Mortgage Loan Officers Entitled to Rest Periods

San Francisco, CAA California federal judge ruled that PNC Bank violated the California labor code by failing to pay mortgage loan officers for rest breaks.  The complaint stems from an unpaid rest break lawsuit that was filed back in 2018.

PNC Lawsuit Time Frame

• Aug 2018: Two months after plaintiff Tanseer Kazi filed the lawsuit, PNC removed it to federal court.
• June 2020: Mortgage loan officers sought class certification and later that year the district court partially granted it, which allowed hundreds of current and former PNC mortgage loan officers to join, reported Law360.
• Sept 2020: Linda Scheid replaced Kazi.
• Jan 2021: Mortgage loan officers filed for partial summary judgment regarding whether PNC failed to pay for the rest periods and whether a previous settlement between the bank and mortgage loan officers prevented some of them from participating in the class in the present case.
• Feb 2021: PNC opposed the bid, citing the state Supreme Court's 2020 decision in Oman v. Delta Air Lines. 
• Mar 2021: The district court granted the workers' bid for summary judgment and ruled that any claims arising before Jan. 5, 2017, were barred due to a settlement in another case, thereby dismissing certain class members and narrowing the class definition.

The district court granted summary judgment to plaintiff Linda Scheid in December 2022. In her lawsuit, Scheid argued that PNC’s Mortgage Originations Incentive Plan (“Incentive Plan”), under which all MLOs are paid, violates California Labor Code section 226.7 by failing to properly compensate MLOs for rest periods. ( PNC appealed the decision in November.) Rest period pay is understood to be included in Regular Pay.

In a unanimous and unpublished opinion, a three-judge panel affirmed a California federal judge's decision that PNC Bank NA violated the California Labor Code under the Second Appellate District's decision in Vaquero v. Stoneledge Furniture, adding that a state Supreme Court's decision doesn't move the needle in the present case.

Vaquero v. Stoneledge Furniture

A California appellate court ruled in Vaquero v. Stoneledge Furniture, LLC (No. B269657, filed February 28, 2017) that employees paid on commission are entitled to separate compensation for rest breaks.

According to court documents, Stoneledge Furniture pays its sales associates only on commission but, it is alleged, requires sales associates to do many tasks that are unrelated to sales. Plaintiff Ricardo Bermudez Vaquero, a former sales associate, argued that this policy violates California's minimum wage and hour laws. He sued Stoneledge Furniture and the district court granted class certification.

Vaquero worked as a sales associate at Stoneledge from 2010 to 2012. He alleges that Stoneledge requires sales associates to perform many tasks unrelated to sales, for example, cleaning the store, attending meetings, and carrying furniture. According to Vaquero, Stoneledge does not pay its sales associates for such work, beyond what they earn in commissions, and this policy violates California wage and hour laws.

In February 2017, the Court of Appeals of California stated: Are employees paid on commission entitled to separate compensation for rest periods mandated by state law? If so, do employers who keep track of hours worked, including rest periods, violate this requirement by paying employees a guaranteed minimum hourly rate as an advance on commissions earned in later pay periods? We answer both questions in the affirmative, and reverse the trial court's ruling granting summary judgment in favor of the employer.
It determined that “Wage Order No. 7 applies equally to commissioned employees, employees paid by piece rate, or any other compensation system that does not provide compensation for rest breaks and other nonproductive time.”

Another PNC Wages Lawsuit

In 2014, an Ohio federal judge approved a $7 million settlement between PNC Bank NA and a class of mortgage loan officers who alleged the bank of misclassifying them as overtime-exempt employees and making improper deductions from their pay.