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YELP SETTLES OVERTIME CLASS ACTION FOR ACCOUNT EXECUTIVES

May 13, 2012

Here’s yet another story to report on exemption misclassification. Review site Yelp! Inc. has agreed to pay up to $1.25 million to settle proposed class allegations that the San Francisco-based company failed to pay overtime to nearly 1,000 account executives, according to a proposed settlement filed in the U.S. District Court for the Northern District of California (Larkin v. Yelp! Inc., N.D. Cal., No. 3:11-cv-01503, settlement filed 4/27/12).

In the April 27 filing, the employees delineated the settlement’s terms and urged the court to grant preliminary approval.

The 2011 lawsuit alleges that Yelp!, which allows users to review everything front dentists to diaper delivery services, violated the Fair Labor Standards Act, the California Labor Code, and the California Industrial Welfare Commission Wage Order for misclassifying sales representatives as exempt.

Yelp! makes money selling advertisements by representatives who make calls to potential sales leads, according to the complaint. The representatives, who are paid a base salary and can increase their pay through performance, were not exempt from overtime, the suit alleges.

According to the settlement motion, Yelp! contends that the employees’ claims have no merit and a majority of class members, including two of the named plaintiffs, signed releases preventing them from bringing the claims asserted in the filing. Yelp! also argues that a class action prohibition implemented in February 2012 bars class members from pursuing claims in this filing on a class or collective action basis.

The proposed settlement calls for $5,000 in incentive payments to the three named plaintiffs; $312,500 for attorneys’ fees and $10,000 for costs, $7,500 payable to the state Labor Workforce Development Agency under the Private Attorney General Act; and
$25,000 in fees to the settlement administrator.

Yelp! agreed to contribute 75 percent to 100 percent of the employer’s share of payroll taxes depending on the number of qualifying workweeks claimed.

The court is being asked to approve a national class, comprised of 454 reps employed by Yelp! between May 11, 2008, and Dec. 31, 2011, and a California class, an estimated 488 individuals employed reps from March 29, 2007, through Dec. 31, 2011.

Under the settlement agreement, the maximum California class payment is $586,667 and $293,333 to the national class members. Individual payments will be paid based on the total number of weeks worked in covered positions during the relevant class period.

The total amount Yelp! will pay depends on how many class members participate. In no event will Yelp! pay less than half the maximum gross amount attributed to the California class, according to the agreement. 05.13.2012