Citigroup agreed in mid-May to pay a record $98 million to past and present advisors to settle their overtime-pay claims. It's the fourth major financial firm to settle a class-action suit regarding overtime pay within the past 10 months (see Registered Rep.'s May cover story). Citigroup's national settlement consolidated three suits — from New York, New Jersey and California — and represents roughly 20,000 advisors and trainees.
Other firms settling include UBS, which also settled nationally, and Morgan Stanley and Merrill Lynch, which settled with advisors in Calilforia. The suits have caused unrest on Wall Street, where brokerage firms claim that reps are exempt from the Fair Labor Standards Act (FLSA) and, therefore, ineligible for overtime compensation. Opponents of the suits say the FLSA was never intended to protect white-collar professionals like reps, whose paychecks are generally much fatter than those of the average blue-collar worker.
Mark Thierman, a Reno-based labor lawyer, has represented advisors in all of the settlements, including Citigroup's. He has at least 25 additional overtime suits-against Edward Jones, Wachovia Securities, Wells Fargo, Prudential, A.G. Edwards and more. “We're happy. This is the second national settlement from a big brokerage house, and we hope to have more of them with the remaining firms,” he says.