The financial giant Morgan Stanley announced that it will settle four FLSA collective actions for six million dollars; the suits, filed by financial adviser trainees, alleged that they were not paid overtime properly. The case is entitled Devries v. Morgan Stanley & Co. LLC et al. and was filed in federal court in the Southern District of Florida.
The parties asked U.S. District Judge Kenneth A. Marra to grant preliminary approval of the settlement, which includes attorneys’ fees of almost four million dollars as well. The filing papers asserted that “the proposed settlement satisfies the criteria for approval of a Fair Labor Standards Act collective action settlement because it was reached after significant information exchange and contested litigation in four venues, and was the result of arm’s length settlement negotiations conducted by experienced counsel well-versed in wage and hour law.”
The settlement provides that members of two of the four collective actions will receive the equivalent of six hours of unpaid overtime for each week they worked, while the others will receive payments equivalent to those reached in a very similar case involving this company, which ended in 2014 with a $4.2 million settlement. The case involved allegedly unpaid training and study time, i.e. off-the-clock work. These types of cases have reached epidemic proportion and are showing no signs of losing vitality. The plaintiffs alleged that although the bank had a written policy to pay overtime, there existed, in reality, a de facto “off-the-clock” policy in violation of the FLSA.
The Company defended this case aggressively, as noted by the assertions in the filings that the “plaintiffs believe that this amount represents a very fair settlement given the amount of unpaid overtime that was claimed, the uncertainty of success on collective certification, and defendants’ defenses on the merits, including its contention that that it provided paid time during the workweek for studying during training weeks and that it took steps to prevent its employees from studying off the clock.”
The Company put forth a statement that it agreed to settle these lawsuits in order to avoid the cost and distraction of prolonged litigation. That was the correct thing to do but the more important thing is to now make sure that proactive steps are taken to ensure that if study/reading time is mandated (or implicitly mandated) that the employees are compensated for that time.