A Different Kind of Pay Reform

15 January 2009

3 minute read

Does the 40-hour work week law cover Wall Street back-office staff who process trades and resolve discrepancies? And legal niceties aside, could paying workers for overtime ever be put into practice in the frenetic and hyper-competitive securities business?

Those questions arise from a lawsuit filed this week against Merrill Lynch and its new corporate parent, Bank of America.

Plaintiffs Andrea Levine and Ivey Moore are derivatives settlement specialists who joined Merrill in 2007 and still work there. Each receives a $65,000 salary and less than $5,000 bonus, says attorney Brian Schaffer of Fitapelli & Schaffer, LLP, the New York law firm representing the Merrill Lynch plaintiffs. Merrill and B of A aren't commenting on the suit.

The popular belief that only hourly or blue-collar workers are entitled to extra pay for longer work weeks is a myth, several employment law specialists who work on either side of the issue told eFinancialCareers News. In reality, federal law sets out very specific criteria that must be satisfied to make a particular job "exempt" from overtime pay.

Stock Brokers, Mortgage Brokers, Accountants

"In every industry it's worthwhile for employees to consider the question of whether they're truly exempt," says Dan Getman, a New Paltz, N.Y. attorney who represents employees in pay cases. "There are many industries in which it's industry practice to treat people as exempt when (legally) they're not."

Within the finance and accounting world, past rulings extended overtime pay to financial advisers, mortgage brokers, and even accountants who perform data-entry work in a Big Four CPA firm.

Based on Fair Labor Standards Act rules, Schaffer says back-office workers in banking "are generally entitled to overtime. They're not doing jobs that require independent discretion and their ability to use their own judgment" - one key factor that would make their work exempt from overtime. "A lot of these people that have left Merrill and have gone to other institutions then did receive overtime," he adds.

Merrill Lawsuit Details

The complaint was filed as a collective action on behalf of the two named plaintiffs and "all those similarly situated" - all who worked for the defendants in the same capacity at any time in the last three years. It states that Merrill and Bank of America currently employ over 30 derivatives settlement specialists.

According to the complaint, those employees process and confirm trades and resolve payment discrepancies involving derivative products. Their duties include inputting data, reviewing items listed on a daily report and ensuring coupon and fee payments are received on the settlement date.

It also says that others who work alongside the plaintiffs and perform "the exact same duties" but are consultants rather than Merrill Lynch employees, get paid time-and-a-half for working beyond 40 hours a week.

AUTHORJon Jacobs

Insider Comment

9 comments

RT
RTM
23 January 2009
This is not a new issue. Having been affiliated with financial services firms as an HR professional for many years, the matter of defining which employees are exempt and non exempt has always been a problem. It was not and, after reading this article, is not, always easy convincing management that non-managerial operations, sales support and related staff should be paid overtime in compliance with, not only the letter of the law, but the spirit as well. The thinking was that bonuses might make up the difference in pay. In my opinion, the FLSA job definitions should include Wall Street jobs specifically as the way to avoid the problem. Several of the prime examples of problem jobs over the years have been those titled: "supervisor" and "sales assistant".
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Jo
Jon Jacobs
22 January 2009
Regarding the above comment from Johnny: It's important to point out that the original motivation for the 40-hour work week concept (and the related requirement that additional hours be paid at time-and-a-half) wasn't simply to protect workers from long hours. It was to maximize the number of jobs in the economy, by encouraging employers to divide the work among a larger number of individual employees. I.e., if an employer needed 5000 man-hours of work perfomed each week, they could either have 100 employees working 50-hour weeks or 125 working 40-hour weeks. During the Great Depression, when the 40-hour week was enacted into law, policy makers preferred the latter - for obvious reasons that still apply today. I mention it because this historical fact somewhat undermines Johnny's implication that accepting or allowing a longer work week without overtime pay somehow benefits "someone who will appreciate having a job in a poor economy." -- Jon Jacobs, eFinancialCareers News staff
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Jo
Johnny
22 January 2009
These people should be happy that they have a job instead of complaining about overtime. In a perfect world they would be fired and someone else who needs a job would be put in their place. If they aren't happy then quit and let someone who will appreciate having a job in a poor economy step in.
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Mo
Monica
22 January 2009
now I know why all of a sudden they started paying us overtime (different Uk-Global company)
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DZ
DZM
21 January 2009
All this will do especially in this environment is cause a reduction of wages to make up for the overtime paid, don't want to take a pay cut... good bye and good luck. They may be entitled to a non-exempt status but it's not like they were told ther were entitled to it and then had it taken away. Unfortunately there are throngs of people interested in these type of back-office jobs because they have been misinformed that they could lead to a front office role (maybe in the past but certainly not in recent history).
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