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IBM May Owe California Workers Millions In Unpaid Overtime

A class action lawsuit claiming that IBM failed to pay overtime and other benefits could leave the computer maker on the hook for more than $5 million in back wages.
A former IBM sales rep is suing the company for unpaid overtime and other benefits in a class action suit that could leave the computer maker on the hook for more than $5 million in back wages.

Tom Chau sold software and hardware for IBM in the San Francisco area from 2000 to 2004. Chau claims that IBM broke California law by routinely requiring him to work in excess of eight hours per day and more than 40 hours per week without paying overtime.

He claims that the company misclassified him and other workers in similar positions as "exempt" from overtime, according to documents filed in U.S. District Court for Northern California. Chau also maintains that he and others were denied legally required meal and rest breaks.

"The number of class members is believed to exceed 100," Chau stated in court documents. That number could rise, however. An IBM official said in a related deposition that the company currently employs about 800 sales reps in California that have been classified as exempt.

At issue is whether Chau and his coworkers were exempt from California's overtime rules and other benefit entitlements by virtue of their job functions. In general, white-collar executives and managers are not entitled to overtime. Chau, however, maintains that he and the other IBM sales specialists weren't managers and shouldn't have been classified as exempt.

Chau is seeking unspecified damages. In a procedural motion, IBM estimated that the company would be liable for back payments of more than $5 million if it loses the case.

The case was originally filed in May in California state court in Alameda. Earlier this month, IBM filed a motion to have the proceedings moved to California's federal court system.

Chau's allegations that IBM failed to provide sales specialists with legally required meal and rest breaks may also result in compensation. "Accordingly, the class members are entitled to one additional hour of pay for each violation," Chau stated in his complaint.

An IBM spokesman said Monday that the company feels Chau's case lacks merit. "We believe his claims are invalid, and we will contest those claims vigorously in court," the spokesman said.