JP Morgan to Pay $2.4M to Settle Unpaid Overtime Lawsuit

JPMorgan Chase will pay $2.4 million to resolve a federal unpaid overtime class action lawsuit filed against the bank on behalf of salaried commercial real estate appraisers in California that it allegedly misclassified as exempt employees who were not eligible to collect overtime pay.

If a federal judge approves the unpaid overtime class action settlement, 158 employees would each receive approximately $9,500.

“The settlement is an extraordinarily positive outcome for the appraisers,” the memorandum said.

According to a memo in support of preliminary approval of the unpaid overtime class action settlement, 99 of the appraisers signed arbitration agreements, while the agreements of 38 others did not address the issue.

According to the unpaid overtime lawsuit, the bankers were denied overtime by being wrongfully classified as exempt, a category designated for employees who do “office or non-manual work related to the management or the general business operations of the company or its customers.”

But the commercial real estate appraisers sell the bank’s goods and services and therefore cannot be denied overtime pay under this exemption, according to the wage and hour lawsuit.

Lead plaintiffs Kenneth Lee and Mark Thompson filed the unpaid overtime class action lawsuit in 2013 alleging violations of federal and California state wage laws.

In the Golden State, salaried employees are entitled to overtime pay unless they are classified as exempt, meaning that the California overtime law does not apply to a particular classification of employees.

Common exemption categories include executive, administrative, professional, and computer professional. If all of the requirements for at least one of those exemptions are not met, an employee is entitled to overtime pay.

To qualify for the executive exemption under the California overtime law, the employee must be an executive earning at least $640 per week in salary. The executive must also supervise at least two subordinates, have the ability to hire and fire (directly or indirectly), be the manager of a particular department, exercise independent business judgment, and spend more than 50 percent of the time doing the aforementioned duties.

Administrative employees meet the exemption requirements for overtime in California if they exercise business discretion over matters of substantial importance.

The legal threshold of a professional who is exempt from overtime in California, the employee must be licensed by the State of California in an area such as law, medicine, engineering, accounting, and others, and be working in that field or hold a graduate degree (masters or above) and perform work that requires the degree to be used in an “intellectual and varied” way.

A professional exemption exists for employees working in artistic fields, such as actors, screenwriters, and artists, but not for technical writers, cartoonists or industrial artists. Discretion and independent judgment must be exercised to be exempted, in addition to a basic minimum salary.

Computer programmers fall under the California overtime law umbrella and are entitled to overtime pay in California unless they spend more than 50 percent of their time analyzing and designing software. IT employees who spend more than 50 percent of their time writing code are likely to be entitled to overtime pay with the exception of those who meet the threshold for very strict requirements.

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