IBM Pays Tech Workers $65 Million To Settle Overtime Lawsuit

International Business Machines Corp. settled a federal class-action lawsuit Wednesday, agreeing to pay a total of $65 million to 32,000 technology workers who claimed the company illegally withheld overtime pay.

The suit was filed in January in U.S. District Court in San Francisco on behalf of three employees who said they were forced to work more than 40 hours per week and on weekends without additional compensation.

The case involved workers classified as "Technical Services Professional and Information Technology Specialists." IBM considered them highly skilled professionals exempt from overtime laws detailed in the Fair Labor Standards Act and California labor laws.

Generally, executives, managers and high-level computer operators are exempt from being paid overtime premiums, which is compensated at 90 minutes pay for each additional hour of work.

But the IBM workers were by no means the decision makers or creative types typically ineligible for overtime, said James M. Finberg, who represented the class for Lieff Cabraser Heimann & Bernstein LLP.

"These people were just following manuals to trouble shoot computer problems," Finberg said.

IBM spokesman Michael Maloney would not comment on whether the settlement would affect earnings. Armonk, N.Y.-based IBM released a statement saying it had established a provision for the settlement of the case in the third quarter.

"Litigation of this case would have been lengthy, burdensome and expensive, and IBM chose to resolve it," the statement said.

According to the settlement, still subject to court approval, the workers may apply for additional pay based on a mutually agreed-upon formula.

Individuals will receive from $50 to tens of thousands of dollars, depending on their rank and number of hours worked, Finberg said.

The lawsuit against IBM is one of several in the workaholic technology sector, where employees are often classified as overtime-exempt software designers with specialized degrees and skills.

Software maker Siebel Systems Inc. settled a class action suit by more than 800 workers earlier this month. The workers, who had job titles such as "software engineer" and "senior software engineer," will receive a total of $27.5 million.

Last year, El Segundo-based Computer Sciences Corp. settled an overtime class-action suit by 30,000 employees for $24 million.

IBM's decision case could have ripple effects throughout the tech industry.

"IBM is an industry leader, and people at other companies look at what they do," Finberg said. "We're very happy with the result."

The case is Rosenburg v. IBM, 06-0430.


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