In a highly complex wage-theft case, a Fresno County judge has ruled that about 250 escrow officers who were misclassified as exempt employees are entitled to receive overtime back pay from 2003 to 2012 from North American Title Co.
In addition, Superior Court Judge Jeffrey Hamilton said about 340 escrow officers can sue North American for millions of dollars in unpaid overtime and for not getting rest or lunch breaks from 2004 to 2012.
In all, the rulings could cost North American about $40 million, said Fresno attorney Nicholas “Butch” Wagner, whose law firm of Wagner, Jones, Kopfman and Artenian has been in a nine-year legal battle with North American Title Co. on behalf of hundreds of escrow officers who worked for the company.
Wagner said he plans to sue North American on behalf of the escrow officers and their lost wages.
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It’s cheating. It’s wage theft.
Fresno attorney Nicholas “Butch” Wagner
North American, which has offices in Fresno and Visalia, is backed by parent company Lennar Corp. , which reported more than $12.9 billion in assets for fiscal year 2014, according to the company’s website.
The company was sued in Fresno County because many plaintiffs are from the Fresno area, Wagner said.
Hamilton made his ruling after hearing several months of testimony in a court trial earlier this year that didn’t require jurors.
In his ruling made public this week, Hamilton said: “The court would like to make it clear that it did see evidence of unreported and unpaid overtime, just not on a class-wide basis.”
Wagner said Hamilton’s ruling reinforces state law that prevents employers from making employees work for free on their own time.
“If you are working for an employer, you’re entitled to get paid,” he said.
Michael Brewer, an attorney for North American, declined to comment on the ruling, saying the company does not comment on pending litigation.
Court records say the case began 10 years ago during a defamation trial in Fresno County Superior Court.
In April 2006, Fresno escrow officer Lisa English was awarded nearly $200,000 in damages after she testified that her former bosses at Financial Title Co. tried to blackball her by firing her and then claiming she wasn’t a good worker. During the trial, Fresno attorney Stephen Cornwell learned that English had been working long hours – and not getting overtime pay.
After the trial, Cornwell told Wagner, who sued Financial Title and other title companies for unpaid overtime on behalf of their employees. The lawsuits have led to more than $80 million in settlements with title companies across the state, Wagner said.
Wagner’s firm sued North American Title Co. in April 2007. The law firm later amended its lawsuit to add North American Services as a defendant. North American Services hires escrow officers and leases them to the title company, Wagner said.
North American Title Co., which has offices in Fresno and Visalia, is backed by parent company Lennar Corp., which reported more than $12.9 billion in assets for fiscal year 2014.
While other title companies have settled, North American has refused. Instead, it opted for a trial in front of Hamilton, which involved about 70 witnesses who testified over a three-month period.
In general, escrow officers are responsible for transferring the title of a home from seller to buyer once both parties have done everything said in the purchase agreement.
According to Wagner, these officers are predominantly women who worked long hours without rest or lunch breaks during the housing boom.
“Many of them would eat at their desk while they did tedious paperwork,” he said. “They were under pressure because their bosses didn’t want to lose the deal.”
The workers were vulnerable, Wagner said, because they were happy to have a job and were paid well. During the heyday of homebuying a decade ago, escrow officers were earning $90,000 a year or more, Wagner said. Likewise, title companies were “making a pile of money” because they avoided paying overtime, he said.
According to California laws, employees must be paid for all hours worked and receive overtime pay if they work more than eight hours in a workday or 40 hours in a workweek, unless they are classified as exempt. In general, exempt employees are managers who supervise other employees.
Wagner said escrow officers are entitled to overtime pay because they produce paperwork for title companies by working with homeowners and ensuring the transactions are executed legally.
To avoid paying overtime, Wagner said, North American “tricked” its employees by giving them titles such as unit or branch manager, then saying they were not entitled to overtime.
Although North American contended the managers supervised other employees, testimony heard in the trial revealed that the managers spent a majority of their time doing paperwork like other escrow officers.
In many cases, Wagner said, the misclassified employees were told not to write overtime on their timecards.
“It’s cheating. It’s wage theft,” Wagner said.