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BofA, Merrill Lynch Can't Shake OT Action By Adviser Trainees

Law360—Max Stendahl

A New York federal judge on Friday refused to dismiss a suit accusing Bank of America Inc. and subsidiary Merrill Lynch & Co. Inc. of stiffing financial adviser trainees on overtime pay and agreed to conditionally certify the case as a class action.

The dual rulings, issued by U.S. District Judge George Daniels following a lengthy hearing in Manhattan court, will allow attorneys for named plaintiffs Andrew Blum and Zaq Harrison to notify potential class members about the case.

Blum and Harrison, former salaried employees at Merrill Lynch, claim they were wrongly denied overtime pay during a five-stage training program to become financial advisers. They are seeking only to represent trainees who went through the second stage of the program, which lasts 90 days and involves generating leads on clients, beginning in August 2011.

Judge Daniels on Friday rejected arguments by Bank of America and Merrill Lynch that at least some of the plaintiffs clearly qualified as “outside salespeople” and therefore fell under an exemption to federal overtime laws.

“The allegations that Mr. Blum and Mr. Harrison make are significant to raise a factual dispute that cannot be resolved on the motion you made,” the judge said. “This litigation has gotten to the point where it is appropriate to give conditional certification.”

The judge said a final ruling on certification would hinge on what information the parties gather during discovery.

The plaintiffs' attorney Justin Swartz said after the hearing, “We’re happy the judge sided our way. We think these workers deserve overtime.”

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Blum and Harrison filed suit in March, claiming they were encouraged and required to work more than 40 hours per week during the second stage of the training program, referred to as the development stage, but were wrongly classified as exempt from overtime.

Bank of America and Merrill Lynch have argued that the experiences of development-stage trainees varied widely, making the case a poor candidate for class certification.

But Swartz argued Friday that all development-stage trainees had the same general duties, followed the same training manual and were compensated based on the same system.

“That is all that’s necessary at this stage of the proceeding,” Swartz said. “They’re all subject to the same alleged violation of the law.”

The plaintiffs' counsel in the case have filed a separate class action against Bank of America and Merrill Lynch on behalf of individuals who were denied overtime pay during the first stage of the training program. Judge Daniels indicated Friday that the two cases could be consolidated.

The plaintiffs are represented by Justin Swartz, Rachel Bien, Jahan Sagafi and Katrina Eiland of Outten & Golden LLP and Gregg Shavitz and Paolo Meireles of Shavitz Law Group PA.

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The case is Blum et al v. Merrill Lynch & Co. Inc. et al, case number 1:15-cv-01636, in the U.S. District Court for the Southern District of New York.