Former Employee Files Class-Action Lawsuit Against Guaranteed Rate for Unpaid Wages

A proposed class-action lawsuit filed against Guaranteed Rate, a Chicago-based mortgage lender, highlights unlawful employment practices that can take place in the mortgage industry. The case focuses on issues with commission-based compensation structures. Commissions make up a key part of wages for certain types of employees. Just like other types of wages, employers are required to pay earned commissions on time and in full.

Former California mortgage loan officer Robert Peters claimed his employer failed to pay minimum wage and overtime, as well as provide legally required rest breaks. Additionally, the company did not pay final commissions within the timeline specified under California law. The lawsuit was filed in October 2023 in the U.S. District Court in Northern California.

Peters worked for Guaranteed Rate, also known as G-Rate, from January 2017 to December 2020. During this period, the mortgage market experienced a significant boom due to historically low interest rates aimed at mitigating the economic effects of the COVID-19 pandemic. Peters, like many others in the industry, was employed on a commission-only basis. This means he was only paid when he successfully sold home loans to customers in California.

According to the lawsuit, Peters routinely worked more than eight hours a day and often exceeded 12-hour workdays without receiving any overtime pay. Furthermore, he alleged that G-Rate failed to provide the mandated paid rest periods of at least 10 uninterrupted minutes for every 3.5 hours worked. Peters and other mortgage loan officers only received commissions and no overtime pay despite working over 40 hours in a workweek and being eligible for overtime pay. The lack of overtime pay and rest breaks violated both the Fair Labor Standards Act and California labor laws.

The core of Peters’ complaint revolves around the commission-based payment structure used by G-Rate. While the company had a commission-based payment plan, it failed to pay all earned commissions when employees left the company.

California law requires that employees receive their final wages, including commissions, within 72 hours if they resign without notice or immediately if they provide notice or are terminated. According to the lawsuit, G-Rate did not follow this timeline and failed to pay Peter’s earned commissions when he left his job. Instead, the employer paid out final commissions according to the same schedule used during his employment.

Additionally, the lawsuit stated that G-Rate did not pay Peters for time spent on tasks unrelated to direct loan sales, such as administrative duties, attending meetings, and preparing his work computer. While such activities were not directly tied to sales, they were essential parts of his job and should have been compensated accordingly.

Peters’ attorney described the issues at G-Rate as “systemic” and ones that exist in the mortgage industry at large. This assertion points to a widespread disregard for labor laws regarding compensation and working conditions, particularly in commission-based roles.

The lawsuit also alleged a lack of transparency in pay statements provided by G-Rate. According to Peters, the company failed to give Peters detailed pay statements that included the total hours worked and the number of paid rest breaks.

While the exact size of the lawsuit remains undetermined, Peters estimates that more than 40 employees could potentially be involved. The class action comprises workers who were employed with G-Rate during the last three years as a mortgage loan officer or a similar role.

Peters is seeking to recover unpaid wages, damages, and penalties due to G-Rate’s wage and hour violations. Under California law, the penalty includes up to 30 days’ worth of wages for failing to pay final commissions on time.

While McCormack Law Firm is not involved with this class-action lawsuit, we are dedicated to helping workers recover their unpaid wages. Our San Francisco employment lawyers are just a phone call away. We are available to answer your questions about unpaid commissions and other related employment matters. Contact us today for a free initial consultation.