Appraiser Overtime Lawsuits Continue

Appraiser Overtime Lawsuits Continue to Hit Banks and AMCs – and Now Commercial Appraisers Against a National Commercial Appraisal Firm

In May, I wrote a short piece (posted here) about the legal threat posed to AMCs, appraisal firms and other employers of appraisers in relation to classification of appraisers as exempt from overtime. I included a warning that the threat was spreading to commercial firms. It’s time for an update.

In August, another bank – U.S. Bank – was sued for unpaid overtime by a potential class of appraisers. Also named as a defendant to the class action is U.S. Bank’s appraisal management and mortgage services subsidiary Red Sky Risk Services, LLC. Overall, the case presents nothing new or unexpected except for one thing: the complaint alleges that U.S. Bank actually concluded in 2015 that the legal environment (in the aftermath of the LandSafe appraiser overtime decision that I discussed in the May article) required that staff appraisers be paid overtime. Thus, in 2015, U.S. Bank and Red Sky allegedly reclassified their staff appraisers as non-exempt employees. According to the complaint, however, U.S. Bank and Red Sky then allegedly pressured appraisers to work overtime “off the clock” without recording it and without being paid for it. Like many other appraiser overtime cases, this case was filed by the Northern California law firm of attorney Bryan Schwartz. Here is a typical allegation from the complaint about the role served by appraisers within U.S. Bank: “Review Appraisers are glorified proofreaders who must apply prescribed guidelines and procedures to check that appraisal reports follow Defendants’ and regulatory established protocol.” (The U.S. Bank complaint and the other cases discussed in this article can be found in a section of my site www.valuationlawgroup.com devoted to appraiser employment cases.)

In another lawsuit, the appraisal management operation of Assurant, Inc. also has been sued by a potential class of appraisers. Assurant had purchased an AMC called StreetLinks several years ago and rebranded it under the Assurant name. This lawsuit is basically a cookie cutter FLSA case against an AMC that simply (and allegedly) misclassified its staff appraisers as exempt and did not pay them overtime. The one thing I found remarkable was that I noticed one of the named plaintiffs in the action has been a staff appraiser of four different AMCs/appraisal firms: LandSafe, Corelogic Valuation Services, the defendant Assurant, and, most recently, Amrock (formerly TSI Appraisal). All four of these companies share the common distinction of having been named as defendants in appraiser overtime class actions. The fact that staff appraisers often move from one lender or firm to another is a big part of the reason why overtime litigation keeps spreading among lenders and AMCs.

With regard to the Assurant case, it’s also relevant to note that Assurant earlier ran into big legal problems stemming from a field services firm that it had purchased called Field Asset Services. I wrote about the Bowerman v. Field Asset Services case in an earlier article here. The problem for Assurant there was that the trial court ruled that the field services subsidiary had misclassified its property preservation vendors as independent contractors, rather than employees. Once the workers were viewed by the court as employees, they were then entitled to overtime and reimbursement of expenses – which individually topped $200,000 for some of the workers. Such a misclassification theory is not part of the present case against Assurant’s AMC operation and there is no allegation in the present case that any members of Assurant’s independent contractor appraiser panels should be reclassified as employees . . . but, in my opinion, whether a reclassification claim will become an issue in the case or in another case against Assurant should be watched. This case too was filed by the Bryan Schwartz firm – which makes the reclassification claim threat very real. (It recently has been reported that Assurant has sold off all its appraisal management and other mortgage service operations to Xome Settlement Services.)

… commercial appraisers against a national commercial firm – Cushman & Wakefield…The biggest development since May in appraiser overtime litigation has been the filing of a class action complaint on behalf of commercial appraisers against a national commercial firm – Cushman & Wakefield. Given the direction of appraiser overtime litigation over the last six years, this development was inevitable. The case is entitled Seltz v. Cushman & Wakefield, Inc. It was filed initially in the Superior Court for the District of Columbia and since removed to federal district court. Like every other appraiser overtime action, it contains sad allegations by the plaintiff about their own work such as “Appraisers perform non-managerial work predominantly consisting of inputting pre-determined data into a computer program that then auto generates reports.” In another section, he alleges that the duties of appraisers in the firm “did not include the exercise of discretion and independent judgment regarding matters of significance.” These kinds of allegations are made to diminish the contention that appraisers should be treated as professionals for the purpose of classification as exempt or non-exempt from overtime. Of course, it’s usually not the way the same person will describe their work on a resume or in a LinkedIn profile.

…will commercial appraisers with years of experience in a respected national firm actually choose to join in a lawsuit led by an appraisal trainee that expressly demeans the professionalism of their appraisal work?In this case, the lead plaintiff appears to not even have been licensed as an appraiser yet – his title was “associate appraiser.” Moreover, he was only employed by Cushman & Wakefield for a short six months. Any overtime compensation to which he might be entitled would therefore be relatively small, and his participation is more realistically viewed as a springboard for the attorneys’ pursuit of claims on behalf of a larger class. Accordingly, the lawsuit is allegedly filed on behalf of all employees who hold or held the titles Associate Appraiser, Junior Appraiser, Appraiser or Senior Appraiser and who worked more than 40 hours in a week at any time since December 5, 2014. Importantly, those who want to be part of the class must join in the action by filing consents to join in the public court docket. That will be the real measure of the severity of the lawsuit for the appraisal firm – will commercial appraisers with years of experience in a respected national firm actually choose to join in a lawsuit led by an appraisal trainee that expressly demeans the professionalism of their appraisal work? We will see.

Aside from the fact that the case is filed on behalf of an alleged class of commercial appraisers against a national firm, the only other remarkable thing about the case is that it was not filed by the Bryan Schwartz law firm.

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Peter Christensen

General Counsel - Attorney at Christensen Law Firm

Peter Christensen is an attorney, licensed in California and Washington. His legal practice primarily serves the real estate valuation community -Valuation Legal. He's the author of Risk Management for Real Estate Appraisers and Appraisal Firms, published by the Appraisal Institute.

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