying the employees overtime, by categorizing them as “exempt” from provisions of the Fair Labor Standards Act.

The Fair Labor Standards Act, according to the Department of Labor, “establishes minimum wage, overtime pay, recordkeeping, and child labor standards affecting full-time and part-time workers in the private sector and in Federal, State, and local governments.”

Former employees filing the lawsuit claimed that, while there are provisions for being exempt under the Act, they did not meet the qualifications for them.

Therefore, according to the Department of Labor, “Overtime pay at a rate of not less than one and one-half times their regular rates of pay is required after 40 hours of work in a workweek.”

On March 13, the counsel for the plaintiffs amended the charges, adding state law claims to the suit.

Amended charges. filed on behalf of IBM technical support workers across the nation, claimed that the company violated federal laws. The amended complaint also alleged that IBM violated labor laws in California, Colorado, Minnesota, Illinois, New Jersey and New York on behalf of workers from each state.

If the court finds the $65 million settlement adequate, as IBM hopes, each plaintiff will be paid an undisclosed portion of the agreed upon amount.

“Litigation of this case would have been lengthy, burdensome and expensive, and IBM chose to resolve it, without admitting any wrongdoing or liability, for a total of $65 million. IBM had established a provision for the probable settlement of this case in the third quarter of this year,” said IBM in a statement to eWeek.

The plaintiffs also requested that IBM compensate them for previous overtime they had worked, as well as compensate all employees presently working overtime.

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Autmn Davis is a staff writer for WebProNews covering ebusiness and technology.

IBM Crisis Averted: Suit Settled
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