Kelly Group’s subsidiary must fork out R15.7m

2012-04-21 13:26

US-based subsidiaries of JSE-listed recruitment company Kelly Group will in the next three years be forced to part with up to $2 million (R15.7 million) after they were hauled into court for allegedly breaking US labour and business laws.

The $2 million settlement paid by Kelly Group’s California-based subsidiaries, M Squared Consulting and Collabrus, was reached after they were accused by two of their female employees of unfair labour and business practices.

In 2009, US citizens Yolanda Lewis and Jamila Stanford alleged in a lawsuit that the employees of M Squared Consulting and Collabrus were not paid a stipulated salary of at least twice the minimum wage when they worked as consultants at IT multinational Cisco Systems for two years.

“Lewis and Stanford contend that between 1 January 2007 and 15 February 2009, employees of M Squared and Collabrus who worked as consultants at Cisco Systems were not properly classified exempt from overtime requirements and meal and rest-break requirements because they were not paid a guaranteed salary of at least twice the minimum wage,” reads a notice of class action settlement.

“As such, Lewis and Stanford contend that these employees were deprived of overtime pay, meal breaks and rest periods to which they were lawfully entitled as non-exempt employees,” read the court document.

M Squared and Collabrus, however, denied that the company had violated any laws or did not pay its employees properly.

But the settlement is not an admission of guilt by M Squared and Collabrus. The $2 million agreement is a big blow to M Squared Consulting and Collabrus, which generated a combined operating profit of $2.4 million for the year ending September 2011.

Kelly Group chief executive Gareth Tindall confirmed this week that the class action was settled last month.
“M Squared and Collabrus will have to pay a maximum amount of $2 million over a three-year period,” said Tindall.

“An initial payment will be followed by bi-annual payments of $250 000,” he said.

“All costs have been provided for in total and payment will be made over a period of time,” he said.

Tindall said the settlement could have had more severe consequences.

“Obviously, this could have been more serious because of the unknown quantums related to these cases.
“However, M Squared and Collabrus management and our lawyers in the US have done a great job in bringing this to finality,” he said.

He added: “The corporate employees responsible for maintaining the source system that gave rise to the irregularity on which the class action lawsuit was premised exited the organisation prior to the class action having been launched.”

Tindall said M Squared and Collabrus would not victimise the two employees who launched the lawsuit.

“Any form of retribution against class members [Lewis and Stanford] is illegal and would result in the settlement being set aside by the courts,” he said.

“M Squared and Collabrus is sufficiently capitalised with access to liquid funds to meet its current and foreseeable future obligations,” said Tindall.

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