Morgan Stanley announced yesterday that it had agreed to pay $42.5 million to settle a class action lawsuit filed on behalf of 5,000 California brokers and trainees who claimed that they had been denied overtime pay and had been forced to pay the securities firm's administrative expenses. U.S District Judge Roger T. Benitez will oversee the settlement.
The employees were represented by a group of lawyers, including Mark Thierman, who was quoted in the Los Angeles Times, saying "I think that there's got to be a change in the way the industry pays brokers." Thierman is correct. Perhaps the settlement of this case, as well as similar cases against UBS and Merrill Lynch, will mark a change in the way brokers can be chewed up and spit out by their employers.
The firm issued the usual denial of liability, stating: "We believe financial advisers are exempt professionals under the law and should not be paid on an hourly basis or be forced to keep track of their work time. However, we have settled this litigation to put the matter behind us."