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Fair Labor Standards Act, Outsourcing

Lessons for service providers: Fair Labor Standards Act in outsourcing

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04 Jan 2007 | (Thinking Point)

On November 22, 2006, International Business Machines Corp. (IBM) announced its agreement to pay $65 million to settle a class action lawsuit involving alleged wage law violations under the Fair Labor Standards Act (“FLSA”), for its current and former employees in its Technical Services Professional and IT Specialist job categories. The employees had alleged that IBM had misclassified such employees as exempt from overtime wage protection, and that IBM had failed to maintain accurate records of hours worked by employees, who were thereby denied overtime due to faulty recordkeeping.  Denying any wrongdoing, IBM settled to avoid a “lengthy, burdensome and expensive” litigation.  Rosenberg v. IBM (N.D. Cal., Dkt. No. C-06-0430, settlement Nov. 22, 2006).  The published report did not mention whether the employees were providing services to outsourcing customers.

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