Tresa Baldas is a staff reporter for the National Law Journal.

The financial services industry is facing an onslaught of overtime lawsuits, triggering hefty settlements from Wall Street powerhouses and raising litigation fears within the industry. Management-side attorneys note that the litigation trend, which started in the early 2000s, has accelerated in the past year, with at least one major company getting hit with an overtime lawsuit every month.

Most recently, on Oct. 1, Countrywide Home Loans Inc., among the largest mortgage lenders in the United States, was hit in Florida with a class action alleging unpaid overtime to loan specialists, loan processors and administrative employees. Weissman v. Countrywide Home Loans, No. 0:2007 cv 61398 (S.D. FL).

Just days before that suit, on Sept. 28, an overtime lawsuit seeking class action status was filed against Deutsche Bank Securities Inc. on behalf of bank employees allegedly denied overtime. Oyejola v. Deutsche Bank Securities Inc., No. 1:2007cv08368 (S.D.NY).

Neither Deutsche Bank nor Countrywide Home Loans has filed responses to the lawsuits. Officials at Deutsche Bank declined comment on the suit. Officials at Countrywide were unavailable for comment.

Exemption a Key

“It's almost anyone in the financial services industry,” said Christine Howard, a labor and employment attorney at Atlanta-based Fisher & Phillips. “There seems to be litigation brewing everywhere. Whether it's loan officers, financial analysts, consultants, stock brokers — they are asserting that they should have never been named as exempt [from overtime].”

Howard explained that a key issue in the litigation is whether certain positions are subject to the administrative exemption from overtime, or if they're inside sales employees entitled to overtime. Under the Fair Labor Standards Act, an employee is subject to the administrative exemption if he or she makes at least $455 per week and if his or her primary duty is office or management work.

The exemption arguments, meanwhile, are piling up in the courts. “I track new case filings in federal court. I would estimate that on a monthly basis, there are at least three class actions filed against a financial services company,” said Joan Fife, a partner in the San Francisco office of Chicago's Winston & Strawn who is currently defending several financial services companies in overtime class actions.

But while overtime claims continue to pour in, Fife said, she has noticed a new trend — companies are fighting back. “Early on, a number of companies settled [the overtime suits]. But more recently, companies are fighting the cases . . . and I do think it's a good idea,” Fife said. “If you don't fight the cases, you become an obvious target for plaintiffs' lawyers and there are going to be a number of copycat cases.”

Many lawyers believe the multimillion-dollar settlements reached during the past year are drawing even more plaintiffs out of the woodwork. A $98 million settlement — the largest yet of overtime claims against the financial services industry — was reached in May 2006 by Citigroup Inc.'s Smith Barney brokerage unit, which was sued for overtime by thousands of current and former brokers. Bahramipour v. Citigroup Global Mkts. Inc. f/k/a Salomon Smith Barney, No. 04-4440 (N.D. CA).

Other recent settlements include an $89 million agreement reached in 2006 by UBS Financial Services, a New York-based unit of a European bank that manages money for the wealthy. It was sued by U.S. employees who claim they were wrongly denied overtime. Bowman v. UBS, No. C:04-CV-03525MMC (N.D. CA). That case followed a settlement for $37 million by Merrill Lynch. Burns v. Merrill Lynch, No. 3:04-CV-04135 (N.D. CA).

For employee rights attorney Justin M. Swartz, those settlements are long overdue. He believes the financial services industry has for too long unfairly denied overtime to scores of employees who have been intentionally misclassified and pressured into working long hours to meet unrealistic goals.

“These financial services companies make a lot of money off the backs of loads of midrange-compensated workers. The least they could do is meet their obligations under the wage and hour laws,” said Swartz of New York's Outten & Golden, which is handling about a half-dozen overtime lawsuits against financial services companies, including banks, brokerage firms and mortgage companies.

Swartz said he is particularly concerned about workers who are paid on a commission basis, who aren't among the highest or the biggest sellers, but are pressured into working long hours to meet certain goals.

Instant Insights /

<b>National Law Journal:</b> Financial Services Hit by Overtime Lawsuits

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