Overtime Lawsuits Overwhelm Industry

A portion of the lawsuits were presented by Nichols Kaster & Anderson PLLP, which says its practice is almost exclusively on the representation of employees in individual and class action cases.

The Minnesota-based law firm has at least nine cases pending against mortgage companies, in pursuit of overtime and, or minimum wage compensation under the Federal Fair Labor Standards Act. The lawyers seek to have all employees, who worked for the companies in the three years since the suits were filed and did not receive such compensation, according to the firm’s Web site.

“Frequently employers try to avoid paying for overtime by telling their employees that they are ‘exempt’ or that they are ‘salaried’ or ‘commissioned’ employees,” the firm says on its site. “Another common technique is to tell the employees that they must “work off the clock” or they can “only record 40 hours. Employers are frequently either mistaken or dishonest.”

In December 2003, the law firm filed a complaint against Heartland Home Finance on behalf of loan officer Camille Melonakis-Kurz and all similarly situated employees of the company. Melonakis-Kurz, who worked from Heartland’s Aurora, Colo., branch office, alleged she routinely worked over 40 hours per week without overtime compensation.

David Carr, an attorney representing Heartland, told MortgageDaily.com in an e-mailed statement that the Colorado loan officer’s claims “involve alleged off-hours, off-premises overtime for which she failed to request payment during her employment. The company believes her claims are without merit.”

With loan officers in general, he said the company believes its loan officers are exempt from overtime pay under the FLSA.

“However, in an overabundance of caution, in June of 2002, the company adopted policies designed to prevent loan officers from working more than 40 hours in a week,” he said. “The purpose of this was to prevent any legal issue concerning overtime.”

Over 830 individuals have joined the case against Heartland, which has been class certified. A second lawsuit was filed alleging that Heartland failed to pay some of its loan officers minimum wage, the law firm’s site said.

Last February, attorneys filed a collective action complaint on behalf of loan officers against Aames Home Loan. The principal plaintiff in the case alleges he often worked more than 40 hour a week without getting paid overtime in the company’s Bloomington, Minn. branch office.

Asked for comment on the case, Leslie Wallis, outside counsel for parent company Aames Funding Corp., stated that “it is Aames’ policy and practice to pay loan officers (formerly known as account executives) overtime compensation for overtime worked,” according to an e-mailed statement.

The law firm said Monday that over 1,100 individuals joined the suit. The deadline for current or former employees to join the case has passed. In mid-June, the firm’s attorneys will meet with Aames’ attorneys in a mediations session and attempt to settle the case.

TCF Financial Corp. had a collective action complaint filed against in it last March by a loan originator who allegedly routinely worked in excess of 40 or 48 hours each week at two of the company’s Minnesota branches. More than 220 employees joined the ongoing case, according to the law firm’s site.

Associate attorney Kevin Finnerty said in an interview that “TCF denies that it did not pay employees overtime that they worked.”

In a June 2004 complaint against Bank of America, two of its former account executives, one who worked about seven months from an Arizona location and another who worked at a Minnesota location for about one year, also alleged unpaid overtime.

BoA has provided the law firm with a list of current and former retail account executives who may be eligible to join the case. Up until Monday, over 500 individuals have joined and those planning to must do so before the April 15 deadline, according to the firm’s site.

BoA commented in an e-mailed statement that it “values its workforce and firmly believes that it has treated its associates appropriately and in full accordance with all applicable laws, and continues to do so. We’re confident that the ultimate resolution of this litigation will confirm this.”

A Minnesota loan officer who worked for Chase Manhattan Mortgage filed a complaint against the company last July alleging that in addition to not being compensated for overtime, he routinely worked hours for which he was not paid minimum wage.

“We believe that we have a strong defense in this case,” Chase spokesman Tom Kelly said.

The law firm said Chase has provided it with a list of current and former loan officers potentially eligible under the case. The deadline to join more than 300 individuals who have done so is April 21.

In complaint filed against CTX Mortgage Co. last July, Lana Larson, of Minnesota, sought to be paid back wages plus interest among other things as she alleged she often worked in excess of 40 and 48 hours per week without overtime compensation.

But, CTX disputes Larson’s allegations. “Her time records indicate that she worked very little overtime, and she was paid overtime for all overtime hours that she reported working,” according to an e-mailed statement from CTX’s attorney Dan Hartsfield.

Hartsfield noted that legal requirements applicable to loan officers vary from jurisdiction to jurisdiction. Thus, determination of whether a loan officer is or is not eligible for overtime must be determined on a case-by-case basis. While some may be exempt from overtime under state law, others are exempt under federal law.

“In addition, some loan officers may be exempt from overtime because they qualify as outside salespersons, highly compensated employees or administrative employees,” Hartsfield continued. “Different rules may apply based upon federal or state law and the individual circumstances, duties and responsibilities of the specific loan officer.

“In Ms. Larson’s case, we believe she was properly classified and paid during her employment at CTX.”

Other companies that have lawsuits pending with similar accusations of unpaid overtime include Centex Home Equity, Fidelity Mortgage and Quicken Loans, according to Nichols Kaster & Anderson.

Blue Valley Ban Corp.’s fourth quarter earnings nearly disappeared due to a one-time charge from an overtime lawsuit.

The Overland Park, Kan.-based lender’s fourth quarter earnings came in at a mere $6,000, or no earnings per share — sinking from $736,000 a year earlier, according to its earnings announcement.

In a 10-K filing, Blue Valley said the blow resulted from a $550,000 charge recorded as a liability for the estimated potential cost of the litigation.

One current and 23 former loan originators of the bank seek a total of $5.6 million in claims that Blue Valley did not appropriately compensate them for overtime hours worked in accordance with the Fair Labor Standards Act. The lawsuit was filed last October in the U.S. District Court in Kansas, according to the filing.

Blue Valley said it “has meritorious defenses to the claims made and we intend to vigorously defend against these claims.” Also, it does “not anticipate any significant additional financial impact from this litigation.”

But, the bank could not be saved from what it referred to as a “disappointing” 2004 — annual income shrunk to $1.9 million from $5.6 million, resulting in the first time in 10 years income was lower than the previous year, the announcement said.

“2004 was a challenging year for the company,” chief executive Robert Regnier said in a written statement, as “results were adversely impacted by nonrecurring items.”