Recent news about Smoothstack may have caught your attention. There is a major lawsuit being brought against this tech staffing and training company.
Several labor laws are allegedly violated by Smoothstack in the case. The company’s questionable practices are being exposed through this report.
Why is Smoothstack so popular? Do they offer a great training program for breaking into technology? Could it be a scam? Check it out in more detail.
Overview of the Smoothstack class action lawsuit:
- Who: Smoothstack, Inc. has been sued by Justin O’Brien.
- Why: If workers leave the company or fail to meet their billable hour requirements, they are allegedly required to pay $24,000.
- Where: Federal courts in Virginia are hearing the Smoothstack class action lawsuit.
Background of Smoothstack
Staffing and training are the main services offered by SmoothStack. As a software developer, you would be working for a Virginia-based company that recruits people interested in careers in information technology (IT).
Recruits from Fortune 500 companies such as Accenture, Bloomberg, Capital One, Johnson & Johnson, Morgan Stanley, and Verizon choose Smoothstack for its placement and training programs.
It staffs consultants in a variety of large tech companies and is a notable player in the tech sector. A subcontract worth over $80 million was recently awarded to Smoothstack by Accenture to support Accenture’s work for the United States Department of Education’s Office of Federal Student Aid.
This company has faced controversy over the TRAP provision, or Training Repayment Agreement Provision. If Smoothstack tech workers do not complete a mandatory minimum billable hour requirement before leaving the program, the company is liable for a penalty of over $20,000, according to the class action lawsuit.
What is a TRAP?
In TRAP agreements, workers agree to reimburse their employers for their training expenses if they leave their jobs before a specified date.
A proposal by the FTC in January 2023 would prevent employers from signing noncompete agreements with employees, as well as require them to revoke any existing noncompete agreements. A TRAP is sometimes described as a “restrictive employment covenant” that is as broad as a non-compete agreement, as the FTC described them in its proposed rules.
A significant amount of economic damage is caused by TRAPs in the American economy. A TRAP plan is thought to be available to roughly ten percent of American workers. As a result of the proposed rule, workers are expected to earn about $250 billion to $296 billion more annually.
How does Smoothstack work?
Smoothstack’s main functions are as follows:
- Their recruitment strategy is to find people who are interested in starting a career in IT
- Tech skills are taught through their training program
- Accenture and Verizon are some of the big companies they place people with
Doesn’t that sound good so far? There’s only one problem. There are some strict contracts you have to sign in order to participate in the Smoothstack program. Therein lies the problem.
Contracts for training that are controversial
The Training Repayment Agreement Provision (TRAP) must be agreed to when you sign up for Smoothstack. How does a TRAP work? A large amount of money is owed to Smoothstack if you leave the program early. Approximately $20,000 in total.
It is pretty common to encounter TRAPs. There are around ten workers in the United States who have signed one. TRAPs, however, are viewed as unfair by many experts. People have a difficult time leaving jobs, even if they don’t like them. TRAPs are now being banned or limited by some officials.
TRAPs are Smoothstack’s key features:
The Smoothstack Lawsuit
The company was sued in a class action lawsuit filed in April 2023 by a former Smoothstack employee. According to the lawsuit, Smoothstack’s program violates the following regulations:
- Over 80 hours of work per week are required of trainees
- There is no payment from Smoothstack for the first 3 weeks
- They do not receive overtime pay after receiving only minimum wage
- Smoothstack pressures consultants after they complete training
- If they quit before billing 4000 hours, they will face a severe penalty
In the lawsuit, the following complaints are made:
- It is illegal and invalid for Smoothstack to use TRAPs
- A minimum wage and overtime law violation has been reported at Smoothstack
- There are illegal “kickbacks” in the TRAPs
Insights for Aspiring IT Professionals
In the case of Smoothstack, what does all of this mean for you? Several key takeaways can be derived from this report:
- Any training repayment agreement should be signed with extreme caution
- You should ensure that you are aware of the terms and the penalties if you leave
- It is not necessary to agree to unfair requirements if you do not feel compelled to do so.
- The law governing labor and employment provides you with certain rights
You can start a career in technology by completing a training program. However, it should not be subject to any conditions. It may not be in your best interest to participate in programs that lock you into strict contracts.
There is a harsh spotlight being shone on TRAPs in the industry as the Smoothstack case unfolds. In this way, workers will hopefully be protected and empowered. There should be no shady deals offered to aspiring IT professionals.
The latest updates on the Smoothstack lawsuit
A lawsuit against Smoothstack was mentioned earlier in 2023. May 2023 marked the end of three claims filed by the lead plaintiff. O’Brien agreed to dismiss claims related to the 4,000-hour requirement in the lawsuit under Virginia and federal law in exchange for Smoothstack waiving that requirement.
The motion for dismissal was filed by Smoothstack on May 12, 2023. On June 6, Smoothstack filed another motion to dismiss in response to the amended complaint filed by the plaintiff on May 25, 2023.
It has been scheduled for August 2, 2023, for the hearing on the motion to dismiss.
Despite the motion to dismiss, there is likely to be more legal wrangling if the Smoothstack lawsuit survives. Among the other legal battles in class action lawsuits is the issue of class certification.
As per statistics, the most common outcome of lawsuits in the United States is a settlement, if both sides ever come to an agreement.
Frequently Asked Questions
What is the Smoothstack lawsuit?
The Smoothstack lawsuit is a class-action suit filed by a former trainee, Justin O’Brien, against Smoothstack, a technology training and staffing company. The lawsuit alleges exploitative employment practices, including unpaid training, overtime violations, and restrictive job placements.
What is the Training Repayment Agreement Provision (TRAP)?
The TRAP is a contractual clause that requires trainees to stay with the company for a set period (in this case, two years). If they leave before this period, they must pay a significant sum, reportedly around $23,875.
What are the potential legal implications of the lawsuit?
The lawsuit challenges the legality of the TRAP and Smoothstack’s employment practices. If proven guilty, Smoothstack could face penalties for violating the Fair Labor Standards Act (FLSA), and the case could set a precedent for stricter regulations in the tech industry.
How does the Smoothstack case compare to industry standards?
The case has brought to light several practices that deviate significantly from industry norms. Most notably, the use of a two-year commitment clause and the alleged failure to compensate for overtime hours set Smoothstack apart from standard industry practices.
What are the key allegations in the lawsuit?
The lawsuit alleges that Smoothstack recruits and trains information technology professionals, but underpays them and forces them to work long hours without compensation. Recruits are not paid for additional hours spent outside of work, and they are subject to a crushing financial penalty if they leave the program before completing the required 4,000 billable hours.
Who is the lead plaintiff in the lawsuit?
The lead plaintiff is Justin O’Brien, a former Smoothstack recruit and consultant who seeks to represent himself and all similarly situated employees and former employees.
What is the current status of the lawsuit?
The lawsuit is ongoing, with various legal motions and hearings taking place. In May 2023, the lead plaintiff agreed to drop three claims from his lawsuit, and Smoothstack agreed to waive the 4,000-hour requirement for Mr. O’Brien. The case is currently awaiting a hearing regarding the motion to dismiss the lawsuit.
What are the potential outcomes of the lawsuit?
If the lawsuit survives the motion to dismiss, it could lead to a settlement or a trial. A settlement could result in Smoothstack making changes to its employment practices and potentially paying damages to affected employees. If the lawsuit goes to trial, it could set a precedent for stricter regulations in the tech industry and potentially lead to penalties for Smoothstack if found guilty of violating labor laws.
Conclusion:
There is a lot at stake with the Smoothstack lawsuit. There could be major consequences for the entire industry of tech training as well as for this company. A variety of labor practices, including TRAPs, are being raised as a result of these developments.
People who want to become IT professionals should be provided with good opportunities and treated fairly. Neither unfair contracts nor shady deals should be forced upon them.
In the coming months, this case will be an important one to follow. Considering training repayment requirements should be carefully considered. In these programs, worker protections must be strengthened.
You should now have a better understanding of Smoothstack’s issues and why they are important. Take your interests into consideration when choosing a tech training program.
