Financial Advisors Advance Their Cause for Overtime Pay

more+
less-

According to Judge Frank Maas of the U.S. District Court for the Southern District of New York, the first step was taken in the settlement process between Merrill Lynch & Co. and over 500 field financial advisors.  Recently he granted preliminary approval for a $6.9 million settlement stemming from claims that the advisors were misclassified as exempt from overtime pay under state and federal law.[1]

As Judge Maas stated, “It simply allows notice to issue to the class and for class members to object to or opt-out of the settlement . . . After the notice period, the Court will be able to evaluate the settlement with the benefit of the class members’ input.”

The settlement encompasses a collective action under the Fair Labor Standards Act involving numerous field FSAs employed by the Merrill Lynch companies between November 15, 2009, and April 30, 2014. The agreement also involves two subclasses under state law.   The subclasses include those advisors working in New York from November 15, 2009, to April 30, 2014, and those working in California from September 3, 2009, to April 30, 2014. The court said about 500 individuals fall within both subclasses under Rule 23 of the Federal Rules of Civil Procedure.

Prior to granting preliminary settlement approval, the Court declined to compel the field advisors to individually arbitrate their claims in accordance with the rules of the Financial Industry Regulatory Authority (“FINRA”).  Initially, the affected investment companies appealed this decision to the U.S. Court of Appeals for the Second Circuit.  However, that appeal was later withdrawn.

Meanwhile, Merrill Lynch officials are “pleased to resolve the matter.”  They also have emphasized that the financial solutions advisors at issue here are different than those that the public traditionally envisions.  Rather than the advisors that generally work at Merrill Lynch offices on behalf of high-net-worth clients, these advisors primarily worked at or near Bank of America branch locations.

Over the past two years, Merrill Lynch has settled similar claims of overtime violations.  In March 2013, the Southern District of New York granted final approval to a settlement of $7 million regarding other alleged FLSA violations.   Similarly, a certified class of financial advisors alleged that the company misclassified them as exempt from overtime pay.

In October 2013, the Southern District of New York granted final approval to a settlement of $12 million regarding alleged FLSA and state law violations.  The company agreed to pay this amount to approximately 12,000 employees who provided administrative and sales assistance to financial advisors.  It previously referred to these employees as “client associates.”

As for the current proposed settlement, a final fairness hearing is scheduled for September 23, 2014.

A special thank you to Gregory R. Harvey, a Summer Associate at Cullen and Dykman LLP, for his assistance with this blog post.

[1] Zeltser v. Merrill Lynch & Co., S.D.N.Y., No. 1:13-cv-01531, May 12, 2014.

 

Topics:  Merrill Lynch, Over-Time, Unpaid Overtime, Wage and Hour, Wages

Published In: Civil Remedies Updates, Finance & Banking Updates, Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Cullen and Dykman LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »