Last week, a federal judge ordered Wells Fargo to pay its California home mortgage consultants and private mortgage bankers a total of $97 million for a violation of labor laws.
The primary violation comes from the bank’s failure to provide compensation during rest breaks, and to what extent.
Wells Fargo said it will appeal, claiming it is actually in compliance with the law:
"Wells Fargo’s compensation structure for its home mortgage consultants complies with California’s wage and hour laws, including pay for all break periods, and allows our HMCs to earn competitive, performance-based compensation," spokesman Tom Goyda is quoted in Bloomberg.
"There never has been any dispute about whether or not our California HMCs were provided with rest breaks," Goyda said in an email to HousingWire. "What’s in question relates to a technicality in the California law regarding such break periods. We believe the judge misunderstood how our compensation plan treats rest periods and misinterpreted the state law, and will be appealing on that basis."
So this brings up the question: what should a lender be willing to compensate for? Is it wrong to ask an LO to “clock out” in order to grab a cup of coffee, a smoke and a trip to the bathroom (just maybe not in that order)?
Furthermore, do rulings such as this actually hurt the mortgage lending industry? Is it plausible that Wells will look for ways to reduce reliance on LOs, if they consider rulings such as this problematic for their bottom line?
Let me know on the message boards below.