Los Angeles, CAAn overtime pay lawsuit can be dealt with through the courts and not through the arbitration system, a federal court judge has found. The lawsuit, filed in New York and representing two New York and one California Merrill Lynch and Bank of America employees, alleged Merrill Lynch and Bank of America violated the Fair Labor Standards Act by exempting certain employees from overtime pay. Merrill Lynch and Bank of America sought to have the claim heard in arbitration, but a judge has ruled arbitration cannot be forced in this case.
The lawsuit (case 1:13-cv-01531-HB, Southern District of New York) alleges Bank of America and Merrill Lynch violated the Fair Labor Standards Act and New York Labor Law by failing to pay employees designated as “Financial Solutions Advisors” for their overtime work. The plaintiffs - from New York and California - filed a lawsuit against Bank of America and Merrill Lynch seeking class-action status on behalf of current and former Financial Solutions Advisors who were not paid for their overtime hours.
As Financial Solutions Advisors, the employees were registered with the Financial Industry Regulatory Authority (FINRA) and signed a “Form U-4,” which contains an arbitration clause. That arbitration clause, which states “I agree to arbitrate any dispute, claim or controversy that may arise between me and my firm, or a customer, or any person, that is required to be arbitrated under the rules…”, means that the employee agrees to settle any dispute between him or herself and the company through FINRA arbitration, rather than through the courts.
As such, Bank of America and Merrill Lynch filed a motion to force the employees’ claims to arbitration, dismissing the lawsuit.
But Judge Harold Baer, Jr., found that FINRA rules prohibit the enforcement of arbitration agreements against a member of a class action until class-action certification has been denied or decertified. In other words, arbitration cannot be forced until the judge has refused to certify a class-action lawsuit or until the class has been decertified. Only at that point can arbitration be enforced.
This means that the plaintiffs can continue their claims in court rather than through the arbitration system.
Bank of America and Merrill Lynch maintain that the employees were properly exempted from overtime pay under the Fair Labor Standards Act. Under the Fair Labor Standards Act, employees can be exempt from overtime pay if they meet certain administrative criteria. Lawsuits have been filed against various employers alleging employees were improperly classified as exempt from overtime pay.