- Business Insider continues to obtain more details on the settlement by HP and HPE to salespeople after a nine-year lawsuit battle.
- We have now learned that 2,189 current and former California HP employees will be receiving settlement payments, with an average payment of $5,430.06. Some will be receiving much more and some less.
- The case involved former salespeople first launching a lawsuit nine years ago claiming that HP’s computer systems weren’t tracking commissions properly and they weren’t getting paid in a timely manner.
HP and Hewlett-Packard Enterprise will pay 2,189 of its current and former California sales employees settlement fees, with an average payment of $5,430.06, after it settled their lawsuit for $25 million, court officials say.
Some will be receiving much more and some far less.
The case involved former salespeople alleging that HP’s computer systems weren’t tracking commissions properly and they weren’t getting paid in a timely manner. They filed suit some nine years ago.
However, in 2016 Business Insider reported that sales people were still complaining about messed up pay, after HP had split into two companies. The sources that we talked to at the time were not aware that other salespeople were suing.
Those sources told us in 2016 that the wacky pay situation had gotten so bad that some people were behind on their mortgages and facing foreclosure, others were late on their alimony. One salesperson was even told that he actually owed his employer money, over $130,000, after the first quarter of 2016, sources told us.
Business Insider again reported on these issues in 2017, after an HP executive sent an email to the troops apologizing. (That executive has since left the company.)
Several months after Business Insider’s second report, HP and HPE agreed to the $25 million settlement deal. And it took another year for the legal volley to officially end and for the court to approve the deal. That happened earlier this week.
In addition to the $25 million penalty fee, HP and HPE said they are currently overhauling their sales and commission-tracking computer systems. The companies told the court that they have already spent or budgeted between $60 million and $70 million through their fiscal 2018 on the new systems and expect to pay another $5 million in fiscal 2019, according to legal documents.
The new system is known as the Incentive Compensation Environment or “ICE”, according to court documents. And it integrates with cloud financial software from startup Anaplan, with inventory-tracking software from startup Zyme and with Salesforce (although HP Inc., the PC and printer HP company, has since ditched Salesforce for Microsoft Dynamics).
Penalties, not back pay
The settlement wasn’t backpay, but a penalty, and each person’s share depended on their wages, Jonathan Parrott tells us. Parrott is an attorney at the Franklin Azar law office working for the plaintiffs.
Of the $25 million that HP and HPE agreed to pay, nearly half went to the lawyers and legal fees. And a few million went to state agency penalty fees as well. The named plaintiff, Jeffery Wall — the one who sued before the suit was turned into class action status for thousands of people — was paid an additional $25,000, settlement documents show.
When the settlement was originally agreed to, back in December, 2017, there were some 1,323 people as plaintiffs in the class action suit and payments to people ranged from the lowest of $144 to the highest of $81,237.
However the final payments wound up quite a bit lower because the court agreed to add another 866 salespeople as plaintiffs to the case. All of them split a kitty of about $11.5 million, out of the $25 million. (The rest went to lawyers fees and government agency penalty fees).
So the total number of salespeople who went to court over pay issues at HP and HPE was nearly 2,200 people.
Parrott told us another interesting fact about this settlement as well: Although plaintiffs included both former and current HP/HPE sales employees, only the ones who left the company received significant cash. Most the money for current employees is being paid as a per-employee penalty fee to the state, he said.
Even so, many class action suits representing this many people result in only a small token payment to the plaintiffs, Parrott says, as would be expected whenever legal fees take a big chunk of the award and everyone else shares the rest.
A spokesperson for HPE did not respond for an immediate request for comment on the payment amount but previously told Business Insider: “HPE is pleased that the mediated resolution in this dispute that was reached by the parties in 2017 has been approved by the Court.”