Quicken Loans Inc. is feeling good about its recent court victory in an overtime case involving loan officers, but the feeling of elation may not last for long.
Just minutes after a Michigan jury last week ruled that Quicken does not have to pay nearly 350 plaintiffs overtime for extra hours worked, attorneys for these rank and file workers said they’d appeal the ruling.
Donald Nichols, founder of Nichols Kaster, said the “Henry” case involved alleged overtime violations from 2002 to 2006. He has three other pending lawsuits against Quicken for different time periods and parts of the company. “We will continue to pursue those,” Nichols told National Mortgage News.
He added, “I don’t enjoy losing, but I am very proud of our clients and that they stood up to this company.”
But for Quicken the unanimous jury decision of 9-0 was something to savor. “I am excited and happy that justice prevailed,” said Dan Gilbert, founder and chairman of the lender, the nation’s sixth largest retail funder overall. “This ruling is a victory for all employees everywhere, whether they are blue-collar or white-collar workers. This case was never about money, but about what was right and what was wrong.”
Bill Emerson, CEO of Quicken Loans, said the jury made the right decision because the facts presented in this case were not true. “We knew that if the jury listened to all the evidence in this case, the final verdict would vindicate us,” Emerson said. “We stuck to our business philosophy of doing the right thing here. Hopefully, now as a result of this verdict, people will see us for who we really are and that we are a company trying to help the city of Detroit and the mortgage industry.”
Nichols, though, is angry. He said Quicken’s attorneys attacked his clients’ character during the entire trial. “They went through their entire lives and used every fact they could find to attack them. The attacks probably hurt us. They also attacked our law firm pretty consistently during the trial.” (The trial, which started Feb. 8, ends a long process for a case filed in 2004.)
Because the jury ruled in its favor, Quicken will save an estimated $10 million in “half-time” payments. But most importantly, the case sets a precedent for owners of mortgage banking firms, including nonbanks and depositories alike.
Although Quicken scored a major “win” on the minimum wage/overtime issue, it may not be entirely smooth sailing ahead for the industry.
Ken Markison, associate vice president and general counsel of the Mortgage Bankers Association, noted that although the jury sided with Quicken (that it properly used an allowable exemption under federal law), he warned that this is just “one decision in one court.”
Markison noted that the trade group is suing the Department of Labor over its interpretation of the Fair Labor Standards Act.
Markison said he recently heard a response from the Department of Justice on the case but doesn’t expect a quick resolution on the issue. “It is anybody’s guess on how it will come out ultimately,” he warned.
Ari Karen, an attorney with Offit Kurman who specializes in labor law issues, called the Quicken outcome a huge decision and one of the first which has come out positively for the industry.
The Department of Labor is leery of defining loan officers as independent contractors. Markison said the new layers of liability for the industry make it even more challenging to go in the direction of using independent contractors.
