Better Mortgage Settles Underwriter Overtime Lawsuit for $7.185M

Better Mortgage has agreed to a $7.185 million settlement to resolve a nearly six-year-old lawsuit alleging the company misclassified mortgage underwriters as exempt employees and failed to pay them overtime.

The proposed settlement, filed on July 1, encompasses claims from 211 current and former underwriters who joined the federal lawsuit, as well as related claims under California’s Private Attorneys General Act (PAGA) covering 116 employees. Employees whose claims were previously sent to arbitration are excluded from this agreement, as is a broader class of other employees.

The lawsuit was initiated in September 2020 by former underwriter Lorenzo Dominguez, who accused Better Mortgage of violating state and federal wage laws by not paying proper overtime to employees classified as exempt. The litigation involved significant legal proceedings, including hearings before the Ninth Circuit Court of Appeals and three unsuccessful mediation attempts.

Key disputes throughout the case involved arbitration agreements, a retention bonus offer of $10,000 for employees remaining for six months, and release agreements introduced by Better Mortgage after the lawsuit was filed. These issues led to disagreements over whether employees could continue their legal actions in court.

Under the terms of the proposed settlement, Better Mortgage will pay the $7.185 million settlement fund, with the company also responsible for payroll taxes and settlement administration costs. Plaintiffs' attorneys intend to request approximately one-third of the settlement fund, around $2.37 million, for fees, plus up to $70,000 for litigation costs and a $12,500 service award for the lead plaintiff, all subject to court approval. An additional $357,750 is allocated to resolve the PAGA claims, with 75% of that amount designated to go to the state of California under state law.