The S-corp setup was his idea - but that may not save the tech giant at trial
IBM must face a jury over a technical writer's claim that he worked 1,000 hours off the clock without pay.
That was the upshot of a federal court ruling on July 29, 2026, refusing to throw the case out before trial. For about three and a half years, a worker wrote technical documents for IBM on a federal Environmental Protection Agency contract. A staffing firm, Viva USA, brought him in, and - at his own request - paid him through his personal S-corporation rather than as a regular W-2 employee. On paper, that put two layers between him and IBM.
The court was not convinced the paperwork ended the matter.
By his own sworn account, IBM's program managers ran his days: his assignments, his hours and, in effect, his pay. He says they capped him at a paid 40-hour week while assigning work that took far longer, and discouraged him from ever billing overtime. When he told a Viva representative he was "working 80 hours a week," he testified, the reply was, "If you want the job, just do it." His understanding of the overtime policy, he said, was to "keep your mouth shut."
After he was terminated in July 2021, he invoiced 1,000 hours of unpaid overtime. Viva did not pay. He sued IBM and Viva under the Fair Labor Standards Act - the federal minimum-wage and overtime law - and District of Columbia wage laws.
IBM and Viva moved to end the case. They argued the contractor setup was his idea, that they paid his corporation in full each week, and that any shortfall was the corporation's doing, not theirs.
The court refused. Using the "economic reality" test, it found a jury could look past the labels and treat IBM and Viva as his true employers, citing evidence they controlled his schedule and tasks and held the power to fire him. The court was careful to say it was not deciding the case, only letting it proceed.
The takeaway for HR is blunt. Calling someone a contractor, or paying through a personal corporation, does not settle their status. What counts is who directs the work. Telling a worker not to log overtime does not make the hours vanish - it can become proof the employer knew. Accurate timekeeping, and a hard look at control rather than contract wording, is the safer ground.
The court also left both sides' experts in place for now and declined to rearrange the parties. Those issues may resurface before trial.
