Rocket Mortgage inks $3.5M overtime pay settlement with bankers (2024)

Dive Brief:

• Rocket Mortgage has agreed to pay $3.5 million to settle claims brought by a group of current and former mortgage bankers that the company failed to pay them overtime wages, according to court documents filed May 17.
• The bankers’ class-action suit, filed in Arizona last year, alleged that Rocket Mortgage violated the Fair Labor Standards Act when it did not pay the correct amount of overtime wages. Specifically, the plaintiffs alleged the company improperly calculated their regular rate of pay by failing to incorporate into the rate incentives, bonuses and additional compensation paid to the plaintiffs each pay period.
• Rocket Mortgage and the plaintiffs reached the settlement agreement during mediation in April, according to court documents. As part of the agreement, Rocket Mortgage denied the allegations and did not admit any liability or wrongdoing as alleged.

Dive Insight:

The agreement is the latest in a run of multimillion dollar payouts involving overtime disputes, highlighting the importance of compliance in this area of the law amid impending regulatory changes.

Last year, technology giant Google agreed to a settlement of more than $8.3 million with California workers who alleged the company incorrectly calculated their regular rate of pay between 2017 and 2022. In that suit, plaintiffs claimed Google improperly excluded commission and stock unit payments.

And in 2021, store managers employed by Jimmy John’s and its franchisees agreed to a $1.8 million settlement with the company over allegations that they were misclassified as exempt employees under the Fair Labor Standards Act, thereby missing out on overtime pay.

U.S. employers now have a little over one month to prepare for the U.S. Department of Labor’s final rule increasing the minimum annual salary threshold for overtime pay eligibility. The rule, which updates the agency’s FLSA regulations, will push that figure from $35,568 to $43,888 on July 1. A second increase is scheduled to take effect in 2025 with automatic increases every three years thereafter.

Each of these components could be subject to court challenges, attorneys previously told HR Dive, complicating the decision of whether to adjust to the thresholds incrementally or jump straight to the 2025 threshold.