Serving The Needs Of Washington Bankers Since 1889
COUNSELOR’S CORNER
How to Avoid Getting Caught
in the Undertow of the Recent
Class Action Tidal Wave
By Rudy A. Englund and Sarah E. Swale, Lane Powell PC
At the national level, the U.S. Department of
Labor issued a November 27, 2012, news release
indicating that its Wage and Hour Division
investigated and found 392 bank employees
in five states had been misclassified as exempt
from overtime. The Department recovered in
excess of $1 million in overtime back wages on
behalf of the aggrieved employees.
The local litigation and the Department’s
investigation were no doubt spawned by the
Wage and Hour Division’s Administrator’s
Interpretation Letter No. 2010-1, issued on
March 24, 2010, wherein the Deputy Administrator determined that mortgage officers who
perform the “typical duties” have a primary
duty of making sales for their employers and,
therefore, do not qualify as bona fide administrative employees exempt from the overtime
provisions of the FLSA.
Even financial institutions who accurately
characterize employees as non-exempt are
not shielded from large wage and hour class
actions. At the national level, on September
27, 2012, the Kansas Federal District Court
conditionally certified an FLSA opt-in class
action on claims for unpaid overtime based
on an unofficial policy requiring off-the-clock
work, allegedly involving as many as 227,000
retail banking center employees in multidistrict proceedings.
The Approaching Tidal Wave
Recently, the banking industry has been
confronted with a wave of wage and hour
class action litigation under the federal Fair
Labor Standards Act (“FLSA”) and its various
state law counterparts. The magnitude of
the cases range from multi-district litigation
with thousands of potential class members, to
smaller cases pending in local federal courts.
In addition, the U.S. Department of Labor’s
Wage and Hour Division has been conducting
investigations in the banking industry that are
aimed at recovering back wages for classes of
aggrieved employees.
One of the primary themes underlying these
class claims and class-wide investigations is
that the targeted financial institutions have
improperly misclassified certain groups of
www.wabankers.com
employees as exempt from overtime under the
FLSA and applicable state law standards. This
opens the door to several potential wage and
hour claims under applicable federal and state
wage and hour laws, including: (1) overtime
compensation, (2) compensation for missed
meal and rest breaks, and (3) compensation
for other required off-the-clock work, including pre- and post-shift activities related to the
institution’s security measures.
At the local level, one bank is facing litigation
in Federal Court in both Oregon and Washington. Both cases include FLSA collective action
and state law class action claims on behalf of
the bank’s mortgage loan officers, contending
those individuals are improperly classified as
exempt from overtime payments under the
FLSA and applicable state laws.
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In December 2012, a proposed class and collective action was initiated against another
bank in the Pennsylvania Federal District
Court on behalf of branch bankers and tellers
alleging a failure to pay overtime for pre-shift
security procedure activities, when such alleged “off the clock” work resulted in time
worked in excess of 40 hours per week.
Calming the Waters
In light of this recent wave of wage and hour
class actions, financial institutions should work
with their in-house and outside counsel on a
proactive plan for ensuring compliance with
and adherence to applicable federal and state
wage and hour laws. A good starting point
would be an internal audit of job descriptions
to confirm the appropriate designation of
 TIDAL WAVE — continued on page 19
Serving The Needs Of Washington Bankers Since 1889
 TIDAL WAVE — continued from page 18
employees as exempt or non-exempt. Job descriptions should match
the actual job duties performed, and outdated job descriptions should
be updated accordingly. Once the job descriptions are accurate, they
should be reviewed against the current FLSA and applicable state law
exemption tests for executive, administrative and professional employees to confirm that any employees designated as “exempt” under any
of these tests actually meet the requirements of the test. A few starting
guidelines to keep in mind during this process include:
• Identifying a job as exempt based solely on a job description or
job title is not sufficient. The analysis must be fact-specific. For
example, a “loan officer” in one bank may be exempt, while a “loan
officer” in another bank may not be.
• Paying someone a salary does not end the inquiry. The employee
must still meet the applicable duties under the applicable federal and
state laws.
• Adherence to meal and rest break requirements for all non-exempt
employees. In general, uncompensated meal breaks must be at
least an uninterrupted 30 minutes in length, and rounding is not
permitted for meal breaks.
• Appropriate calculation and payment of commissions, and
appropriate inclusion of bonuses and commissions in overtime
calculations for non-exempt employees.
• Review of wage and hour handbooks and policies to ensure
compliance with updated laws and current policies/practices.
To avoid being caught in the riptide of class actions and investigations,
banks may want to consider conducting an annual audit and consulting
with legal counsel on a regular basis to ensure compliance with current
employee classification requirements and wage and hour laws.
Once employees have been appropriately identified as exempt or nonexempt, the next step might be an audit of current pay practices with
an eye toward hot-button issues currently confronting the banking
industry, such as:
• Appropriate payment to non-exempt employees for pre- and postshift security procedures.
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Rudy A. Englund is a shareholder at Lane Powell, where he serves
as one of the Firm’s Senior Trial Lawyers as well as the Firm’s Director of Wage and Hour and Class Action Litigation. He can be reached
at 206.223.7042 or englundr@lanepowell.com.
Sarah E. Swale is a shareholder at Lane Powell and chair of the
Firm’s Wage and Hour Practice Group, where she focuses her
practice on employment litigation and counseling. She can be
reached at 206.223.7946 or swales@lanepowell.com.
January/February 2013 |