Investors in TaskUs, a digital outsourcing powerhouse, are a step closer to receiving justice — and a hefty payout — after a federal magistrate judge recommended approval of a $17.5 million settlement resolving claims that the company manipulated its Glassdoor ratings to boost investor confidence.

In a detailed report issued Thursday, U.S. Magistrate Judge Gary Stein endorsed the deal, calling it “fair, reasonable, and adequate.” The proposed settlement, he said, offers meaningful relief to the investor class who alleged they were misled by TaskUs’ overly polished portrayal of its workplace culture.

A Case Built on Polished Promises

The lawsuit, which stems from TaskUs’ initial and secondary public offering filings, claimed the company misrepresented its employee satisfaction by pressuring trainees to leave glowing Glassdoor reviews before they experienced the reality of the job.

According to the complaint, the company made it appear that its online ratings “accurately reflected a vibrant and positive workplace,” when in truth, new hires were encouraged to post five-star reviews during training — a period still fueled by “management’s promises of a fun place to work.”

Fees, Awards, and the Final Verdict

Judge Stein also approved the plaintiffs’ request for $5.25 million in attorney fees — about 30% of the total settlement — along with $925,000 in litigation expenses and service awards of $7,000 and $9,750 for the lead plaintiffs.

If granted final approval, the settlement would end all remaining claims against TaskUs, which had already seen portions of the case trimmed by U.S. District Judge John P. Cronan in January 2024, including accusations that the company downplayed attrition rates.

The Legal Teams

The investors are represented by Joseph A. Fonti, Nancy A. Kulesa, Evan A. Kubota, and Thayne Stoddard of Bleichmar Fonti & Auld LLP, alongside John A. Kehoe and Michael K. Yarnoff of Kehoe Law Firm PC.

TaskUs and the individual defendants are defended by Jonathan K. Youngwood and Meredith Karp of Simpson Thacher & Bartlett LLP.

A Costly Lesson in Image Management

If approved, the TaskUs $17.5M Investor Deal will close a chapter in one of the more unusual securities suits in recent years — one where a company’s reputation management strategy may have cost far more than a few flattering reviews.