Merill Lynch has agreed to pay as much as $37 million to settle a lawsuit alleging the company misclassified stockbrokers in California as exempt from overtime, the New York Times reports.

Some labor attorneys say the settlement is significant and could prompt more overtime claims in the financial industry.

"It's a huge deal with very significant ramifications," says Cliff Palefsky, a lawyer in San Francisco who has sued brokerage firms. "This is going to set off a chain reaction of wage-and-hour cases against the industry..."

In settling the lawsuit, the company continues to deny any wrongdoing.

"We believe it was in the best interests of our clients, our financial advisers and the firm to avoid litigation and settle this matter," Mark Herr, a Merrill spokesperson, tells the newspaper.

Plaintiffs' attorneys argued that under federal law, stockbrokers fall outside an overtime exemption covering commissioned retail sales employees.

"The substance of this case is the federal labor law fact that brokers are not by definition engaged in a retail trade," plaintiffs' attorney Mark Thierman tells the newspaper.

Link

• New York Times article (requires registration)