Bank of America (NYSE:BAC) has agreed to pay a total sum of $12.8 million, following a string of claims made by hundreds of former employees regarding the bank’s failure to provide adequate compensation, according to a Reuters report.
The period in question dates back to 2008 when Bank of America merged with Merrill Lynch, resulting in a wide array of personnel shakeups. This included several hundred firings, prompting an investigation into whether proper procedures were followed for the ex-employees. More than eight years later however, a North Carolina district court finally reached a settlement, awarding a total of $12.8 million to settle claims by 270 former employees.
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The nature of the dispute dealt with deferred compensation from Bank of America, which following the firings of the aforementioned ex-employees. More specifically, procedure and decorum would have allowed these employees to argue that they deserved to leave the firm with some of their deferred compensation, which had not been paid out.
The practice of bonuses and other compensation is commonplace amongst several brokerages in the financial services industry, especially Wall Street. Compensation can also take the form of deferred cash, which is seen as a mechanism to delay immediate payouts and potentially lock in employees who might otherwise be tempted to jump ship to rival firms.
As a result of the settlement, each former employee was entitled to approximately $47,000 according to the filing, ending an eight-year struggle. According to Michael Taaffe, the lawyer representing the former employees, in a recent statement on the settlement: “If they were terminated for cause, the bank had to allow them opportunity to present their side of the story to make sure that the termination was appropriate and not because the bank wanted to keep their deferred compensation.”