FLSA Overtime Case Settles for $5M

If employees in a brokerage company merely comply with client wishes by executing transactions for them, the brokerage must properly classify their status under the Fair Labor Standards Act, and pay them overtime, when they work more than 40 hours in a work week. If the brokerage wants to exempt employees from the law’s overtime and minimum wage requirements, the employer must make sure their primary duties are exempt duties.

After over four years of litigation and negotiations, brokerage firm RBC Capital Markets is ready to settle with a class of securities brokers for $5.05 million to resolve the the brokers’ claims that RBC violated federal and state overtime and minimum wage requirements.

The settlement amount would be distributed among 423 class members. RBC denied liability. The settlement must be approved by the presiding judge before going into effect.

2010 Decision

The agreement follows a March 31, 2010 decision in which a federal court exonerated RBC regarding four brokers (In re RBC Dain Rauscher Overtime Litigation).

But the court found that “genuine issues of fact” remained as to the other members of the class, and the announced settlement applies to them, and appears likely to resolve their claims.

Professional Exemption

In the 2010 decision, the district court ruled that one plaintiff was not eligible for the learned professional exemption under the FLSA, as argued by the defendant, because his position did not require an employee with “knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction,” as the professional exemption requires (29 C.F.R. §541.300(a)).

Administrative Exemption

The court excluded four additional plaintiffs because it wasn’t clear whether they qualified for the administrative exemption, which requires them to perform work “directly related to the management or general business operations of the employer or the employer’s customers” (29 C.F.R. §541.200(a)).

Their primary duties may instead have been merely to “comply with clients’ wishes by effectuating transactions for them,” wrote the court. One of these plaintiffs failed to meet this prong of the exemption because his clients were individuals, with no “business operations” within the meaning of the exemption.