ICT Anticipates Higher Costs in Class-Action Suit

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Teleservices provider ICT Group Inc. said yesterday it increased by $11.5 million the money it has put aside for the anticipated cost of a class-action lawsuit by former employees of its West Virginia call centers.


The increase brings the total held in reserve by ICT, Newtown, PA, for the lawsuit to $12.85 million. On April 16, a circuit judge in Berkeley County, WV, ruled that ICT owed damages to former employees who had not been paid for transition time, short breaks and other wages under the state's Wage Payment and Collection Act.


Under the ruling, ICT owes the employees a day's pay for every day the wages remained unpaid up to 30 days, ICT said. The increase in the reserve was based on ICT's estimate of higher damage payments due to the ruling, though the former employees who filed the class action claim the company's estimate is low, according to ICT.


ICT will appeal the ruling and continue to defend the lawsuit, the company said. Litigation defense costs were $200,000 in the first quarter of 2003, according to ICT.


The company also said it may be unable to meet financial obligations to its creditors because of the increased costs associated with the lawsuit and will seek changes to its debt agreements to remain in compliance.


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