Hard-working Bank of America Merrill Lynch Corp. advisers may be in for a mid-year bonus following a $6.9 million class action settlement regarding overtime pay.
The three original adviser plaintiffs, who worked in the company's bank branches, sued the firm last March, claiming that they had been misclassified as exempt from overtime and were owed pay on the hours they worked outside of the traditional 40-hour work week.
The three advisers, Roman Zeltser, Anna Tyutyunik and Jared Brock, had all worked for a time with Merrill Lynch in bank branches in New York and California. None of the advisers are still employed at the firm, according to records with the Financial Industry Regulatory Authority Inc.
The advisers claimed that the firm violated the Fair Labor Standards Act, as well as New York and California labor laws by requiring them to work nights, weekends and through lunch hours without additional compensation beyond their standard salary and commission.
Their case hinged on the fact that Merrill Lynch had used a professional or administrative exemption, which requires that the employee exercise “discretion and independent judgment with respect to matters of significance,” according to the Fair Labor Standards Act.
The exemption aims to help distinguish between employees who are paid for their decision-making authority and those who are paid commissions for making sales.
(More: Overtime pay for advisers?)
An employee whose primary duty is selling financial products does not qualify for the administrative exemption, according to the Department of Labor's regulations.
Because their duties revolved around sales of products, they shouldn't be considered exempt under Department of Labor's standards, the plaintiffs argued.
“[Financial solutions advisers] exercise little or no independent discretion and judgment in performing their primary duties,” the complaint said.
The same law firm representing the plaintiffs in this case, Outten & Golden, has also brought cases on behalf of bank advisers at JPMorgan Chase & Co. on the same grounds that they are not exercising significant discretion. There are other cases that are pending on behalf of adviser trainees at other firms, as well.
(See also: Merrill settles unpaid-OT suit for $12M)
Although this case settled, it is a point of contention among employment lawyers whether advisers deserve to be paid overtime.
Advisers who are analyzing client assets and counseling on financial decisions should be exempt from overtime, according to the Fair Labor Standards Act.
That makes it harder to argue in favor of overtime for non-bank channel advisers because their duties are more focused around providing advice for clients, lawyers say.
Moreover, some attorneys such as Linda Friedman of Stowell & Friedman have argued that attorneys are exploiting a loophole and that highly paid advisers are not the people that overtime laws are designed to protect.
Attorneys at Outten & Golden did not return calls requesting comment.
Bank of America is “pleased to have resolved the matter,” said firm spokesman William Halldin.
As part of the settlement, Bank of America Merrill Lynch denied that they are liable or owe damages to anyone with respect to the allegations. The firm will continue to classify advisers in both bank and brokerage channels as exempt from overtime pay.
All current and former advisers or “field financial services associates” in the firm's retail banking centers in California between September 3, 2009 and April 30, 2014, will be eligible to participate in the settlement.
Bank advisers who worked for Bank of America Corp. or Merrill Lynch & Co. in New York from November 15, 2006 to April 30, 2014 will also be eligible.
A third class applies to all current and former field financial solutions advisers employed by Merrill Lynch in retail banking centers between November 15, 2009 and April 30, 2014.
The group had originally specified damages “in excess of $5 million.”
The settlement was first reported by Law360.