Hewlett-Packard has been hit with a lawsuit filed by three former sales executives claiming that the computing giant has withheld millions of dollars worth of sales commissions.
The disgruntled trio Jeffrey Johnson, Jennifer Riese, and Shaun Simmons allege that HP was using faulty software called Omega that failed to keep accurate record of sales and commissions.
The law suit was filed in federal court in San Francisco on Thursday and claims that as many as 50,000 employees may have been a victim of the Omega systems’ inaccurate bonus and commission tracking.
The trio are asking the court to certify their suit as a class action on behalf of the 50,000 current and former HP sales employees, alleging that the total amount owed is more than $5 million.
HP has subsequently acknowledged issues with the sales-tracking software, but issued a statement saying that the allegations “substantially exaggerates the scope” of the previously acknowledged issue. HP also stated its intention “to defend this vigorously in court.”
In a separate statement, HP said that “a very small percentage of HP's global sales team were impacted by a technical issue relating to processing commissions. We are working to address the issue.”
The Omega system as implemented in 2002 following the acquisition of Compaq. Omega was a legacy system inherited by Compaq when it bought Digital Equipment in 1998.
Analyst firm Zack Investment Research said the lawsuit was potentially damaging to HP’s reputation.
“We believe this is an embarrassing development for a company of this stature, which may adversely affect its goodwill going forward. It is likely that the incident will spread a negative feeling among all employees, whether affected or not,” it said.
“We believe that this allegation if proved in a court of law may attract monetary penalty over and above the arrears commission to be paid by the company.”