Free Brief in Support of Motion - District Court of Colorado - Colorado

Case 1:03-cv-02485-MSK-PAC

Document 339-6

Filed 01/31/2006

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DUANE MCCLAIN and ALESIA MILES
VS

HEARTLAND HOME FINANCE

DEPOSITION OF

THOMAS E. BECK

AUGUST 17,2005

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Case 1:03-cv-02485-MSK-PAC

Document 339-6
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seven years?

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A Q

Yes. Are you a vice president of a certain

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division? A I'm head ofthe legal department. Are you a lawyer, also? Q A lam.
Q
You've been designated by the company

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as a 30(b)(6) deponent that has answers to my
questions about investigations, other lawsuits,

things like that. Would you agree that you would
be a person that would have that sort of knowledge?

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it arose from a complaint by one of the employees, but, of course, they would not disclose who it was, 9 and i do not know who it was. Were you involved in conversations 10 Q Labor where they explained 11 with the Departent of 12 to you whether or not the company was violating
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violations? Yes, it did. A What was your understanding as to why Q there were minimum wage allegations made against Heartland Home Finance? A As to why they were made? I believe

Yes. You heard me asking Mr. Flynn about Labor investigations into Heartland Departent of Home Finance, correct? Yes. A i asked him -- in his last Q

A Q

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minimum wage laws? A Yes. What did the Departent of Labor say 15 Q 16 on that issue? 17 A i believe they classified our loan

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18 offcers as nonexempt and subject to minimum wage Did they explain to you why they 19 Q deposition he stated there was a Departent of Labor investigation in Dayton, Ohio, that concluded 20 believed or what their concerns were wi~h respect 21 to the minimum wage issue? around June of 2002. Do you recall that 22 A I'm not sure i understand. investigation? Did they believe employees were not 23 Yes, I do. Q A 24 being paid minimum wage by Heartland Home Finance: Q Was it your understanding that that A They said they had received this investigation included allegations of minimum wage 25
, ...... .

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complaint, and they were investigating it.

Was it your understanding that they Q concluded for the Dayton, Ohio, location that some 4 loan offcers did not receive minimum wage? A Yes; 5 Do you recall what time period that 6 Q 7 was for that they investigated? I think it was January 1, 2000 A 8 two-year period. 9 through December 31, 2001, a That was there during the time frame 10 Q 11 where Heartland compensated its loan offcers on a
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.2 there were miniriuim wage violations at the Dayton,
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Q Was it your understanding that since

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Ohio, offce that there could be violations at other offces that Heartland had across the country, that they were paid the same way as the
Dayton, Ohio,: 'loan offcers, right?

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A Q

Yes.
Are you aware of

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any investigation on a nationwide

the company doing scale or an

audit, for example, to determine whether or not

other employees were paid iiinirrurn wage besides the
Dayton, Ohio, folks?

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strctly commissions basis. There were no draws;

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is that correct? A That's correct, there were no draws was strictly commission. at that time. It And was it your understanding that Q there were, in fact, loan officers who were not paid minimum wage as a result of that type of compensation plan? That's correct. A And Heartland was involved in paying Q the loan officers from Dayton, Ohio, so that they were, in fact, paid the minimum wage for that time frame? A That's correct.
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A Yes, we did do some investigidion because at that time there were two other DOL cases that had arose -- arisen during this period in
time.
What did the company do? Q A Well, what we did was we determined that irrespective of the issue of whether loan

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offcers were exempt or nonexempt, we thought it was a prudent policy to adopt a $500 draw, and we 22 did so in July of 2002 effective for all of our 23 offces. 24 We also at that time instituted a
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time sheet policy which we had not had prior to

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Case 1:03-cv-02485-MSK-PAC

Document 339-6
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Filed 01/31/2006

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that time in which the individual loan offcers

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would record their hours on their own and then initial it for tlt~ day, inclJ,uliag time that they 4 a commj~si.Qn during a CertalA pay periodal1d, left theQff,*o,na aoncompanY busil1r~s:, such l,S lunc,hor for l,~Y extendeil period of time other than 5. tl1,ereror~, didn't reci;ive a~y cOriP~l1~atj(ll1, apd 6 that was whi;t yiolated t1le minininm wage,laws? a short b,reak. Alld we communicated that to the 7 A That's correct. fieid throu.gh oùr -- initil,Jly,through a 8 Q Am! thl,t practice occurred on a conference ,call with our regional managers, and 9 nationwiCle ba,~is b.eçause all loan otlcers were then it was fnJJowed up by the individual contact with the managers anil, of course, tlien cnmmunicate 10 subject to the saniIiBI¡¡n; is that com~ct?
to the 10l,11 o(fcers alld what we ex.pecteil in return
for, you kl1oW, giving $500 per pay period. We wa..ted l,n honest 40-hour week. And so. tltl,t is how

1 investigation, would it be fair to say that the Labor found thi;t there were minimum 2 Departent of 3 wage violations because soi:e e.niployees didn't make

11 A Tbl,t's correct.
12 Q Are YOu aware of

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Heaiiland going back

13 and payiiig any emplOYees from other givisions

it was instituted in response to the DOL and
expectl,tions that we wl,nteil to

create.. in the. field.

Q Y q\j ~ain thlt you mi;d.e. itckar that you wanted an honest 4p~hour week. pid you make it clear that youdidii't 'Yant them working beyond 40

14. besi.ces o,r other branches b,esines l)aytQn, Ohio, 15 when it discovered thi;t there wi:re these minimum 16 wage violations?

17 A' NQ~ I think the only ones that were
18 addressed were the St. Louis offce, which was the
19 subject ofthe nQL; and then the Aurora, Colorado,

hours per week? '
A Yes.
Q How so?

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20 office, whic.h Wl,S the slllJject or the POL. And they 21 were ongoing l,t tlie time th~t we rellcbed our
22 settlement i,n JlIne of 2Q04, bnt they

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A Tolil themthiit they couldn't work

hadn't been

over 40 hQlIrs of week witliout specific approval 24 from a regional manager ånd up. 25 Q Going bi;Çk ta this .gayton, Ohio,

23 c9nch1ded yet. lJut we 'Yi¡.¡ in t,lie midst of it.

24 Q Why didn't the cqlJP¡iny pay Itmii
4.5 OmCiifS fwm otl1ltr ~ranches the p:Ünim1Jm wi;ge or

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1 pay them their backpay when it discovered that 1

September 2003.

2 there were these minimum wage violations? 2

4 You can answer. 4 5 question. 5
3 MR. CAll: Object to the form ofthe 3
6 THE WITNESS: I don't know the answer 6
7 ' tò that

Q And in that investigation there were
allegations of

minimum wage violations as well; is

th,at right?

A That's correct.
Q And the Department of

question. 8 8Q BYdon't recallFISHER: 7 MS any conversations 9 9 You

Labor came in

and folind then~ were, in fact, these minimum wage

violations? .
A Yes. In short answers, yes.
Q These were just loca)i;zed
investigi;tions, right?

10 with anyone higher up in the company about whether 10

lIar not the companyshoÜld pay all the other 11

13 time fnime?' 13
18 aware of is the discussion of

12 employees who were denied minimumwi;ge during th 12

A, . Yes, tb~ts correct.
Q Did they just laoki;t thl;t Qne branch
look at iill of c;alnrado, Qr is thllt the only branch in Colorado? '

W ~~ W
19 do in the future, and that led to this 19
what we should 18

15 the in 16 question. Assumes facts notI'm 15 evidence. 16 17 THE WITNESS: The only thing 17

14 MR. CARR: Objection to the form of 14 say, forex:i;mple, A,,ior¡i, c;olorano, or did they

21 You also mentioned the Aurora, 22 BYMS. FISHER: 21 22 Q
23 Colorado, investigation. That concluded sometime 23
24 around September of

A We only had -- at that time we only had one branch in Colorado. From time to time it might have been diviiled into two brl,nch offces, bllt they were all at this physicallocl,tion. I
don't recalJ l,t that time wbether we had one or two
there at

25 A Yeah, I believe that is correct, 25

2003; is that correct? 24

managers. I think we had at one time two managers least. So it would have been over different regimes. Q These investigations into Dayton,

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Case 1:03-cv-02485-MSK-PAC

Document 339-6
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Filed 01/31/2006

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1 Ohio, and Aurora, Colorado, were just specific to 1

2 those branches, right? 2 3 A Yes, that's correct. 3
6 of2003. Does

these violations?

A St. Louis is the one that dragged on
an inordinate amount oftime because the
got heat fro~. her manager. So I'm striig~ling~ I
is my -- you know, I am going to have to look exactly to make sure. But I believe it is

4 Q There was also an investigation in 4 investigator kind of just dropped the'ball and it 5 St. Louis, Missouri, that was around mid September 5 just laid in limbo for a long time. And then she

that soundaçcuri;tt:to you? 6

7 A Mid September of2003? That is 7 think it was-- July of 2001 through July of 2003

11 though? 12 12 A Yes, I do.1 i
9 what period of

time it covered. 9 10 Q You recall that investigation, 10
13 Q Was it your understanding that that 13

8 probably more like when it concluded as opposed tii 8

straddled, our policy change of $500 draw, roughly
SO/50 on each side, and that was a two-year look.

Q So did they find violations prior to the July of 2002 change and after the July of 2002 14 involved an overtime claim allegation and a minimum 14 change?

15 wage violation allegation? 15

violation, and my recollection was for the -- prior 17 all three investigations involved minimum wage ancl 17 to July of 2002. They found minimum wage, and the found an overtime violation with respect to that. 19 Q And during that investigation, the 19 But after July of 2002, I don't think they found 20 Department of Labor fOlihdthat there werèminimum 20 overtime, and there might have been some small 21 wage violations with respect to the St. Louis 21 amount of minimum wage. I just -- I don't clearly recall each individual study they did on each loan

18 overtime. 18

16 A Yes, it does. As a matter offact, 16

A Actually, they found the

22Aoffice, correct.22 right? 23 23 That's
25 were they looking at when they were looking for 25

offcer to come,up with it.' ,

24 Q Was that based on -- what time frame 24

Q Do you have documentation that would
show ifthey found minimum wage violåtio'ns after

t;,i.

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1 July of

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3 the records to see exactly what thèy found. 3 4 Q You had this change of the 4
5 compensation plan in July of2002. Prior to that, 5

2 A July of2002? I would have to review 2

2003 -- or July 2002? I am sorr. 1

were involved in all three investigations. So I'm not quite sure what all of their communications were.
~- I think they

Q So you weren't involved in any
communications where the Departent of disclosed what their concerns were against commissions compensation plan as it

6 it was just a commission, and after that it was a 6 7 draw against commissions, right? 7

Labor 9 A Well, I know what was said to me, and 9 Q Do you recall the Departent of i 0 finding any problems with the draw against 10 what was said to me was that that plan was fine,

8 A That's correct. 8

Labor with your draw relates

to minimum wage violations?

12 A No. As a matter offact, they said 12
13 it did comply from their standpoint. 13 14 Q They told you that specifically? 14

i I commissions not meeting minimum wage standards? 11

that it covered the 5.15 an hour.
Q Y oii 'weren't with the Departent of

'part of any discussions

15 A Yes. 15
22 not discuss everything

Labor abolit when that plan might violate minimum wage laws? For"example, if
receive any commissions, if

16 Q Was there any discussion as to 16

an employee worked 45 hours per week and didn't the $500 woUld violate

20 laws? 20
24 was typically to generate and provide the necessar 24
25 information to them, and I believe I had Ice Milel 25
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17 whether or not loan offcers were working -- if 17

the minimum wage laws. Did you have any of

those

18 loan officers were working overtime if that type of 18 types of conversations with the DOL? A No, I don't believe I was involved in 19 compensation plan complied with the minimum wagf 19
those type of discussions.

21 A You know, I'm not sure because I did 21 with the investigator 22

Q Have you ever had those types of
discussions with ,anyone in

management at Heartland

23 because at that time we drew in counsel. My role 23 Home Finance?

A Yes.

Q Who did you have those conversations

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