Federal Court Recommends Class Certification for Tax Preparers’ Wage Claims

On June 21, 2024, a federal magistrate judge in the Eastern District of New York recommended granting class certification to tax preparers alleging overtime violations and unlawful deductions, among other things. 

Specifically, the tax preparers sued two companies doing business as R & G Brenner Income Tax Centers (collectively, “R & G Brenner”), which operated 20-30 locations throughout the New York City area, according to the plaintiffs’ complaint.  The tax preparers alleged that they were paid on a commission basis without an overtime premium of one and half times their regular rate for hours worked over forty (40) per week.  For example, one tax preparer alleged working Monday to Friday from 9 a.m. to 8 p.m. and Saturday from 9 a.m. to 5 p.m.  That tax preparer further alleged that she was paid a weekly draw of $1,000 per week against her commissions without extra pay for overtime work. 

In addition, according to the tax preparers, R & G Brenner automatically deducted half an hour per shift for a meal break but did not provide such a break, requiring tax preparers to work “off-the-clock” without compensation.  Finally, R & G Brenner allegedly took unlawful deductions from tax preparers’ commissions for errors and omissions insurance, credit card chargebacks, and missing customer payments for tax preparation services, among other things.      

In its report and recommendation, the Court found that class certification was appropriate because the tax preparers had alleged that they were not paid properly pursuant to uniform, company-wide policies, including the failure of R & G Brenner to pay overtime.  Further, the applicability of certain exemptions from overtime that R & G Brenner raised could be determined on a class-wide basis. 

 R & G Brenner had argued that the tax preparers were subject to the administrative and professional exemptions – which are only applicable when employees are paid a salary and perform certain duties – and that determining whether those exemptions applied would involve too many individualized questions for class certification.  But the Court rejected that argument, finding that the tax preparers were paid commissions, not salaries, and had materially similar duties. 

Further, the Court found that class certification was appropriate as to the tax preparers’ claims that they worked off-the-clock during automatically deducted meal breaks, based on testimony from tax preparers on this issue.

Importantly, this case shows that differences employees’ pay or damages may not bar a class action and that representative testimony may suffice to make out a class-wide claim of unpaid wages.