In June 2011, three client service associates in the wealth management division of Morgan Stanley filed a class action lawsuit in New York federal court on behalf of current and former client service associates. Plaintiffs claimed that Morgan Stanley, one of the world’s largest brokerage firms, violated the federal Fair Labor Standards Act and New York state labor law by failing to pay overtime. Last week, Morgan Stanley agreed to settle the case for $4.2 million. The three lead plaintiffs agreed to settlements of $10,000 each in addition to their individual settlement amounts and the other plaintiffs who joined shortly thereafter will receive $7,500.
Client service associates are often compensated by both the brokerage firm and the individual broker for whom they work. They are usually classified as non-exempt employees, which entitles them to overtime pay if they work more than 40 hours per week pursuant to both federal and state law, but as here, such employees are often not paid overtime pay.