IBM settles overtime pay legal action

IBM announced today that it has agreed to resolve "all claims" in a legal action which alleged that the company had unfairly prevented some of its staff benefiting from overtime pay.

The class action lawsuit was filed in the Federal District Court in the Northern District of California in January 2006.

The case focused on current and former employees within IBM's Technical Services Professional and Information Technology Specialist job categories

The suit alleged that some employees were classified as exempt from overtime under the Fair Labour Standards Act and certain state laws. It is claimed that these workers should have been classified as non-exempt and paid overtime wages.

Under the terms of the settlement, still subject to final approval by the Court, each qualified individual in these two job categories will be entitled to apply for a payment, in accordance with an agreed formula, in full and complete settlement of all claims in the case.

"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 US$65m," IBM stated yesterday.

"IBM had established a provision for the probable settlement of this case in the third quarter of this year.

"IBM states that during its 90-year history as a major employer in the US it has a long-standing and proven track record in accurately and appropriately paying many hundreds of thousands of employees.

"IBM continues to believe that its payment practices are fair and comply with all applicable laws and regulations."