The class has been certified in a class action filed against finance newspaper Investor's Business Daily, Inc., and three related companies on behalf of current and former inside telephone sales marketing agents/associates who sell newspaper subscriptions from a California-based telemarketing center. The action alleges that Investor's Business Daily compels them to return commissions on failed subscriptions and also fails to pay them overtime in violation of California unfair business practices and labor laws. The action seeks a return of all commissions taken away, and compensation for unpaid overtime, apparently from November 20, 1998, to the date of any eventual judgment in the action.

The action proposes two subclasses of telemarketing agents, who are referred to as associates: (1) All current and former employees who were charged back commissions earned during the applicable period, and (2) all current and former employees who were not paid overtime for hours worked in excess of a normal 40 hour workweek during the same period.

Return of Commissions Paid to Associates

Allegedly, Investor's takes back fees that are earned for subscriptions when customers cancel before the subscription runs out, even though Investors receives payment for every issue that is sent prior to the cancellation. Not only that, but Investor's allegedly keeps all advertising revenues generated by the canceled subscriptions. The action alleges that Investor's takes taxes out of the fees it pays, but when it rescinds subscription fees because of cancellations, the agents do not get a return of the taxes paid. Allegedly, company policy states that these recissions, called chargebacks, are to be deducted from the next available paycheck.

The action alleges that company policy as of November 1, 2001, states that commissions are now "advanced" to associates until the 16th week of the subscription--if a customer cancels a subscription within 16 weeks of its starting date, any commission advanced will be deducted in full from the associate's weekly paycheck. Associates are even charged back 60%--that is, they apparently only get to keep 40%--of the amount earned if a customer calls to cancel but is convinced to keep the subscription by a specially trained quality assurance agent.

Prior to November 1, 2001, company policy allegedly stated that all commissions were actually earned on the date that the orders were taken, and were subject to being charged back within the first 16 weeks. California law states that the collection of wages previously paid is unlawful. Compelling employees to pay back through a reduction of future wages has already been settled as an illegal action in the California courts.

Failure to Pay Overtime

The action alleges that telemarketing associates are paid on a piece-rate or production basis for sales calls and completed sales rather than a true commission based upon the value or price of the product sold. Under California law, commissioned sales positions are normally not paid overtime pay for time worked beyond a normal workweek. However, California law states specifically that commission sales positions are only those that are compensated based proportionately upon the amount of value of the sale. Since the pay policies of Investors allegedly are based on a flat fee for each completed sale and not a percentage of the value of the sale, the action alleges that the agents should be paid overtime when they put in extra hours.

Under California labor law, eight hours of work constitutes a day's work. Any work in excess of eight hours in a day and 40 hours in any workweek is to be compensated at one-and-a-half times the regular rate of pay. Any work in excess of 12 hours in a day is to be paid at the rate of no less than twice the normal pay rate. In addition, any work in excess of eight hours on the seventh day of a workweek is to be compensated at twice the regular pay rate.

For former associates who no longer work for Investor's, the action also seeks 30 days of pay as a penalty for not paying all wages at the time of termination between November 20, 1998, and the date of any eventual judgment in the action.

The other companies named as defendants in the action are Investor's telemarketing subsidiaries Data Analysis and Direct Marketing Specialist, Inc, and related business William O'Neil & Company, Inc.