Merrill Lynch & Company agreed this month to pay $37 million to settle a class action, but, for a change, the plaintiffs in this case were its own employees. Merrill Lynch brokers are paid primarily on a commission basis, and the company denied them overtime, treating them as exempt from state and federal overtime laws. Last year, the federal Fair Labor Standards Act (FLSA) was amended to exempt from overtime pay all white-collar workers earning more than $100,000, as long as those earing included $455 or more per week in salary. The brokers typically received no such salary.
The settlement is the first of its kind, and is likely to lead to other similar cases (we are preparing a similar action ourselves) because the industry standard was to treat brokers exactly as Merrill Lynch did. As many as 3,000 current and former brokers will be paid up to $15,000 each, depending upon length of service and time worked. San Francisco District Court Judge Maxine M. Chesney will review and approve or reject the settlement terms in a hearing set for September 9, 2005.