Smoothstack, a well-known IT staffing and training company, is facing serious legal challenges over its employment practices. Employees have accused the company of violating labor laws, leading to multiple lawsuits, including one filed by the U.S. Department of Labor (DOL)
Class-Action Lawsuit Against Smoothstack
In April 2023, employees took legal action by filing a class-action lawsuit against Smoothstack. The lawsuit alleges that the company enforced unfair Training Repayment Agreement Provisions (TRAPs). These agreements required employees to pay up to $23,875 if they left before completing 4,000 hours (approximately two years) of billable client work.
Former employees also claim that Smoothstack did not pay them for the first three weeks of their training program. Additionally, they allege that the company failed to compensate them for overtime, despite requiring them to work beyond 40 hours per week. These actions, according to the plaintiffs, violate the Fair Labor Standards Act (FLSA).
Department of Labor Sues Smoothstack
In July 2024, the U.S. Department of Labor escalated the case by filing a lawsuit against Smoothstack and its co-founder, Boris Kuiper. The DOL alleges that the company’s employment practices resemble modern-day indentured servitude.
The lawsuit claims that Smoothstack increased penalties, demanding up to $30,000 from employees who left before completing the required 4,000 hours. Some employees reportedly earned less than the federal minimum wage, a direct violation of labor laws. Additionally, the DOL asserts that Smoothstack unlawfully restricted employees with broad non-disparagement, non-disclosure, and confidentiality agreements, preventing them from discussing their working conditions or cooperating with government investigations.
Potential Impact on the IT Industry
The Smoothstack lawsuit highlights growing concerns about unfair employment contracts in the tech industry. Legal experts believe the case could set an important precedent, forcing companies to reconsider restrictive work agreements and wage policies.
Employees and job seekers in the IT sector should stay informed about their rights and avoid signing contracts with excessive financial penalties. If the courts rule in favor of the plaintiffs, companies across the industry may need to revise their employment policies to comply with labor laws.
