Countrywide Settles Pay Suit

Countrywide Financial Corp. has agreed to a $30-million settlement of a lawsuit alleging that the home loan giant failed to pay overtime to 400 employees at its Southern California call centers.

The deal, tentatively approved last month by Los Angeles County Superior Court Judge Victor Person, is the latest multimillion-dollar payout in a wave of white-collar compensation suits in California, where laws governing overtime pay are tougher than in other states.

Plaintiffs’ attorneys maintain that many workers -- despite being given management titles such as “store manager” or, as in the Countrywide case, “account executive” -- spend most of their day on nonmanagerial tasks rather than supervising any aspect of the business.

In the settlement, Calabasas-based Countrywide, the nation’s largest mortgage lender, agreed to reclassify call center employees as hourly workers eligible for overtime, instead of exempt salaried employees. It also agreed to cease docking staff for production errors and to permit meal breaks on company time.

The settlement, excluding attorney fees, amounts to an average of about $50,000 per employee.

“It feels wonderful,” Douglas Butler said of the accord. Butler, currently a Countrywide loan officer, was one of three employees to initially sue the company in 2002.

Countrywide has steadfastly denied the workers’ allegations.

“While the company continues to believe that its original classification of account executives was lawful and that it would have been upheld at trial, it decided to settle in order to avoid the expense and uncertainty of litigation,” Countrywide said in a statement.

The Countrywide employees’ complaints were not unusual, reflecting the ways in which many companies are alleged to have become more efficient by getting more work out of employees.

Companies operating in California in a broad swath of industries have been hit with workers’ wage-related lawsuits, including Farmers Insurance Group Inc., Bank of America Corp., RadioShack Corp., Rite Aid Corp., Starbucks Corp., Taco Bell Corp. and United Parcel Service Inc. Many companies have settled.

Most recently, State Farm Insurance Cos. agreed in January to pay $135 million to 2,600 California claims adjusters who complained that they were denied overtime.

Nationwide, workers’ complaints about violations of wage and hour laws are rising. The Labor Department reported a 2% increase in complaints in 2004 from the year before.

At the same time, worker productivity -- as measured by output per worker-hour -- has shot up more than 4% in each of the last three years. During the first quarter of this year, productivity growth slowed but still clocked in at a healthy 2.6% annual pace.

According to the lawsuit against Countrywide, some sales agents worked at least 10 hours a day, five days a week, without meal breaks “in order to meet production demands and pressures.”

The 400 Countrywide employees who sued claimed that they worked an average of 16 hours of overtime a week, including weekends, from 1998 to 2004 without premium pay, chief plaintiffs’ attorney Linda Dardarian said.

“Countrywide did make a very good-faith settlement,” she said. “It’s a lot of money. Even if they never admitted liability, they’ve done the right thing.”

The settlement, Dardarian added, “puts a premium on extra hours worked, but it also gives employees incentives not to work long hours so they can spend time with their families.”

Of the $30-million settlement, about one-quarter will go to attorney fees before the rest is shared among the class members. Individual plaintiffs can also opt out of the settlement and pursue their own claims.

The agreement is expected to receive final court approval at a June 27 hearing.