On February 23, 2012, E-Trade Financial Corp. agreed to pay a $1.5 million settlement to resolve claims by a proposed class of company relationship managers who accused E-Trade of violating the Fair Labor Standards Act by refusing to pay them overtime.

The plaintiffs filed a motion in the U.S. District Court for the Southern District of New York seeking preliminary approval of class settlement, in which the settlement funds would be awarded to two subclasses of employees: those employed by E-Trade relationship as managers in California between 2008 and 2011 and similarly situated employees in New York between 2006 and 2011.

The lawsuit began in May 2011 when Hector Palacio, an E-Trade relationship manager, filed suit claiming that the brokerage company misclassified him as exempt from FLSA’s overtime protection and failed to pay him overtime ages despite the fact that he routinely worked more than 40 hours per week.  The complaint was amended several months later, with Palacio naming three additional plaintiffs and seeking claims on behalf of current and former E-Trade relationship managers. The plaintiffs alleged that E-Trade violated FLSA by failing to keep adequate payroll and time records for employees and classified the employees as ‘relationship managers’ instead of ‘relationship sales associates’ in an effort to classify the employees as exempt.

According to the plaintiff’s amended complaint, “E-Trade did not perform a person-by-person analysis of relationship managers’ job duties in making its decision to classify all [of them] as exempt” and “intentionally, willfully and repeatedly engaged in a pattern of violating the FLSA.”

The Employment Law Group® law firm has an extensive nationwide wage and hour practice representing employees whose rights have been violated, including nonpayment of wages and denial of overtime pay.