Better Mortgage settles underwriter overtime lawsuit for $7.185M

Better Mortgage has agreed to pay $7.185 million to settle a nearly six-year-long lawsuit, which alleges the company failed to pay overtime to mortgage underwriters it classified as exempt employees, according to court filings seeking preliminary approval of the agreement.

The proposed settlement, filed July 1, would resolve claims brought by 211 current and former underwriters who joined the federal lawsuit, along with related claims under California’s Private Attorneys General Act (PAGA) covering 116 employees. Workers whose claims were previously sent to arbitration are not included in the settlement, nor does the agreement cover a broader class of employees.

The lawsuit was filed in September 2020 by former underwriter Lorenzo Dominguez. It accused Better of misclassifying “underwriting employees as exempt from the overtime requirements of state and federal law, thereby failing to pay them proper wages when they worked overtime.”

The case stretched on for nearly six years, including hearings with the Ninth Circuit Court of Appeals and three unsuccessful mediation attempts.

According to the filing, much of the litigation centered on arbitration agreements, a retention bonus agreement that offered $10,000 to employees who remain employed for six months, and release agreements that Better rolled out after the lawsuit was filed. This prompted disputes over whether employees could continue pursuing their claims in court.

Under the proposed settlement, Better will pay a non-reversionary settlement of $7.185 million while separately covering payroll taxes and settlement administration costs.

Plaintiffs’ attorneys plan to seek about one-third of the settlement fund — or roughly $2.37 million — in fees, along with up to $70,000 in litigation costs and a $12,500 service award for the lead plaintiff. The fees and awards are subject to court approval.

The agreement also sets aside $357,750 to resolve claims under PAGA. Under state law, 75% of that amount would go to the California Labor and Workforce Development Agency, with the remaining 25% distributed to eligible employees.

After deducting attorneys fees, costs and other court-approved payments, about $3.9 million would be distributed among participating workers. That amount is in addition to $485,000 previously paid by Better to employees who signed release agreements.

Individual payouts will be based largely on the number of weeks employees worked as underwriters, with California workers receiving larger allocations because they are releasing additional state law claims. No participating employee would receive less than $1,000, according to the settlement.

Plaintiffs’ attorneys estimate the remaining claims are worth nearly $13.9 million, including unpaid overtime and California labor code penalties, making the gross settlement worth about 52% of their estimated damages.

Better denied any wrongdoing and said it complied with federal and California wage-and-hour laws. The company agreed to settle to avoid the cost, uncertainty and time associated with continued litigation and potential appeals, according to the filing.

In a statement given to HousingWire, a Better spokesperson said, “As a matter of policy, we do not comment publicly on settlements. We remain committed to maintaining a fair and respectful workplace for all employees.”

Better is expected to fund the settlement fund by Jan. 8, 2027, or 10 business days after the settlement effective date, legal documents said.

A hearing on preliminary approval of the settlement is scheduled for Aug. 11 in the U.S. District Court for the Central District of California.