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Audit Firms Slapped with Overtime Lawsuits

January 11, 2012

What do KPMG, Deloitte and PricewaterhouseCoopers have in common, besides being three of the Big Four?

They have all been hit with lawsuits by New York law firm Outten & Golden claiming they violated federal and state labor laws by not paying their entry-level audit associates for overtime. Earlier this month, a court conditionally certified a national collective action lawsuit against KPMG brought on behalf of a group of the firm’s auditors (see Court OKs Lawsuit against KPMG over Entry-Level Audit Employee Pay).

The plaintiffs include a small group of about a half dozen auditors. But now that the lawsuit has been conditionally certified by the court, the law firm plans to begin canvassing for further plaintiffs.

“We’re now allowed to send notices to all the KPMG audit associates who worked there in the past three years,” said Outten & Golden attorney Justin Swartz.  “When we filed the motion, we had seven people who joined the case. Since the court’s ruling and the media coverage, we have had a lot of phone calls, and we expect to have a lot more when the notices come out. Our plan is to litigate the case to a judgment in our favor.”

The lawsuit claims the class members are entitled to time and a half for all the hours they worked overtime above 40 hours a week. “We expect the damages to be very significant for each person who worked there,” said Swartz. A KPMG spokesman declined to comment on the case.

Besides the lawsuits already filed against KPMG, Deloitte and PwC, Swartz said there is also a case pending against Ernst & Young.

Last month the judge overseeing the Deloitte case, also in the Southern District of New York, issued a similar ruling as the one in the KPMG case, according to Swartz, certifying the collective action. Outten & Golden is now in the process of sending notices to all of the low-level audit employees at Deloitte as well as KPMG.

Swartz noted that there are now two cases against PwC, one in California for which a motion was granted about a year and a half ago (see PwC Wins Round on Overtime Class-Action Lawsuit). A notice was sent out to the audit associates who worked there, and many people joined the case, according to Swartz.

There is also a case against PwC in New York, and that case is just in its early stages, he noted. There was also a case in Canada that went favorably for the auditors. “My understanding is that they now pay their low-level audit employees overtime,” said Swartz.

While the major firms tout their enlightened work/life balance policies, Swartz does not think that makes up for the lack of overtime pay.

“The long hours are certainly not a thing of the past,” he said. “Firms are allowing their employees more flexible schedules and trying to improve their work/life balance, but they should still pay their employees overtime. That’s what the law requires.”

Nowadays in today’s economy, a great many people are working extra hours in order to keep their jobs, but not everybody can expect overtime pay under the law.

“The determination of who is entitled to overtime is based on the duties of the job,” said Swartz. “Some are exempt jobs and some are non-exempt jobs.”

Oftentimes a company will misclassify its employees under the belief that they’re not covered by the overtime laws and save money that way.

“It’s our job to collect that money for those employees who worked so many hours and gave up so much of their lives for their firms,” said Swartz. “At the very least, hard-working employees should expect to get paid according to the law.”

He is not sure when the KPMG case will get resolved or settled. “Sometimes it takes years for a case to go to trial,” he said. “The case could get settled. We’re always willing to talk about that. The judge in the KPMG case has invited us to file a motion for a summary [judgment], and we plan to file that motion on the schedule the court provided, which I believe is sometime in April. We hope the court will agree with us that their workers were misclassified as a matter of law.”

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