Smoothstack Lawsuit Allegations of Wage Theft and Unfair Practices

Smoothstack Inc. is a tech-training and employee-staffing agency. It promises to train individuals for careers as information technology (IT) professionals and place them in positions with major firms, including Fortune 500 companies like Accenture, Verizon, and CapitalOne.

You know what—Smoothstack offers a six-month training program during which recruits are prepared for IT roles through rigorous training and work assignments.

However, a class-action lawsuit was filed against Smoothstack on April 14, 2023, by former employee Justin O’Brien. The case seeks to address the alleged wage theft and other abuses along with securing compensation for affected employees.

Let’s discuss the Smoothstack Lawsuit in detail—exploring the truth behind it.

What is the Smoothstack Lawsuit About?

The Smoothstack lawsuit is a class-action legal case filed against the tech-training and employee-staffing agency Smoothstack Inc. It was initiated by their former employee Justin O’Brien on April 14, 2023.

According to the lawsuit, Smoothstack engages in unlawful employment practices, including wage theft and the use of predatory Training Repayment Agreement Provisions (TRAPs). Reportedly, TRAPs require employees to repay substantial amounts of money if they leave or are terminated before completing a specified amount of billable work hours for Smoothstack’s Fortune 500 clients.

Who Filed the Lawsuit Against Smoothstack and Why?

The lawsuit against Smoothstack Inc. was filed by former employee Justin O’Brien on April 14, 2023. The case was brought forward by Outten & Golden LLP, Towards Justice, McGillivary Steele Elkin LLP, and the Student Borrower Protection Center (SBPC) on behalf of O’Brien and other similarly affected employees.

O’Brien alleges that Smoothstack is responsible for:

Wage Theft

• Failing to pay employees during the first three weeks of the training period.
• Paying employees as little as $7.25 per hour for a 40-hour workweek during the remaining five months of training, despite requiring up to 80 hours of work per week.
• Not paying overtime wages for hours worked beyond 40 per week.

Predatory Training Programs

• Requiring employees to sign TRAPs, obligating them to complete 4,000 billable hours of work for Smoothstack’s clients or repay at least $23,875.
• Using TRAPs to limit employee mobility and trap them in low-wage jobs.

Bait and Switch Employment Practices

• Advertising permanent career opportunities that do not materialize.
• Assigning employees to short-term contract work for Fortune 500 clients, with no path to permanent employment.
• Paying employees minimum wage during periods when they are not assigned to client projects, with these hours not counting towards the 4,000-hour requirement.

Coercive Employment Contracts

• Pressuring employees to sign increasingly restrictive contracts as they progress through the training program.
• Threatening legal action to enforce TRAPs if employees attempt to leave before completing their service commitment.

Unconscionable Agreements

• Utilizing agreements that have been deemed “unconscionable” under Virginia state law.
• Continuing to enforce these agreements despite their illegality, according to the lawsuit.

Retaliation

• Allegedly demoted and ultimately terminated the plaintiff, Justin O’Brien, in retaliation.

The lawsuit seeks to void all these agreements and secure compensation for affected employees.

How has Smoothstack Responded to Lawsuit Allegations?

Smoothstack hasn’t publicly responded in detail to the allegations brought forth in the lawsuit filed by Justin O’Brien.

However, legal representatives and advocacy groups involved in the case have voiced their criticisms. For instance, Persis Yu, Managing Counsel at the Student Borrower Protection Center, called Smoothstack’s practices “coercive, cruel, and corrupt,” likening them to those of for-profit trade schools that exploit low-wage workers.

Hannah Cole-Chu, an attorney at Outten & Golden LLP, stated that Smoothstack “locks these employees into work schedules they don’t control” and imposes hefty penalties if they attempt to leave, thus preventing them from seeking better employment opportunities.

Rachel Dempsey from Towards Justice further condemned Smoothstack’s use of TRAPs, describing it as a combination of “a wage theft operation with a predatory for-profit training program.”

All these statements from legal and advocacy representatives highlight the serious concerns regarding Smoothstack’s employment practices—despite that the company’s specific defense or counterarguments are yet to be seen.

What are the Potential Outcomes of the Lawsuit?

This isn’t simple to specify.

If we consider the allegations and the involvement of advocacy groups like the Student Borrower Protection Center (SBPC) and legal firms such as Outten & Golden LLP—the court might rule that TRAPs)are illegal and unenforceable.

However, Smoothstack might settle the case out of court—offering compensation to affected employees and revising its employment practices to prevent future violations.

If the lawsuit proceeds to trial and Smoothstack is found guilty of violating the Fair Labor Standards Act (FLSA), the company could face substantial financial penalties, including back pay, overtime compensation, and punitive damages. Such an outcome could also damage Smoothstack’s reputation and business relationships.

How can Affected Employees Join the Lawsuit?

Affected employees who wish to join the lawsuit against Smoothstack Inc. can take several steps to participate in the class-action case. First, they should contact the legal firms representing the plaintiffs, such as Outten & Golden LLP, Towards Justice, or McGillivary Steele Elkin LLP. All these law firms can provide detailed information on the case and guide employees through the process of joining the lawsuit.

Employees should gather any relevant documentation, such as employment contracts, pay stubs, and communication with Smoothstack, to support their claims. They can then submit this information to the representing law firms.

For more information and to initiate contact, affected employees can visit the websites of the legal firms involved or reach out directly to the Student Borrower Protection Center.

Read also: White Oak Global Advisors Lawsuit

Quick Summary

On April 13, 2023, a former employee filed a class and collective action lawsuit against Smoothstack Inc., alleging violations of the Fair Labor Standards Act (FLSA).

The lawsuit claims that recruits are required to work over 80 hours per week during a six-month training program without proper pay for the first three weeks and no overtime pay thereafter.

They also require recruits to sign a Training Repayment Agreement Provision (TRAP), imposing a $23,875 penalty if they leave before completing 4,000 hours of client work, effectively tying them to minimum wage jobs indefinitely. This practice, deemed “unconscionable” by a Virginia state court, constitutes illegal wage kickbacks. The lawsuit seeks to represent employees affected by these practices since April 13, 2020 and is currently pending a court decision.