The giant Wall Street financial firms have settled numerous overtime pay and discrimination claims over the past decade and a half, but a recent suit filed in New York represents a new twist on some old themes. Nancy Martignago, a sales assistant for Merrill Lynch in the firm’s Fort Worth, Tex. office, filed a class action lawsuit on Jun. 9 against Merrill in the Southern District of New York for unpaid overtime compensation. The class could be as large as 5,000 sales assistants nationwide, said Martignago’s attorney Linda Friedman of Stowell & Friedman, though she declined to disclose the number participating so far.
What’s at stake is the entire system of hiring, promotion, supervision and compensation of sales assistants at Merrill, said Friedman. She alleges that the system not only results in unpaid overtime, but also fosters a pattern of intimidation and gender discrimination. Martignago may add a gender discrimination claim to the class action lawsuit later if she receives approval from the Equal Opportunity commission (EOC). In the early aughts, Merrill Lynch settled a class action gender discrimination lawsuit with female financial advisors employed by the firm.
“We disagree with the claims and will be vigorously defending ourselves in court,” said a Merrill spokesperson in an email response to a request for comment on the Martignago claims. Merrill has filed a motion to move the case to Texas. Friedman says they decided to file in New York because the firm is headquartered in New York, and “that’s where the company’s practices are formulated.” She notes, however, that “some of the worst gender discrimination claims come from that area in Texas, Fort Worth.” Stowell & Friedman plans to file a response to Merrill’s motion in the next couple of weeks, which will probably include additional Merrill sales assistants who work in New York.
Friedman, who has a record of winning gender discrimination cases against big Wall Street firms, says this overtime suit is very different from the wave of overtime claims brought against the wirehouse firms a few years ago by brokers. In 2006, Merrill consolidated various broker overtime pay lawsuits against it, agreeing to settle nationally with its brokers for an undisclosed sum. (It first dished out $37 million in an overtime lawsuit in the state of California.) UBS, Morgan Stanley and Smith Barney also settled overtime cases.
“I never felt it made a particularly compelling case to argue that a person who makes several hundred thousand dollars a year should be expected to be paid overtime,” said Friedman. “What’s different about this case, and that is more consistent with the work this law firm has done, is that the core of what the overtime laws were intended to accomplish was to make sure a fair wage exists for the people in the lower wage categories—people who perform more traditional office-type jobs. It’s also consistent with work we did in the 1990s and early 2000s on harassment and gender discrimination.” Stowell & Friedman brought one of the first major Wall Street gender discrimination lawsuits in 1996 against Smith Barney; it was known as the Boom-Boom Room case.
In the lawsuit, Martignago claims that even though her supervisor told her not to work overtime, her financial advisor expected her to stay late, and she consistently worked more than 40 hours a week without pay. Martignago’s direct supervisor, Diane Giza, the client relationship manager, “often instructed Plaintiff and other CAs not to work overtime and refused to approve their overtime requests or authorize payment for their overtime worked, despite Giza’s knowledge that the CAs were working more than forty hours. One on occasion, Giza said 'Well, don’t tell me that,' or words to that effect,” according to the lawsuit.
Serving Two Masters?
Because so much of their compensation is often “bonus” money paid by the financial advisor, which is entirely at his discretion and comes out of his own paycheck, Merrill sales assistants are uniquely vulnerable to intimidation and discrimination, the lawsuit alleges.
Sales assistants, called “client associates” at Merrill, “have no real job security,” the lawsuit alleges. "When CAs, and particularly female CAs, complain, or the relationship otherwise fails, Merrill Lynch protects the primarily male FAs, and often removes the CAs from the FA or the team.”
Merrill typically pays sales assistants a base salary of $25,000 to $40,000, Friedman says. As the sales assistants gain experience and become more valuable, the supplemental part of their income, paid for by the FA, grows, often accounting for up to a half of the assistant’s total compensation, according to Friedman. “The best assistants came make $80,000 to $100,000 a year,” she says. Merrill could not confirm these numbers.
Because of the two-tiered compensation model, Merrill sales assistants essentially serve two masters with ocassionally conflicting interests: Merrill and the individual financial advisor, says Friedman.
“As Merrill Lynch is well aware, many CAs, out of fear of angering their FAs or for fear of disturbing their compensation arrangements with the FAs, do not refuse to work the overtime hours requested or required by their FAs, nor do they raise overtime issues with or ask to be paid overtime by their FAs,” the lawsuit claims.
In addition, while women who apply to positions at Merrill are often steered into sales assistant roles, men who are no more qualified are automatically recommended to the financial advisor/broker track, the lawsuit claims.
“We believe that if you can eliminate the compensation system, the idea that the sales assistant must not only look to employer Merrill, but also the employee for supplemental pay, that that will eliminate a lot of the gender discrimination,” said Friedman. “It even affects things like promotion. If they are paying a good sales assistant, they don’t want the assistant to leave so they fight promotion. The sales assistant gets berated for taking vacation. You are beholden to people who have very different interests. One is Merrill, the other is the broker, whose main interest is his book of business.”
