$105K Judgment Against Net Branch

Shultz and Viens said in court documents filed in U.S. District Court for the District of Maryland that they consistently worked more than 40 hours a week during their two years with the company.

But All Fund, which along with its attorney didn’t return calls for a statement, argued in court that the two were exempt from federal minimum wage and overtime requirements because they were outside sales employees who made sales at the customer’s place of business or, if selling door-to-door, at the customer’s home.

Schultz and Viens disagreed, arguing they worked primarily from the Columbia, Md., branch office and were not regularly engaged in making sales outside the office. Schultz estimated he spent over 90 percent of his work time communicating with clients and potential clients by phone, e-mail and in writing from within the office.

Outside sales does not include sales made by mail, telephone or the Internet unless such contact is used merely as an adjunct to personal calls.

The court noted that the men provided detailed affidavits in support of their argument.

The court found All Fund’s sole piece of evidence — an affidavit from the regional sales manager stating that he called on the branch regularly and was told several times that neither Schultz nor Viens was in the office — insufficient to prove its case. The company should have offered depositions from the other employees in the office or even have deposed Schultz and Viens, the judge explained.

The originators also alleged the Tacoma, Wash.-based company improperly deducted $5,681 from their final checks in violation of Maryland wage laws. The court said All Fund deducted the funds for legal expenses it incurred in connection with a lawsuit against the originators by another mortgage broker for allegedly violating a restrictive covenant even though the loan officers were represented by their own counsel. That lawsuit has since been dismissed.

In response, the court ruled that, although the employment agreement stated Washington law applied, Maryland law controlled the lawsuit because the loan officers’ claims did not relate to the employment agreement.

Under Maryland wage law, an employer can not deduct wages from an employee’s paycheck unless the deduction is ordered by a court or authorized in writing by the employee or made in compliance with a law or regulation. Because All Fund did not provide any evidence that it had a legal right to deduct its attorneys’ fees from the employees’ paychecks, the court said the deduction violated state wage law.

Schultz was awarded $58,401 and Viens $46,236.

But collecting on the court’s decision could be difficult.

Even though All Fund is still operating, one Virginia mortgage broker with All Fund said neither she nor several other brokers have been paid for several months. She said, as a result, the company is suffering a mass exodus of employees.

“There’s a huge problem going on,” she said. She explained that because she’s sunk $30,000 into getting signed up with the company, she’s staying with All Fund in the hopes that things will improve.

And the Tacoma, Wash.-based News Tribune reported in April that All Fund was facing lawsuits and wage claims from employees claiming they had not been paid. The newspaper also reported that All Fund had filed a lawsuit in February against several former employees of its Arlington, Texas, office because it was facing the prospect of paying back $4 million in FHA-insured loans made by the branch office involving improprieties such as inflated house values, altered purchase prices and signatures that did not match.

Bradford Warbasse, Schultz’s and Viens’ attorney, declined to discuss collection strategies that can be used if a company cannot pay a judgment or whether such strategies would be employed. “Collecting the judgment is an issue, but a normal part of the litigation process” he said.

Earlier this spring, CMXL Corp. completed the acquisition of All Fund. It was announced that All Fund would operate as a sister company to CMXL.

All Fund was No. 487 on Inc. magazine’s 2006 list of the nation’s fastest-growing private companies as well as ranking on the 2005 list.