A federal judge last week denied a request by Bank of America and Merrill Lynch to force a group of bank brokers to arbitrate a lawsuit seeking overtime pay.
The relevant laws and interpretations by the Securities and Exchange Commission “each reject [Merrill's and Bank of America's] contention that arbitration should be compelled at this stage of the litigation,” wrote Judge Harold Baer of the U.S. District Court of the Southern District of New York in denying the firms' request.
BofA and Merrill sought to move the case into the arbitration system run by the Financial Industry Regulatory Authority Inc.
But Finra rules “explicitly prohibit the enforcement of arbitration agreements against a member of [a continuing] putative class or collective action,” Mr. Baer wrote.
The case, filed in March, alleges that the bank brokers, called financial solutions advisers, aren't exempt from labor laws that require overtime pay for nonmanagerial employees.
The suit seeks back pay for more than 100 members of the proposed class, and estimates that damages will exceed $5 million.
One broker in California and two in New York are the named plaintiffs so far.
The court's decision keeps the case alive, said Jennifer Liu, a lawyer at Outten & Golden LLP, who represents the plaintiffs.
Plaintiffs could be added in other states, she said.
“The next step is to seek collective-action certification” so that more bank brokers could opt in and then seek class action status to cover all eligible brokers who don't opt out of the case, Ms. Liu said.
The companies are disputing the claim, spokesman Bill Halldin said.
The ruling was “a procedural decision, but it doesn't change the underlying facts that these individuals are classified as exempt” employees, he said.