Just three days before they expected to get paid, 92% of Celebrity Home Loans employees were laid off in what a new class action lawsuit calls an “abrupt” and “callous” decision.
The class action lawsuit filed Friday in Cook County Court in Illinois says hundreds of employees were not given the 60 days notice required under state and federal law.
The separation letters which arrived on Feb. 13 “told employees that they would not be receiving timely compensation for the pay period prior to termination. For many, the outstanding pay included salaries, wages, and commissions earned during the entire month of January and the first half of February."
The loan officers, like the lead plaintiff, Michael Blake, were primarily compensated through a baseline hourly wage plus commissions on loans they closed. The amount of the commissions depended on a number of factors such as number of loans closed, loan size, and the loans’ interest rates. Commissions were generally paid on the 16th day each month.
The company, according to the lawsuit, reported approximately $5.9 billion in total mortgage origination volume in 2022.
“To date, however, Plaintiff has not received full payment of all outstanding wages and commissions. Plaintiff had also accrued paid time off and vacation days pursuant to his employment agreement for which he did not receive full payment,” the lawsuit states. “Plaintiff is not alone in his experiences, and hundreds of Defendants’ other loan officers and other employees have had nearly identical experiences.”
While the announcement came as a shock to Celebrity employees, it also came as a shock to On Q the company that was seeking to acquire it. On Feb. 7, Celebrity announced it was furloughing 75% of its staff during a conference call in which they also made the announcement about On Q.
NMP was the first to report that On Q had no idea about the sudden liquidity issues that led to the furloughs and a week later the mass layoff.
An executive at On Q Financial, Patrick Lamb, stated “that his company had no idea about the seemingly sudden liquidity issues that led to the furloughs and, a week later, the mass layoff by Celebrity Home Loans on Monday [February 13th], adding that On Q found out about the issues only after they occurred.” Lamb further stated that “the deal to acquire some of [Celebrity]’s assets had] fallen apart,” because “there’s nothing left to acquire” following the termination of nearly all of Defendants’ staff.”
The lawsuit says that Celebrity represented that employees were being terminated “due to unanticipated events.” It claims the company and their executive officers knew for weeks if not months prior to sending the separation letters was false and misleading. The lawsuit claims Celebrity knew the breakdown of negotiations with On Q could lead to a mass layoff and closure of defendants’ facilities.
Several messages were left with Celebrity Home Loans, but no one responded to requests for comment on the lawsuit.
