Insight Global Lawsuit: DOJ Settlement, Class Action, and Wage Cases

An Insight Global lawsuit most often refers to the $2.7 million federal settlement the Atlanta-based staffing firm paid on May 1, 2024, to resolve Department of Justice allegations that it mishandled COVID-19 contact tracing data in Pennsylvania.¹ But that case is one of several. Insight Global has also faced a related class action by affected residents, a Department of Labor back-wages order, an unpaid-overtime class action by its own recruiters, and a string of non-compete disputes, at least two of which the company lost.

The $2.7 Million DOJ Cybersecurity Settlement

The Pennsylvania Department of Health hired Insight Global in 2020 under a $23 million federally funded contract to deploy more than 1,000 contact tracers who called people exposed to the virus about testing and quarantine.² According to the DOJ, employees stored names, phone numbers, email addresses, COVID-19 exposure status, and sexual orientations in unauthorized public-facing Google accounts that lacked password protection and were potentially accessible to anyone with an internet link.³ Staff also emailed personal health information in unencrypted messages and shared passwords for sensitive systems.¹

Managers received internal complaints about these vulnerabilities as early as November 2020 but did not begin remediation until April 2021, roughly five months later.¹³²

The federal case began as a qui tam lawsuit filed on July 30, 2021, by Terralyn Williams Seilkop, a former Insight Global contract worker on the tracing program. Under the False Claims Act’s whistleblower provisions, she sued on behalf of the United States, alleging the company defrauded the government by accepting CDC-funded payments while failing to meet basic cybersecurity obligations. The case was captioned United States ex rel. Seilkop v. Insight Global LLC, No. 1:21-cv-1335 (M.D. Pa.).⁴¹

The government partially intervened in April 2024, and the settlement was announced weeks later. Seilkop received $499,500 as her whistleblower share plus $86,200 for attorney’s fees and expenses. Insight Global did not admit liability.⁴ The company said it later secured the exposed data, investigated the scope, strengthened its controls, issued a public notice, and offered free credit monitoring and identity protection to those affected.¹

The Related Class Action by Pennsylvania Residents

Affected residents filed a separate proposed class action in May 2021, Chapman v. Commonwealth of Pennsylvania Department of Health et al., No. 1:21-cv-00824, against both Insight Global and the state health department. The suit alleged the defendants failed to implement reasonable cybersecurity procedures, failed to provide timely breach notice, and maintained sensitive health information in unsecure spreadsheets and databases accessible through public Google searches. The complaint further alleged the $23 million contract had not gone through competitive bidding.⁵ Reporting indicates the case was later resolved by a settlement that received final approval from a federal judge.⁶

Wage and Overtime Cases

The DOJ case was not the first federal action against Insight Global tied to a government contract. Between June 2014 and October 2017, while subcontracting for Hewlett Packard on an IT contract with the U.S. Navy, Insight Global misclassified personal computer support technicians as lower-paid “computer operators.” The misclassification pushed workers below the prevailing wage rates required under the McNamara-O’Hara Service Contract Act, understated their overtime under the Fair Labor Standards Act, and skipped required fringe benefits.⁷ In March 2018, the company agreed to pay $354,978 in back wages to 14 affected employees.⁸

Former recruiters then sued the company itself. In March 2019, they filed a proposed class action, Willie et al. v. Insight Global, LLC, No. 1:19-cv-00801 (D. Md.), alleging the company had misclassified recruiters as exempt salaried employees to avoid paying overtime, when in practice they lacked meaningful decision-making authority and were performing administrative screening tasks.⁹

Non-Compete and Employment Cases

Insight Global requires employees to sign non-compete and non-solicitation agreements, and the resulting litigation has produced mixed results.

Insight Global v. Collabera (2015)

In July 2015, Insight Global sued Collabera, Inc., a competing IT staffing firm, in New Jersey state court, alleging Collabera had induced at least twelve former Insight Global employees to violate their restrictive covenants and bring proprietary knowledge with them.¹⁰ Collabera moved to dismiss because Insight Global had never registered or obtained a license to operate as an employment agency in New Jersey, as required by the state’s Private Employment Agency Act. The company only filed registration papers on October 16, 2015, months after suing.¹¹

On November 20, 2015, Judge Stephan C. Hansbury granted Collabera’s motion and dismissed the entire complaint. The court ruled that because Insight Global was unregistered when its cause of action arose, it could not sue in New Jersey courts, and its employment agreements and restrictive covenants were unenforceable as a matter of public policy.¹¹

Fromhold v. Insight Global (2023)

Michael Fromhold spent more than 15 years at the company and was promoted to president of its Technology Division in May 2021, joining the executive leadership team.¹² When the company adopted a COVID-19 vaccination policy in November 2021, Fromhold requested a religious exemption, explaining he was a “Bible-believing Christian” who had not received any vaccines in his adult life and believed the vaccine would alter the immune system God gave him.¹³

Insight Global asked four follow-up questions, which Fromhold answered. The company then denied the exemption for insufficient information, called the decision final, and did not ask for clarification. On November 5, 2021, it removed him from his leadership role and transferred him to a sister company, Monument Consulting. His supervisor told him to work from home to avoid “awkwardness” in the office, and he was eventually reassigned to a division where he supervised four employees instead of the thousands he had previously managed.¹³ He later left to become CEO of another staffing company.

Insight Global sued to enforce his non-compete and asked a court to order him fired from the new position. On February 23, 2023, Judge Brantley Starr of the Northern District of Texas denied the request for a temporary restraining order and preliminary injunction. The court found the non-compete overbroad, found no evidence Fromhold had taken or was using confidential information, and stated there was evidence Insight Global had violated Title VII of the Civil Rights Act by denying his religious exemption request. The judge wrote that “honesty and faith are not adequate bases for the Court to enjoin Fromhold or fire him from his new job.”¹² Insight Global appealed to the Fifth Circuit, but the parties filed a joint stipulation of dismissal in May 2023, ending the case.¹⁴

Barker v. Insight Global

Former sales manager John Barker filed a proposed class action alleging that Insight Global enforced non-solicitation agreements in violation of California’s unfair competition law. A federal judge declined to dismiss the class claims on December 5, finding Barker had adequately shown economic injury. The suit alleged the agreements affected up to 1,000 employees.¹⁵

Other Reported Cases

Not every non-compete case has gone against the company. In 2019, Insight Global’s outside counsel announced a favorable settlement in a trade-secret and employee-poaching case against an unnamed national competitor in the Southern District of New York. The financial terms were not disclosed.¹⁶

A separate case tested whether job applicants could sue over Washington’s 2023 salary disclosure law. In Floyd v. Insight Global LLC, No. 2:23-cv-01680 (W.D. Wash.), an applicant brought a proposed class action alleging violations of the pay-transparency requirements. On April 25, 2024, Judge Barbara J. Rothstein dismissed the case for lack of Article III standing. After motions for reconsideration were denied, the case was remanded to King County Superior Court in June 2024.¹⁷

1
U.S. Department of Justice. Staffing Company to Pay $2.7M for Alleged Failure to Provide Adequate Cybersecurity for COVID-19 Contact Tracing Data
2
Spotlight PA. PA Contact Tracing Data Breach Compromised, Insight Global
3
CBS News Pittsburgh. Insight Global Pennsylvania COVID-19 Contact Tracing Data Settlement Federal Whistleblower Case
4
Staffing Legal News. Takeaways From Insight Global’s Cybersecurity Settlement
5
ClassAction.org. Penn. Dept. of Health, Insight Global Hit With Class Action Over Data Breach Linked to COVID-19 Contact Tracing
6
TechTarget. Insight Global Settles Class Action Lawsuit After Contact Tracing Breach
7
U.S. Department of Labor. Staffing Company to Pay Back Wages After DOL Investigation
8
Staffing Industry Analysts. Insight Global Pay Almost $355,000 Back Wages Following DOL Investigation
9
EIN Presswire. Former Recruiters at Insight Global, a National Staffing Agency, Sue for Unpaid Overtime Wages
10
FindLaw. Insight Global LLC v. Collabera Inc.
11
New Jersey Courts. Insight Global LLC v. Collabera Inc., Docket No. MRS-L-1867-15
12
CaseMine. Fromhold v. Insight Glob., LLC, Civil Action No. 3:23-CV-0048-X
13
vLex. Fromhold v. Insight Glob., LLC, 657 F.Supp.3d 880
14
PACER Monitor. Fromhold v. Insight Global LLC
15
Bloomberg Law. Insight Global to Face Class Claims Over Non-Solicitation
16
Kasowitz Benson Torres. Kasowitz Reaches Favorable Settlement for Insight Global in Poaching Case
17
PACER Monitor. Floyd v. Insight Global LLC et al