A judge in Arizona has approved a $3.5 million settlement agreement between Rocket Mortgage and current and former employees who alleged in a class-action-seeking lawsuit that the company did not provide sufficient overtime pay, according to court documents reviewed by HousingWire.
U.S. District Court Judge Douglas L. Rayes mentioned in the decision that the agreement “was reached through arms-length negotiations with the assistance of a retired federal judge who served as a mediator.” In the order published on Wednesday, Rayes considered the settlement “fair and reasonable,” and he dismissed the Fair Labor Standards Act case with prejudice.
Rocket and the plaintiffs’ attorneys did not immediately respond to a request for comment.
In January 2023, employees sued the top-three U.S. mortgage lender in Arizona, alleging they “were not paid one-and-one-half times their regular rates of pay for all time worked in excess of 40 hours in a given workweek,” the original complaint stated.
In December 2023, the company sought to have the case dismissed on jurisdictional grounds, but the judge denied the company’s request.
At that time, the judge also characterized as a class any employee who worked for Rocket or its predecessor, Quicken Loans, for more than 40 hours in any given workweek as a past or present mortgage banker or similar title, or anyone who performed the job duties of working with borrowers through loan processing, court documents show.
After a mediation process, the parties reached an agreement that requires Rocket to pay $3.5 million to class members. The sum also covers attorneys fees and costs, as well as a fee associated with settlement administration that could exceed $50,000.
Nearly 30% of the $3.5 million settlement will cover legal costs. Class members will receive the remaining amount, with a minimum payment of $25 per person. All unclaimed settlement funds will be returned to the company.
Rocket did not admit any wrongdoing.
The company, which has been under the leadership of Varun Krishna, a former executive at Intuit and PayPal, since July 2023, also recently entered into a conciliation agreement with the U.S. Department of Housing and Urban Development (HUD) to resolve allegations of discriminatory housing practices.