The federal Fair Labor Standards Act (FLSA) requires employers to pay their workers one and one-half times their normal hourly rate of pay for each hour that the employees work beyond eight hours in a day and forty hours in a week. Although the FLSA does provide for certain exceptions to this requirement with specific categories of employees, employers will sometimes try to avoid paying their employees overtime by mislabeling them. This is against the law and employers who intentionally mislabel their employees in order to avoid paying overtime are subject to wage and hour lawsuits.
Under the FLSA, an employee must be paid a salary of at least $455 per week and fit into one of three categories in order to qualify for overtime exemption. The first category is administrative and an employee must perform mostly non-manual office work which directly supports the company or its customers in order to qualify for this exemption. The second category, executive, consists of employees who primarily manage at least two other employees and have significant input into the job status of those employees. The third category is professional, and in order to fit into that category, an employee’s job must require a particular set of skills or level of education which is not common to most workers.
Employees are commonly mislabeled under the administrative category as employers will sometimes try to claim that any worker who performs mostly office work and is paid on a salary basis is eligible for overtime. Recently, RBS Citizens Bank agreed to settle a class action lawsuit of mortgage loan officers who were allegedly misclassified as exempt from overtime under the administrative category. The ten named plaintiffs of the class who filed the lawsuit “sought overtime premium compensation under the Fair Labor Standards Act (‘FLSA’) and the Pennsylvania Minimum Wage Act (‘PMWA’) on behalf of themselves and similarly situated mortgage loan officers (‘MLO’) employed by [RBS Citizens Bank] alleging that they were misclassified as overtime exempt,” according to the motion to certify the settlement that was filed by the plaintiffs.
RBS Citizens Bank provided an answer to the complaint which denied the allegations that it had misclassified its MLOs, insisting instead that it had properly classified all of its employees.”
Once the court certified the class, the parties entered into mediation in an attempt to settle the case outside of court. RBS Citizens Bank provided payroll data which included the weeks worked and annual compensation amounts for the relevant statutory period for each opt-in plaintiff and number of potential class members for the states of Pennsylvania, New York, New Jersey, Massachusetts, Rhode Island, Ohio, Illinois and New Hampshire for the past three years. The class counsel combined this data with estimates of hours worked by the MLOs who had joined in the litigation in order to create a damages model which outlined RBS Citizens Bank’s potential exposure if the two parties were unable to reach a settlement.
Most of the $3 million settlement will be distributed among the participating class members. The named plaintiffs will receive $22,000 in enhancement awards, $750,000 will go to the fees for the plaintiffs’ attorneys, about $20,000 will go to the costs of bringing the lawsuit, and $10,000 will be used to settle third-party claims.
The attorneys at Chicago Overtime Law Center have decades of experience litigating wage and hour cases, including overtime, vacation pay, meal breaks, and tips. We have offices conveniently located in Oakbrook Terrace and Chicago, Illinois. Contact an Arlington Hts. and Rosemont wage and hour lawyer at the Chicago Overtime Law Center today at 312-869-4095. We are looking to represent loan and mortgage brokers who have not been paid overtime and have been misclassified as managers.