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Deloitte & Touche LLP Audit Assistants and Audit Seniors Seek Unpaid Overtime, Allege Misclassification as Exempt Workers Under the Fair Labor Standards Act (FLSA) and New York State Overtime Laws
On April 26, 2011, Jason James filed a collective action lawsuit against Deloitte & Touche LLP, James v. Deloitte & Touche LLP, No. 3:11-cv-02027, in the United States District Court for the Northern District of California, on behalf of current and former Deloitte Audit Assistants and Audit Seniors. The lawsuit alleges that Deloitte misclassifies Audit Assistants and Audit Seniors as exempt workers under the Fair Labor Standards Act and fails to pay them overtime pay for the long hours the work. On July 5, 2011, the case was transferred to the United States District Court for the Southern District of New York. On November 22, 2011, the case was consolidated with another similar case on behalf of Deloitte Audit Assistants and is now know as In Re Deloitte & Touche LLP Overtime Litigation, No. 1:11-cv-02461-RMB-THK.
Justin M. Swartz, Ossai Miazad, Delyanne Barros, and other attorneys at Outten & Golden LLP, New York, NY represent the plaintiff in James. Edward Wynne of the Wynne Law Firm, Greenbrae, CA; Jeffrey K. Compton and William Anthony Baird of Markun, Zusman & Compton, LLP, Pacific Palisades, CA; and Steven Elster of the Law Office of Steven Elster, Concord, CA also represent James. Max Folkenflik of Folkenflik & McGerity, New York, NY and H. Tim Hoffman of Hoffman & Lazear, Oakland, CA represent another plaintiff in the combined cases.
In the combined cases, Deloitte & Touche LLP claims that Audit Assistants and Audit Seniors are “administrators" or "professionals" who are not entitled to overtime compensation. The lawsuit claims that this is a misclassification and that Deloitte Audit Assistants and Seniors are not really “administrators" or "professionals" under the FLSA overtime provisions because they perform mostly routine low-level audit tasks. James and the other Plaintiffs claim that they spent most of their time reviewing client documents and financial records, comparing numbers in financial statements with numbers in other documents, updating statements from previous years (also called “rolling forward”), entering data from documents into spreadsheets or templates and comparing and matching numbers, documenting work done during an audit, and performing clerical tasks. In depositions and declarations, Plaintiffs testified that they were required to raise problems with a senior employee, that the hierarchy of positions, the partner sign-off and the final, managerial review of work-papers . . . is consistent from engagement to engagement, that their duties include testing work (matching numbers with client’s supporting documentation), control testing and walk-throughs, reviewing work papers, testing and matching numbers, matching ending balances to the totals, deleting last year’s information and inserting current year’s information, data entry and matching numbers, filling in blanks on form letters for partners, matching numbers with the support documents that clients provide, testing, documenting, and observing procedures, documenting what clients show them, photocopying, stuffing, hole punching, and filing, assembling binders, organizing documents, ordering food. They were required to discuss any significant issues with supervisors, raise questions with managers, read over documentation to make sure it is clear and that references to other documents check out, and match ending balances to totals.
The lawsuit seeks to recover unpaid overtime pay for Deloitte Audit Assistants and Seniors for all the hours they worked over 40 each week, liquidated damages, and other relief.
On December 16, 2011, the Judge presiding over In Re Deloitte & Touche LLP Overtime Litigation issued an order conditionally certifying a nationwide collective of Deloitte Audit Assistants, Audit Senior Assistants, Audit In-Charge and Audit Seniors (also known as Staff 1, Staff 2, or Senior 1, Senior 2) under the federal Fair Labor Standards Act (FLSA) and authorizing the plaintiffs to send notice to all potential members of the FLSA collective to inform them of their right to join the lawsuit and attempt to recover unpaid overtime compensation under the FLSA. In conditionally certifying the class, the Judge found the Audit Class Members are “(1) similarly situated with respect to their job requirements, (2) similarly situated with regard to their pay provisions, and (3) classified as exempt pursuant to a common Deloitte policy or scheme.” Accordingly, the Judge held that the “propriety of the [exempt] classification may be determined on a collective basis.” In support of this finding, the Judge determined that Audit Class Members at Deloitte “each perform non-exempt clerical work to assist Certified Public Accounts . . . in the performance of audits and they each received training on how to complete an audit using [the Company’s] audit methodology and procedures.” Further, Deloitte’s Audit Assistants share in “their inability to exercise independent judgment and discretion with respect to matters of significance” and are “uniformly limit[ed]” by accounting licensing laws and professional rules from doing anything more than “assisting [the Company’s] CPAs in providing public accountancy services.” Finally, Deloitte has a common policy of classifying “all Audit Class Members as exempt from FLSA’s overtime protections . . . without making any person-by-person exemption determination.”
To read the Judge’s conditional certification decision, click here.
In another similar lawsuit, Brady v. Deloitte & Touche LLP, No. C 08-00177 SI, filed on January 10, 2008 in the United States District Court for the Northern District of California, Deloitte Audit Assistants and Audit Seniors who worked in California are attempting to recover unpaid overtime wages under California Labor Code and Applicable Wage Orders of the California Industrial Welfare Commission. On March 23, 2010, the Judge presiding over the Brady case in California issued an order certifying a statewide class consisting of “[a]ll persons employed by Defendant in the State of California as salaried exempt employees in Defendant[’s] Audit line of service with positions below the level of manager” at Deloitte. The Court held that "common questions of law or fact predominate over individual questions. Most of defendant’s evidence regarding class members’ job duties and purported levels of discretion goes to the merits of plaintiffs’ claims, rather than whether certification is proper. Defendant asserts that plaintiffs will not be able to prove that the class members were exempt, because some unlicensed employees were able to exercise discretion while others were not. However, common questions are present in plaintiffs’ complaint, including whether accounting is a learned or artistic profession, whether plaintiffs worked under less than general supervision, and whether plaintiffs exercised discretion and independent judgment with respect to matters of significance. Resolution of these questions, according to plaintiffs, will not require factual inquiries into the experiences of every class member because the Court is only being asked to ascertain what effect the Deloitte policies and outside regulations have on the class as a whole. Without, at this juncture, evaluating plaintiffs’ likelihood of success on the merits, plaintiffs should have the opportunity to prove that Deloitte policies and procedures, along with other restrictive regulations mentioned in the briefs, produced such a restrictive environment that class members were not able to qualify for the professional and administrative exemptions."
To read the California Judge’s class certification decision, click here.
Similar cases have also been filed on behalf of audit associates and audit assistants at the other Big Four accounting firms including KPMG, Pricewaterhouse Coopers ("PwC"), and Ernst & Young ("E&Y"). Outten & Golden LLP represents plaintiffs in several of these cases including Pippins v. KPMG LLP, No. 11 Civ. 0377 (CM) (JLC) in the United States District Court for the Southern District of New York and Commisso v. PriceWaterhouseCoopers LLP, 11 Civ. 05713 (NRB) in the United States District Court for the Southern District of New York. For more information about these lawsuits or to discuss potential overtime claims against KPMG, Pricewaterhouse Coopers ("PwC"), and Ernst & Young ("E&Y"), or any accounting firm, Big Four or otherwise, please call (212) 245-1000 and ask for Justin Swartz or Ossai Miazad of Outten & Golden LLP or email us.
Under the Fair Labor Standards Act (FLSA), the New York Labor Law, and many state overtime laws, it is illegal for your employer to retaliate against you for participating in a lawsuit to protect your overtime and wage and hour rights.
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