Unusual development reported in an article from Law.com: “Is the System Broke or Are Brokers Gaming the System?.” Excerpt:
In a spate of class action lawsuits against Merrill Lynch, Morgan Stanley, Prudential and other brokerages, filed principally in New York, securities brokers — who earned billions in commissions annually — now claim they were just hourly “wage earners,” who were misclassified by their employers to thwart the Fair Labor Standards Act and the California Labor Code.They seek unpaid overtime, or “backpay” — using their prorated commissions (over a 40-hour work week) to calculate the “regular hourly rate” and demand 1 1/2 times this amount for all overtime hours. In other words, a broker who earned $400,000 last year, putting in 60-hour work weeks, made $200 per hour for a 40-hour work week (assuming 50 weeks per year). At time and a half for overtime, the employer owes this broker $300,000 per year. Under the FLSA, a court may double the amount of recovery when the violation at issue is “willful.”
Overlawyered comments on the development in Arise, ye prisoners of high-paid brokerage jobs and Michael Fox comments here.