Countrywide Financial Corp. has agreed to pay $30 million to settle a class action lawsuit alleging that its misclassified its account executives as exempt employees and overworked them with no overtime pay. Approximately 400 employees at the firm's Southern California call centers will share in the settlement. The terms were given preliminary approval last month by Los Angeles County Superior Court Judge Victor Person. A hearing on final approval is set for late June.
The employees claimed that Countrywide denied them overtime pay by giving them management titles but mostly nonmanagerial job duties. Countrywide alleges that the employees were exempt, and that the lawsuit was meritless, and it asserts that the $30 million settlement was given solely to avoid the risks of litigation.
"While the company continues to believe that its original classification of account executives was lawful and that it would have been upheld at trial, it decided to settle in order to avoid the expense and uncertainty of litigation."
We had never actually seen or heard of a company paying out $30 million to settle a meritless claim, so we looked more closely at the case. After reviewing the facts and the publicly available evidence, we still think we've never seen or heard of a company paying out $30 million to settle a meritless claim.