New York bank settles wage dispute with a $5.8 million payout

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Community Bank System in Syracuse, New York, has agreed to pay $5.8 million to forestall a threatened class action lawsuit involving branch employees' allegations of unpaid wages. 

The $15.6 billion-asset Community Bank System disclosed its payout plans last week in a filing with the Securities and Exchange Commission. Though the company expects to execute the settlement during the first quarter of 2024, it is treating the expense as a subsequent event for accounting purposes, thus including it in a revised fourth-quarter earnings statement. 

The payout reduced profits for the three months ending December 31 from the originally reported $38.3 million to a revised total of $33.7 million. Full year 2023 net income was revised downward to $131.9 from the original $136.5 million. 

Hovde Analyst Nick Cucharale, who gave Community Bank System an "Outperform" rating in a January 23 research note, said Friday in an email to American Banker that he views the settlement as a one-time event. According to the February 9 8-K filing, Community Bank System does not anticipate any additional costs beyond the $5.8 million settlement. 

A Community Bank System spokesman did not respond to a request for comment. 

Community Bank System, the holding company for Community Bank, provided few details regarding the dispute, noting only that it involved "certain nonexempt branch employees." According to the U.S. Department of Labor, nonexempt employees are those that must receive at least the minimum hourly wage. Nonexempt employees also qualify for overtime pay. 

For banks and other financial services companies, compensation-related disputes — often centered around overtime — have been a perennial issue, and one that continues to bedevil institutions of all sizes.  In January 2023, for instance, Canadian banking giant CIBC agreed to pay $153 million to settle a class action suit filed by employees who claimed the company failed to properly compensate them for overtime work. 

Branch banking

One Wells Fargo branch has voted to unionize. Here's what's next.

December 21, 2023 1:24 AM

Wells Fargo, which last month announced it would pay $1,000 bonuses to lower-paid employees, was sued in November by an employee who claimed the San Francisco-based company improperly classified some bankers as management-level employees, depriving them of overtime. In its response to the suit, Wells Fargo acknowledged that it classified its senior branch premier bankers, including plaintiff Sabrina Perez, as nonexempt, but asserted the classification was proper. 

Perez is part of a group of employees seeking to unionize Wells Fargo.

Long hours spent processing Paycheck Protection loans during the COVID pandemic prompted employees at the $40 million-asset Genesee Co-Op Federal Credit Union in Rochester, New York, to seek to unionize in 2022.

In December, a group of former mortgage lenders sued Bank of America over alleged failure to pay overtime. Similar charges have been leveled against a number of mortgage companies in recent months.