Former bankers at Rocket Mortgage have filed a class-action-seeking lawsuit that claims the lender failed to fully compensate their overtime wages, a violation of the Fair Labor Standards Act. The lender denied the allegations in a statement to HousingWire, calling it a “desperate” move.
Complaints about the company’s labor practices were made public in November amid a challenging mortgage market. Like its competitors, Michigan-based Rocket was highly affected by surging mortgage rates in 2022, which caused refinancing volume to dry up.
Despite its efforts to obtain more purchase loans, Rocket lost $166 million in the third quarter of 2022 and fell from its position as the largest mortgage lender in the country. It was replaced in the top spot by United Wholesale Mortgage (UWM).
To adjust its structure to the new landscape, the company imposed two voluntary buyout programs in April and August. The remaining employees reportedly faced intense pressure to bring in business, which resulted in working extra hours.
But the latest lawsuit, filed on January 4 in the U.S. District Court in Arizona, claims that Rocket did not pay for the overtime, which should be billed at 1.5 times the hourly pay for hours worked in excess of 40 per week. The class action lawsuit targets current and former employees.
Aaron Emerson, a spokesperson for Rocket, told HousingWire that the lawsuit is “nothing more than a desperate, last-minute attempt by a group of former employees who knowingly and willingly violated the terms of their employment with our company and are already party to pending litigation.”
According to Emerson, Rocket “fully expects these baseless claims to be tossed out as we proceed toward holding these individuals to account for their actions.”
The plaintiffs – including Rachael Gilburd, Andrew Gebhart, Daniel Featherstone, Derek Martin, Angela McGuire, Kori Morin, Katherine Redas, Erin Salava, David Vallejo and Nick Vincent – were originators at the company.
“At all times relevant, Defendant improperly calculated Plaintiff’s regular rate of pay pursuant to the FLSA,” the lawsuit states. “Defendant failed to properly incorporate the incentives, bonuses, and additional compensation paid to Plaintiffs in each pay period as part of the determination of their regular rate of pay.”
According to the lawsuit, the former bankers are demanding a jury trial and compensatory damages.
Rocket originated $25.6 billion in mortgage volume in the third quarter of 2022, which was 71% lower than the $88 billion in volume it produced in the same period in 2021, when refinancing business was still plentiful.
The mortgage tech platform Modex shows that the company has about 5,700 active loan officers and 1,720 branches.
In a Wall Street Journal deep dive on Rocket’s businesses in October, Amanda Womack, a former employee at the company, said, “When it’s good, they encourage you to come in to make even more sales. When it’s bad, they encourage you to come in because you’re not making money for the company.”
At the time, Rocket told the Journal it had made changes – including an increase in hourly pay for new bankers and per-loan commissions for seasoned bankers. The company said that an average banker worked up to seven hours less per week in 2022 compared to 2021 and sales goals have been lowered.