United Wholesale Mortgage settled a wage dispute with a former employee who filed a lawsuit last July claiming the company did not pay account executives for working beyond 40 hours per week.
UWM will pay a total of $2.75 million to the eligible AEs, according to published reports. It covers AEs that worked at the company between Oct. 12, 2018 and Dec. 23, 2021 and whose gross compensation was below $100,000 prior to Jan. 1, 2020, or less than $107,432 after that date, according to a memo written by Allen Beydoun, executive vice president, sales, and viewed by National Mortgage News.
The U.S. District Court for the Eastern District of Michigan agreed to the settlement and dismissed the case without prejudice on March 17, according to court records. The Beydoun memo was sent to UWM employees on May 26.
“None of our policies or practices need to change or will change at this time, as we have always treated our account executives and team members correctly but made the decision to settle this case as is,” Beydoun wrote. “The litigation process is very expensive, and we would rather see the money we would spend proving our position go to team members, instead of litigation attorneys.”
Eligible employees will receive “a predetermined sum of money,” the memo stated.
The complaint from Annie Haberlein said UWM considered its account executives to be nonexempt employees under the Fair Labor Standards Act and thus eligible for overtime pay after 40 hours.
In 2015, the U.S. Supreme Court ruled against the mortgage industry, agreeing with a Department of Labor interpretation that the administrative exemption to the FLSA did not apply to mortgage loan officers. A second exemption, known as the outside sales rule, might still apply, industry attorneys speculated at the time. That rule was a factor in a 2014 overtime case involving Prospect Mortgage, which won a jury verdict against a loan officer.
Following the 2015 Supreme Court decision, in a separate case PNC paid $16 million to settle a suit filed by current and former loan officers regarding overtime compensation.
Wholesale account executives are sales positions but rather than dealing directly with consumers as an LO does, they work with mortgage brokerages.
“Defendant told Plaintiff and other similarly situated employees that they would only work a ‘Firm 40,'” Haberlein’s original filing said.
For example, UWM allegedly required employees to attend 15-to-20 minute early morning meetings but would not let them clock in until their start time. Other instances of alleged uncompensated work were also in the complaint. Haberlein then alleged that any attempt to be compensated for this time was changed to indicate the AE only worked 40 hours.
However, UWM is “extremely confident that our account executives were and are fairly and accurately compensated for the work and time dedicated to their business,” Beydoun said in the memo.