May 18, 2011
Google and two contract service providers, Mainelli Mechanical Contractors and Eurest Services, were sued in Iowa on Monday for allegedly failing to pay overtime wages to a former employee.
Plaintiff Michele A. Peterson, a resident of Papillion, Neb., claims that from January 2008 to her termination in February 2011, she worked as a facility coordinator at Google's "business facility located in Council Bluffs, Iowa," which is to say the company's Council Bluffs data center. After her hiring, Peterson's complaint claims, Google delegated payroll responsibility to Eurest and then to Mainelli. Whether Peterson was a Google employee or an employee of a contractor hired by Google isn't entirely clear: The complaint asserts Peterson was hired by Google; a receptionist answering the phone for Mainelli said, "[Peterson] worked for us at Google." Mainelli provides installation services for HVAC, plumbing, and related needs for commercial construction projects like Google's Council Bluffs data center. A spokesperson for the company was not immediately available. Google declined to comment. Google announced plans to build a $600 million data center in Council Bluffs in early 2007 and completed the project in May 2009. The project was expected to create about 200 full-time jobs paying around $50,000 annually. The complaint asserts that Peterson was required to work 50-60 hours per week, six days a week during her employment and that she was not paid overtime wages "to complete the work demanded by Google's management." Peterson claims to have been a non-exempt employee. Under the Fair Labor Standards Act, non-exempt employees are entitled to overtime pay. Employees classified as exempt, who are not entitled to overtime pay, typically have high salaries or managerial responsibilities. Litigation about unpaid compensation appears to be relatively common in the tech industry. In April, AT&T settled a class action lawsuit over failure to pay overtime compensation for $12.5 million. In April 2006, game maker Electronic Arts settled a similar overtime lawsuit for $14.9 million. That same year, IBM settled an overtime case brought on behalf of 32,000 workers for $65 million. Apple was hit with an overtime lawsuit in 2009 but didn't end up paying very much upon settlement--a mere $3500. Apple faced another overtime lawsuit in 2008, settling that case in 2010 for almost $1 million. This may have something to do with conflicting wage pressures. On one hand, the desire to hire top talent at Google and its competitors has led to the costly acquisitions of start-ups just for access to their engineers. Yet even as tech companies pay what some argue is too much for talent, Google's recent decision to raise base salaries for its employees by 10% and to shift non-executive compensation from bonuses to salary increases--a move motivated by a desire to retain talent more effectively--suggests that Google had been a bit too successful in keeping wages low. One reason for that may be the alleged conspiracy between Google and other Silicon Valley firms--Adobe, Apple, Intel, Intuit, Lucasfilm, and Pixar--to not hire each other's employees, an act that plaintiff Siddharth Hariharan, in a lawsuit filed earlier this month, claims suppressed employee compensation. Businesses have myriad technology options for pulling together people and ideas. But getting it right still isn't easy. Also in the new all-digital issue of InformationWeek SMB: A UC champion's survival guide. Download it now. (Free registration required.)
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