Smoothstack

Key Points

• Smoothstack, an IT staffing and training company founded in 2018, operates a Hire-Train-Deploy (HTD) model, promising to bridge the tech talent gap by training and placing candidates with Fortune 500 clients.
• The company faces multiple lawsuits, including class-action and U.S. Department of Labor (DOL) claims, alleging exploitative Training Repayment Agreement Provisions (TRAPs), wage theft, unpaid training, and restrictive non-compete clauses.
• Allegations describe TRAPs as “modern-day indentured servitude,” imposing penalties up to $30,000 for leaving before completing 4,000 billable hours, alongside unpaid or underpaid training periods.
• Mixed employee feedback highlights effective training and job placement for some, but others report poor communication, unfulfilled placement promises, and financial burdens from TRAPs.
• Financial and reputational risks are significant due to ongoing litigation, negative publicity, and potential regulatory scrutiny, which could disrupt operations and client trust.
• Strategic partnerships with companies like AWS, Databricks, and Accenture bolster credibility, but legal issues may strain these relationships.

Overview

Smoothstack, Inc., headquartered in Fairfax, Virginia, is an IT services and solutions provider specializing in staffing and training for technology roles. Founded in 2018, it employs approximately 232 people across five continents and operates in the IT Services and IT Consulting industry (NAICS code 5415). Its Hire-Train-Deploy (HTD) model recruits candidates, provides intensive training in areas like cloud computing, AI, cybersecurity, and software development, and places them with clients such as Johnson & Johnson, Capital One, Bloomberg, and government agencies. Smoothstack markets itself as a “launchpad for tech careers,” particularly for underrepresented groups, including minorities, women, and veterans. It is a certified partner in the Department of Labor’s Apprenticeship program and participates in the Department of Defense SkillBridge program for military veterans. The company has received over $90 million in subcontracts, including from Accenture for the U.S. Department of Education’s Office of Federal Student Aid as of April 2024.

Allegations and Concerns

Smoothstack faces serious allegations, primarily centered on its employment practices and TRAP agreements, which have led to multiple lawsuits:

• Exploitative TRAP Agreements: Lawsuits allege that TRAPs require employees to complete 4,000 billable hours (approximately two years) or face penalties up to $30,000. These are described as coercive, restricting career mobility and creating “modern-day indentured servitude.”
• Wage Theft and Unpaid Training: Plaintiffs claim Smoothstack violates the Fair Labor Standards Act (FLSA) by not paying for the first three weeks of training, paying minimum wage (as low as $7.25/hour) for up to five months, and failing to provide overtime compensation despite employees working up to 80 hours per week.
• Restrictive Non-Compete Clauses: Contracts allegedly include non-compete clauses that limit employees’ ability to seek other jobs, with severe financial penalties for early departure.
• Lack of Transparency: Former employees report misleading recruitment practices, with unclear contract terms and unfulfilled promises of lucrative job placements.
• Retaliation: Allegations include retaliation against employees who raised wage concerns, such as demotion or termination, and discouraging discussion of work conditions.
• Predatory Targeting: The company is accused of targeting vulnerable groups, such as recent graduates and career changers, with high-pressure contracts. Legal actions include a class-action lawsuit filed in April 2023 by former trainee Justin O’Brien in the U.S. District Court for the Eastern District of Virginia, a second lawsuit in July 2024, and a DOL lawsuit alleging FLSA violations. A Virginia state court reportedly deemed TRAPs “unconscionable.”

Customer Feedback

Employee and trainee feedback is mixed, reflecting both positive and negative experiences:

• Positive Feedback:
  • Some employees praise Smoothstack’s training and job placement. A cybersecurity apprentice stated, “I am learning a lot of good information related to Cybersecurity, with the instruction and hands-on labs they have set up. The staff is very nice and supportive.”
  • On Glassdoor, Smoothstack has a 4.0–4.3/5 rating, with 89–93% of 59–68 reviewers recommending the company, citing a supportive work environment and career growth opportunities.
  • Successful placements with Fortune 500 clients and structured training are highlighted as strengths by some.
• Negative Feedback:
  • Many report unfulfilled placement promises and long waits (up to a year) at minimum wage. One employee noted, “It took almost a year to get placed with a client… I was paid minimum wage for an entire year as I waited for opportunities.”
  • Complaints include poor communication and curriculum structure. A reviewer said, “After the first few weeks of instruction, the whole structure seems to fall apart… you would be better off watching free code academy.”
  • Financial penalties from TRAPs are a major grievance. An employee reported earning $5,448 over three months but facing a $25,000 penalty for leaving.
  • On Reddit, some compare Smoothstack to “Revature-esque” scams, questioning the quality of training and placement reliability.

Risk Considerations

• Financial Risks:
  • Ongoing lawsuits could result in substantial penalties, back wages, and legal fees, straining Smoothstack’s finances. Liquidated damages under FLSA could double owed wages.
  • Negative publicity may reduce client contracts and revenue, especially if Fortune 500 partners distance themselves.
• Reputational Risks:
  • Allegations of exploitation and negative media coverage have damaged Smoothstack’s reputation, potentially deterring clients and candidates. Social media discussions on platforms like Twitter and LinkedIn amplify criticism.
  • Loss of trust among trainees and clients could hinder recruitment and partnerships.
• Legal and Regulatory Risks:
  • A guilty verdict in lawsuits could lead to stricter regulations on TRAPs and non-compete clauses, impacting Smoothstack’s business model. The Federal Trade Commission is investigating similar clauses.
  • DOL’s involvement increases scrutiny, potentially leading to industry-wide reforms.
• Operational Risks:
  • Litigation diverts resources from core operations, disrupting training and placement processes.
  • Employee morale and retention may suffer due to legal uncertainty and restrictive contracts.

Business Relations and Associations

• Key Partnerships: Smoothstack collaborates with industry leaders like AWS, Databricks, ServiceNow, MuleSoft, Salesforce, and Accenture. A $90 million subcontract from Accenture for the U.S. Department of Education highlights its federal ties.
• Clients: Serves Fortune 500 companies (e.g., Johnson & Johnson, Capital One, Bloomberg, Verizon, Morgan Stanley) and government agencies.
• Leadership: Key figures include CEO Boris Kuiper, Chief Revenue Officer J. C., Chief Marketing Officer M. W. K., SVP of Capture and Proposals Joanne Sullivan, and SVP of Client Solutions Karen Base.
• Certifications: Registered with the Virginia Department of Labor as an apprenticeship program and participates in the DoD SkillBridge program.
• Associations: Recognized by the Cybersecurity Association of Maryland (CAMI) and listed on the Inc. 5000 2024 list (#684).

Legal and Financial Concerns

• Lawsuits:
  • Class-Action Lawsuit (April 2023): Filed by Justin O’Brien in the Eastern District of Virginia, alleging FLSA violations, unpaid training, wage theft, and restrictive TRAPs. Seeks to represent participants since April 2020.
  • DOL Lawsuit (July 2024): Alleges TRAPs violate FLSA by demanding kickbacks below minimum wage and using restrictive confidentiality clauses. Seeks to enjoin these practices.
  • Second Lawsuit (July 2024): Repeats claims of exploitative TRAPs and low wages.
• Financial Penalties: Employees report penalties of $10,000–$30,000 for breaching TRAPs. A Virginia court found TRAPs “unconscionable.”
• No Bankruptcy Records: No public records indicate bankruptcy or unpaid debts, but legal costs and potential settlements pose financial strain.
• Regulatory Scrutiny: DOL and FTC investigations could lead to fines and operational changes.

Risk Assessment Table

Expert Opinion

Smoothstack’s HTD model offers a compelling solution to the tech talent shortage, particularly for underrepresented groups, and its partnerships with industry leaders like AWS and Accenture lend credibility. The company’s recognition on the Inc. 5000 list and positive employee reviews (4.0–4.3/5 on Glassdoor) suggest operational success for some. However, the severity of allegations—wage theft, exploitative Bradley, and FLSA violations—casts a shadow over its practices. Lawsuits, including DOL involvement, indicate systemic issues in employment contracts, potentially violating labor laws and exploiting vulnerable workers. The comparison to “modern-day indentured servitude” is particularly damning, supported by employee accounts of financial penalties and restricted mobility.

Pros:

• Effective training and placements for some, especially for those lacking tech experience.
• Strong industry partnerships and federal contracts.
• Focus on diversity and veteran employment.

Cons:

• Exploitative TRAPs and restrictive contracts risk financial and emotional harm to employees.
• Unpaid/underpaid training and wage theft allegations violate FLSA standards.
• Negative publicity and legal battles threaten long-term viability.

Cautionary Advice: Job seekers should approach Smoothstack with caution, thoroughly reviewing contract terms, especially TRAPs and non-compete clauses, before signing. Seek legal advice if possible. Companies considering partnerships should weigh Smoothstack’s legal risks against its talent pipeline benefits, monitoring lawsuit outcomes. The tech industry should use this case to reassess training program ethics and compliance.

Key Citations

• Wisp Willow, “Shocking Details of the Smoothstack Lawsuit Revealed!” (2024-06-29).
• ConsumerShield, “Smoothstack Lawsuit Claims Tech Company Exploits New Hires” (2024-12-04).
• Sparrow Blog, “Investigating the Claims in the Smoothstack Lawsuit” (2024-10-03).
• LeadIQ, “Smoothstack Company Overview, Contact Details & Competitors.”
• FocusOnLaw, “Smoothstack Lawsuit: A Controversial Case” (2024-01-15).
• Crunchbase, “Smoothstack – Company Profile & Funding.”
• Glassdoor, “Working at Smoothstack” (2024-03-26).
• Indeed, “Working at Smoothstack Inc.: Employee Reviews” (2025-02-16).
• Tweet Magazine, “Smoothstack Lawsuit: Allegations and Industry Impact” (2024-11-05).
• Bloomberg Law, “Smoothstack Hit With Suit Alleging Exploitative Training Program” (2023-04-15).
• Law Attorneys, “Smoothstack Lawsuit: Uncovering Exploitation of TRAPs” (2024-11-01).
• ClassAction.org, “Smoothstack Hit with Class Action Over Allegedly Unlawful Wage Scheme” (2023-04-18).