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PNC Bank Pays Near $12M To Settle MLO Rest Break Lawsuit

May 28, 2024
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The lawsuit alleges PNC skimped on paying its loan officers for time spent on rest breaks and issued inaccurate wage statements.

KEY TAKEAWAYS
  • The lawsuit stemmed from an “incentive compensation” provided by PNC Bank for its loan officers that uses a formula based on the loan officer’s loan sales.
  • Plaintiffs claim that loan officers were only paid commissions after their regular pay was recaptured as deductions.
  • Plaintiffs also allege PNC Bank failed to separately compensate them for their rest breaks, as required by California law.
  • The Court partially granted summary judgment, ruling that PNC's comp plan did not properly pay loan officers for rest breaks.

After six years of pending litigation, PNC Bank has agreed to pay nearly $12 million to settle a class action lawsuit that alleges the bank didn’t pay its mortgage loan officers (MLOs) for rest breaks and failed to issue accurate wage statements, according to a joint motion filed on May 24, in the Northern District Court of California.

The Northern District Court of California has granted preliminary approval of the proposed settlement ($11.85 million) that applies to those who were employed by PNC Bank in California as MLOs during the class period of June 28, 2014 through June 30, 2019.

The lawsuit stemmed from an “incentive compensation” provided by PNC Bank for its loan officers that uses a formula based on the loan officer’s loan sales. PNC claims to also provide a basic level of pay independent of the incentive compensation, which would be deducted from the calculation of incentive pay, so in a given month a loan officer would receive either a portion of their loan sales or their base pay, whichever was larger, the defendant claimed.

“In at least some circumstances, a negative balance on the calculation of incentive pay (after effectively deducting base pay) would carry over to future months,” PNC Bank alleged in the lawsuit. “MLOs were never paid less than their regular pay for a given pay period, and failure to meet incentive goals would never result in them owing money to PNC at the end of their employment. MLOs also received other forms of incentive pay besides the monthly incentives calculated from loan sales. PNC allowed MLOs to take periodic rest breaks and instructed them to remain clocked in during those breaks, so MLOs would receive their regular pay for time spent on rest breaks.”

In 2018, Linda Scheid brought a class action lawsuit against PNC Bank on behalf of herself and other similarly situated loan officers employed by PNC Bank in California. Scheid and other class members claim that loan officers were effectively only paid commissions after their regular pay was recaptured as deductions. The plaintiffs contend that PNC failed to separately compensate them for their rest breaks, as required by California law. Also, the plaintiffs argue that even when loan officers did not earn commissions, they did not receive valid pay for their rest breaks because their regular pay created a deficit that would be applied to future commissions. Furthermore, they claim even when PNC forgave such deficits, it still deducted regular pay from commissions earned within a discrete period of time.

The complaint asserted a number of claims, including: 

  • Failure to provide paid rest periods or pay premium wages in lieu thereof as required by California Labor Code § 226.7 and certain California wage orders, including waiting time penalties for class members whose employment ended during the class period.
  • Failure to pay for non-productive time as required by the California Labor Code and applicable wage orders, including waiting time penalties for non-current employees
  • Violation of California laws requiring accurate wage statements.
  • Violation of California’s Unfair Competition Law as a result of the alleged claimed violations.

Scheid sought penalty payments for unpaid rest periods, unpaid wages, interest, penalties, injunctive relief, as well as attorneys’ fees and costs for herself and class members. The lawsuit also includes a claim for civil penalties under California’s Private Attorneys General Act of 2004 (PAGA).

The court partially granted class certification and partially granted summary judgment, ruling that PNC Bank's compensation plan did not properly pay loan officers for rest breaks under California law during the class period spanning five years, until 2019 when PNC changed its compensation plan and how it compensated for rest periods. The ruling was upheld on appeal, but the court has not yet made a final decision on the other claims in the lawsuit.

The settlement notice stated, "By issuing this notice, there is no intention to suggest that one side would win or lose if the case went to trial. Defendant vigorously denies any liability whatsoever, denies all of the factual and legal allegations, and contends that it fully complied with all applicable laws at all times. Nevertheless, Plaintiff and Defendant have agreed to resolve the case as a negotiated compromise." 

PNC Bank did not immediately respond for comment.

About the author
Staff Writer
Katie Jensen is a staff writer at NMP.
Published
May 28, 2024
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