A former employee has filed a class-action lawsuit against Chicago-based mortgage lender Guaranteed Rate for failing to pay minimum and overtime wages, violating the Fair Labor Standards Act.
According to the lawsuit, Robert Peters worked for G-Rate as a mortgage loan officer from January 2017 to December 2020, when the mortgage market was booming due to historically low rates imposed to mitigate the impacts of the COVID-19 pandemic on the U.S. economy.
During that time, Peters sold home loans to customers for properties in California, receiving his salary on a commission-only basis. It means that when Peters did not sell loans, G-Rate did not pay any wages for his work, the lawsuit claims.
However, Peters claims he regularly worked more than eight hours daily and often more than 12 hours a day without receiving overtime wages. He said the company did not provide paid rest periods of at least 10 uninterrupted minutes when he worked at least 3.5 hours.
Peters and Guaranteed Rate did not reply to HousingWire’s requests for comments.
The plaintiff’s attorney, Joshua S. Boyette, from Swartz Swidler LLC, said Guaranteed Rate had a commission-based payment plan but the company did not pay all the commission at the time of separation. It also did not pay for unproductive time and rest breaks, violating California labor laws, he added.
“We believe the issue was systemic at Guaranteed Rate and, unfortunately, a number of other mortgage banks in the industry,” Boyette said in an interview.
In addition to his work as a loan officer, Peters says he also performed tasks other than selling loans, “including but not limited to participating in meetings, administrative work, and booting up a work computer.” G-Rate did not pay additional wages for the time spent performing these activities, the lawsuit states.
According to the lawsuit, G-Rate failed to provide a detailed pay statement to the former employee, missing information such as the total hours worked and the number of paid rest periods.
Peters claims that, when he parted ways with G-Rate, he did not receive all earned commissions in the required timeline – within 72 hours if he had resigned without notice or immediately if Peters had provided notice or the company had discharged him, which is required by California labor laws.
Instead, G-Rate paid his final commissions according to the same schedule for the payment that was in effect during his employment at the earliest or later, the lawsuit states.
Peters’ attorney filed the lawsuit on Tuesday with the U.S. District Court in Northern California.
Peters does not know the exact size of the class-action lawsuit, because the information is in G-Rate’s exclusive control, per the lawsuit. “However, on information and belief, the number of potential class members is estimated to be more than forty (40) employees,” the lawsuit states.
It’s no secret the current mortgage market is brutal for lenders across the board. Guaranteed Rate’s production volume in the first half of this year totaled $17.6 billion, down about 47% from the same period in 2022, according to data from Inside Mortgage Finance.
In August, the company cut hundreds of employees across two rounds of layoffs, HousingWire reported. As of Oct. 31, 2,051 mortgage loan officers were licensed with G-Rate’s primary mortgage businesses, according to data from the Nationwide Multistate Licensing System (NMLS). On Oct. 8, the previous total was 2,094.
In another legal battle, HousingWire reported that its affiliated company Guaranteed Rate Affinity is suing former LOs, accusing them of breaching contracts by failing to pay back advanced signing bonuses and commissions after they left the company.
The Wall Street Journal also recently reported that the company is going after “hundreds of LOs” who signed six- and seven-figure bonuses.
