Workforce reported earlier this week that Groupon, the hot Chicago-based startup that basically defined the "daily deals" category, has been sued in "class action" style for unpaid overtime. It's a somewhat tricky suit - not your garden variety unpaid overtime class-action, since it involves sales professionals. Hmmm - let's dig into a bit of the workforce article (find the whole thing here):
"The suit says the Chicago-based 3-year-old daily-deal business didn't pay sales employees overtime, violating wage laws, or didn't pay them enough. “It's a systemic problem,” said Douglas Werman, a Chicago-based attorney who filed the suit on behalf of Dailey and is seeking class-action status on behalf of her and other sales reps allegedly cheated out of overtime pay.
His firm, Werman Law Office, won the largest wage-and-hour case in Illinois history two years ago, an $11 million settlement against Troy, Michigan-based staffing firm Kelly Services Inc.
The overtime suit could become a problem for the company, which employs more than 4,800 sales reps worldwide out of a workforce approaching 10,000. Roughly 1,000 of the reps are in the U.S. and therefore covered by federal labor laws.
On average, the reps are paid about $32,500 a year, plus commissions equal to a percentage of the value of the deals they line up with restaurants, salons and other local businesses."
Most of you have salespeople that are out beating the street, and most of you classify those sales pros as exempt, meaning they're not generally eligible for overtime. Which begs the question, why are the Groupon reps eligible for overtime if yours are not?
What's your take? Think about it and I'll give you my best guess below. Thinking....(music in background)
Got your answer? Here's mine:
At a 32K base and knowing a bit about the Groupon model, my take is that these reps might be classified as non-exempt and overtime eligible due to the fact that they're more telemarketer than sales pro. I'm betting that most of these people report to HQ in Chicago and smile and dial via the phone, rarely seeing customers in the field. Also playing into that model is the fact that they're probably hooked up to a predictive dialer, which means they're fed one call right after another in their territory and they're banging it out like a telemarketer.
Which means that they don't control what they work on and when they work on it, which is the first test of independence I usually throw up for poor man's overtime eligibility test.
That's nothing but a guess, but I'm thinking it's directionally accurate. What's your take?
PS - you have to love the model this law firm is operating under. I can imagine the tweet from a partner - "just took down @kellyservices for 11 large. will scan #monster for companies who are mis-classifying sales pros after the celebration. #winning