Multi-Million Dollar Overtime Compensation Settlement

Swiss financial services giant UBS AG has settled class action suits by financial advisers and trainees for that position who claimed they were unlawfully treated as exempt from overtime pay.

UBS said it will pay as much as $89 million to resolve the suits at the federal and state level “because it did not believe protracted litigation in multiple courts was in the best interests of employees or clients.”

Read the AP story from law.com: “UBS Settles Employee Overtime Compensation Suits for $89 Million”

White-collar financial employees not exempt from overtime pay? How could that be?

Perhaps they did not qualify as salaried employees. More likely, they did not satisfy the duties test for exemption (or at least this was seriously disputed). Here’s what the Department of Labor’s overtime regulations say about exempting financial services employees:

Employees in the financial services industry generally meet the duties requirements for the administrative exemption and are not entitled to overtime pay if their duties include work such as collecting and analyzing information regarding the customer’s income, assets, investments or debts; determining which financial products best meet the customer’s needs and financial circumstances; advising the customer regarding the advantages and disadvantages of different financial products; and marketing, servicing or promoting the employer’s financial products.

However, an employee whose primary duty is selling financial products does not qualify for the administrative exemption.

DOL: “Fact Sheet #17M: Financial Services Industry Employees and the Part 541 Exemptions Under the Fair Labor Standards Act (FLSA)”

Now, I don’t know all that much about the financial services industry, but I find it difficult to understand how someone whose primary duty is selling financial products would not be involved in collecting and analyzing a customer’s financial information, advising customers regarding different financial products, and/or marketing, servicing or promoting financial products.

Perhaps non-exempt financial services employees merely execute sales decisions made by their superiors or by customers who do not seek or require any advice, and thus do not exercise “discretion and independent judgment.”

But with overtime regulations containing such difficult distinctions, under which some financial advisers are exempt and others are not, is it any wonder that the result is huge overtime lawsuits?

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