Commitments and Contingencies

12 Months Ended

Dec. 31, 2023

Commitments and Contingencies [Abstract]

Commitments and Contingencies

21.  Commitments and Contingencies

Per ASC 450 Accounting for Contingencies, the Company reviews potential items and areas where a loss contingency could arise. In the opinion of management, other than items disclosed below, we are not a party to any legal proceeding, the outcome of which, in management’s opinion, individually or in the aggregate, which would be reasonably possible to have a material effect on our consolidated results of operations, financial position or cash flows. We expense legal defense costs as incurred.

Three former employees of Absolute Consulting, Inc. and Hyperspring, LLC, filed putative class action lawsuits against  the Company, alleging that the Company failed to pay overtime wages as required by the Fair Labor Standards Act and state law. The three cases Natalie Adams v. Absolute Consulting, Inc., Case No. 6:20-cv-01099, Matthew Waldecker v. Hyperspring, LLC, Case No. 2:20-cv-1948, Don Pharr v. Absolute Consulting, Inc., Case No. 23-cv-01558-JRR were filed on December 2, 2020, December 15, 2020, and June 8, 2023 respectively.

On August 22, 2023, Plaintiffs in Adams, Waldecker and Pharr and GSE Systems, Inc., Hyperspring and Absolute participated in private mediation. The mediation was successful and an agreement in principle was reached before the conclusion of the mediation to resolve and dismiss all three pending matters in exchange for a settlement payment.

The parties’ settlement agreement was executed on October 30, 2023 and will result in the dismissal of all three cases. In addition to customary terms, GSE Systems, Hyperspring and Absolute will be obligated to make a series of payments in 2024, eventually totaling $750,000 inclusive of attorneys’ fees and costs. This amount is included in accrued legal settlements as of December 31, 2023, and included as a part of selling, general and administrative costs for the year ended 2023.

One former employee of Hyperspring, LLC, had filed charged with the Equal Employment Opportunity Commission, alleging discrimination and retaliation, which Hyperspring, LLC, filed a response denying those claims. On December 19, 2023, a complaint was filed in the United States Eastern District of Tennessee against GSE Systems, Inc and its subsidiaries.

Subsequent to the year ended December 31, 2023, a settlement agreement was executed by the parties on February 29, 2024, dismissing the case with the obligation to pay approximately $260,000 inclusive of attorneys’ fees. As such, this amount is included in accrued legal settlements as of December 31, 2023, and included as a part of selling, general and administrative costs for the year ended 2023.