Groupon's Latest Deal: $2.5M Overtime Settlement for Sales Reps

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By Jon Steingart

Aug. 2 — Groupon Inc. and a class of 2,024 sales representatives received preliminary approval Aug. 1 from a federal judge in Illinois for a $2.5 million settlement to resolve claims the company illegally misclassified them as exempt from overtime pay ( McDonnell v. Groupon, Inc. , N.D. Ill., No. 1:14-cv-09028, preliminary settlement approval 8/1/16 ).

The same judge in 2014 denied class certification to about 1,500 Groupon sales representatives in a separate overtime case. Judge Edmond E. Chang of the U.S. District Court for the Northern District of Illinois said putative class members were too dissimilar in the “types of duties that each Account Rep performed, the amount of time each Account Rep spent on a certain duty, and also the amount of independence and discretion Account Reps could exercise.”

In the current case, Chang found that “common questions of fact and law exist” and “the Class Representatives’ claims are typical of the class’s claims.” He didn't elaborate on these findings or distinguish them from the earlier case, which the four plaintiffs settled on an individual basis.

The representatives said in their unopposed motion for class certification that they present common questions of fact concerning the nature of their sales work. Common questions of law exist as to whether they were exempt from the overtime requirements of the Fair Labor Standards Act and a state statute, they said.

Settlement Avoids Litigation, Parties Say

Groupon contended the sales representatives fell within exemptions for administrative employees and salespeople who earn commissions. The settlement would avoid the risk and expense of litigating these defenses, they told Chang in a joint stipulation.

The settlement fund would distribute about $1.57 million to class members, varying by the number of weeks they worked during the coverage period. The precise calculation is based on company records that show “each Class Member having worked approximately 2.18 hours of uncompensated overtime each week,” the representatives told the court.

The average distribution will be about $778. Chang conditionally certified the class as sales representatives who held account representative or account executive job titles from Aug. 24, 2011, through June 30, 2015. The rest of the funds will be earmarked for attorney's fees, litigation costs and settlement administration expenses.

The preliminary approval authorizes a claims administrator to notify class members about the proposed settlement. Chang scheduled a hearing for Nov. 10, when he will hear parties' and class members' arguments for or against final approval.

An attorney for the sales representatives and a spokesperson for Groupon declined to speak about the case Aug. 2.

Werman Salas P.C. represented the account representatives. Littler Mendelson P.C. represented Groupon.

To contact the reporter on this story: Jon Steingart in Washington at

To contact the editor responsible for this story: Susan J. McGolrick at

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