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Bank of America is paying $14 million to settle a class action lawsuit accusing the bank's Merrill Lynch unit of overworking and underpaying trainees. According to the lawsuit, trainees in Merrill's Practice Management Development program were forced to work 60 hours per week or more, including weekends, without being paid overtime.
Although the settlement only comes out to about $1,000 for each of the roughly 9,500 plaintiffs after legal fees, the settlement could teach business owners small and large about the perils of violating labor laws.
The former trainees claim they were expected to work 10- to 14-hour days, attend additional client functions, and even work on weekends in order to generate client leads. But if that's what you expect out of your employees, you should expect to compensate them for that time. The Fair Labor Standards Act (FLSA), under which the plaintiffs brought their lawsuit, is fairly clear about establishing minimum wage and hour laws, and requiring employers to play employees both for the regular hours worked and for overtime.
Careful With Your Classifications
The Merrill Lynch trainees were probably only allowed to bring this lawsuit because of their status as trainees. As stringent as the FLSA is, there are exceptions to its overtime requirements for executives, administrative employees, professionals, and outside sales people. If Merrill and BofA really wanted to work these trainees without paying them, they should've hired them as full-time employees.
Not Your Dad's Department of Labor
In the wake of the settlement, many in the industry sneered at the plaintiffs, calling them "litigious Millennials" who shockingly think they're entitled to compensation for their work, or scoffing at them for not working the unpaid hours the previous generation had without complaint.
The problem is that the Department of Labor doesn't care what managers in your company did when they were trainees twenty years ago. They care about what your company is doing today, a more enlightened age when employees work, and employers pay them for that work.
If you'd like to avoid lawsuits, and settlements, like BofA's, you should contact an experienced employment law attorney near you.
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