Bank of America Merrill Lynch has agreed to pay $2.8 million to settle a class action that claimed the firm took too long to pay wages to departing brokers.
The case involves almost 300 brokers in California who resigned in the years following Merrill Lynchs purchase by Bank of America in 2008. A former Merrill Lynch broker who left in 2010 initiated the class action to seek penalties for late payments. The claim, which was filed in the U.S. District Court for the Northern District of California, asserted that Merrill Lynchs practice of disbursing payment commission wages at the next pay cycle violated California labor laws, which require payment within 72 hours of the employees last day.
This is purely a penalty case, the plaintiffs attorney, James Quadra of Quadra & Coll, says. California is very protective of its employees.
BofA Merrill Lynch denied any wrongdoing and argued that it had a good faith belief that its procedures were not in violation of the law, according to the settlement agreement.
The firm has vigorously defended this matter on the grounds that it had a good faith belief that commission payments were not due before the regularly scheduled payment times, the settlement read. [They] argued that uncertainty over the applicable law can constitute a good faith dispute, which defeats claims for penalties.
A spokesperson for Bank of America declined to offer additional comment.
Since the case, Merrill Lynch established an official policy in 2011 to pay its departing employees in California within 72 hours of their last day.
The class includes a total of 275 former Merrill Lynch brokers in California who resigned between December 2, 2008 and December 31, 2011.
The final settlement of $2,785,000, which was approved by Judge Claudia Wilken on August 29th, represents 75% of the total penalties that could have been assessed, had the case gone to court. The amount, 25% of which will go to the plaintiffs attorneys, provides for compensation of no more than $10,000 per broker.
We believe its a fair settlement, Quadra says. Seventy-five percent is a good return when you avoid any other risk.