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Waterstone Ordered to Pay LOs $7 Million

Waterstone Mortgage Corp. has been ordered by an arbitrator to pay current and former loan officers over $7 million in unpaid wages and overtime. But it will appeal the decision.

About 200 loan officers in 17 states will share in the arbitrator’s award.

The originator who brought the case, Pamela Herrington, will also get an incentive fee of $20,000.

The fee is not unusual, said Artemio Guerra, an attorney for the law firm — Getman, Sweeney & Dun — that represented the loan officers.

In a telephone interview with Mortgage Daily, Guerra said judges and arbitrators typically provide such awards to people who step forward.

But, the company said, through an attorney recently hired to handle the case, that it will be filing an appeal.

The wage and overtime lawsuit was brought as a proposed class action lawsuit case in federal court in Wisconsin in 2011.

Herrington alleged that the Wisconsin-based company caused her to underreport hours, failed to pay overtime and to reimburse for business expenses.

Waterstone provided a timekeeping system that did not allow employees to record more than 40 hours in a work week, according to information posted on the website for the plaintiffs’ attorneys. The “off the clock” work caused loan officers to “suffer sub-minimum wages and loss of overtime pay.”

The federal Fair Labor Standards Act governs minimum wage and overtime pay requirements. The FLSA requires that employers pay at least the federal minimum wage and 1.5 times an employee’s regular rate of pay for all hours over 40 worked in a workweek.

In an interview with the Wisconsin State Journal, Getman attorney Matt Dunn said Waterstone first argued that the workers had not worked overtime but later claimed they were exempt from overtime pay and minimum wage requirements under the outside sales exemption to the FLSA’s pay provisions.

The general requirement for meeting the FLSA’s outside sales exemption is that an employee must primarily be engaged in making sales and customarily and regularly perform this primary duty away from the employer’s place of business.

The lawsuit was sent to an arbitrator under a section of the employment agreement requiring that disputes be settled through arbitration rather than litigation.

In a final decision issued July 5, the arbitrator found for the loan officers, deciding that they should be compensated for unpaid minimum wages, unpaid overtime and unreimbursed business expenses going back to August 2010.

The award for the originators includes damages, $3.3 million in attorneys’ fees and costs, arbitration administrative fees of about $18,000 and arbitration compensation and expenses of about $438,000, making the total award against Waterstone to be about $10.6 million.

Appeal to be Filed
Waterstone is expected to appeal the decision.

“We dispute the arbitrator’s award and its underlying reasoning, said Spencer Skeen, the Ogletree Deakins attorney who was recently hired to handle the appeal. “Waterstone plans to fully pursue its available appellate remedies.”

Offit Kurman handled the lower court proceedings.

Although the standard for appealing an arbitrator’s decision is quite high and arbitrator decisions are rarely overturned, a likely basis for appeal may be the trial court’s decision to invalidate the class waiver in Waterstone’s arbitration agreement.

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