Bank of America Corporation (BAC - Analyst Report) put a class action lawsuit filed against its subsidiary Landsafe Appraisal Services, Inc. by 365 current and former employees working as residential real estate appraisers to rest, by agreeing to shell out $36 million in settlement. The bank will successfully dodge a scheduled Aug 31 trial, if it gets court approval for the settlement.
A court case filed in April 2013 alleged that Bank of America and its subsidiary erroneously used the “administrative” and “professional” exemptions to residential staff appraisers. This particular work entails no special academic degree, only a state license.
According to the charges, the company failed to pay any overtime compensation despite the plaintiffs putting long hours at work. The workforce, mostly based in Northern California, seeks reimbursement for working from 6 a.m. to 10 p.m. without any breaks due to "artificially short deadlines set by Bank of America."
The bank’s efforts to get the case dismissed from the court were in vain with the ruling clarifying that the company will be obliged to pay workers substantial back wages for overtime along with missed meals and rest periods. Though the bank denied any wrongdoing, it opted to put an end to the matter through an out-of-court settlement.
"We have seen over and over again across the economy that employees are misclassified, depriving them of overtime compensation, when under state and federal law they are due the wages," said Bryan Schwartz, founder of Oakland-based Bryan Schwartz Law, and co-lead counsel on the case. "These individuals worked hard, generated thousands of reports a month for the employer to sell mortgages, and were not compensated for their efforts as the law requires."
Bank of America has previously settled a part of the same case with Schwartz and his co-counsel in 2014. The bank had compensated $5.8 million, aggregating the sum to $42 million for plaintiffs, who are seeking the court’s preliminary approval of the current settlement in September. Schwartz expects the current settlement to encourage other misclassified employees to follow suit.
Currently, Bank of America carries a Zacks Rank #2 (Buy). Other banking stocks include The Bank of New York Mellon Corporation (BK - Analyst Report), Citigroup Inc. (C - Analyst Report) and The Goldman Sachs Group, Inc. (GS - Analyst Report). All these stocks hold the same rank as Bank of America.