Ex employees of Meritage Homes have filed suit similar to the Perry Homes overtime suit. As we all know, Perry settled with quite a few plaintiffs. If this continues, and more builders are sued, the entire industry may go to a David Weekley type salary structure.
For those that read these posts that aren't in the buisness, it might be good to give a brief outline of the Perry suit, the Meritage suit, and how Weekley pays different than the rest of the builders. I would, but don't have a clue as to how Weekley pays, having never worked for them or applied with them. In fact, surprisingly, I don't even know anyone working for Weekley.
Newhomesdallas: as most in the industry know, Former Perry Home employees filed a suit against Perry for overtime pay and punitive damages. According to the lawsuit, sales people wanted to collect overtime pay for the amount of hours they have to stay at work. Like IBM, who has had a similar case against them, Perry tried to prove that the sales staff are considered Outside Sales Reps therefore are exempt from overtime pay. IBM lost the case and from what I understand, Perry is loosing the case. Meritage employees have filed a similar lawsuit aginst their employer.
David Weekely has taken a pro active role and is paying their sales staff a salary of $50K plus 1% commission on any sale. This may be great for the B and C players. But this pay structure will not work for the guys that close $10 - $ 15 mill per year. I would loose 52% of my earnings if I were to receive a Weekely type pay structure and close the same amount of homes as I did last year. Once you become a salaried employee, the employer can control every aspect of your work schedule. Weekley made some of their reps attend the US open tournament everyday this spring in Fall Creek. That means they were out sitting in a booth at the golf tournament instead of selling.
We all knew coming in what to expect in this business. I don't agree with either one of the lawsuits. Just my opinion.
houston Nitroglycerin
Joined: 02 Dec 2008
Posts: 661
Location: Houston, Texas
Our Perry sales people paid an hourly rate plus commission or just commission? I know most companies won't pay overtime for salary or flat commission employees. The 1% commission by Perry does seem really low for a sales person. I wonder if they've lost a lot of home sales people?
_________________ Grady - Has anyone used North American to move?
There is an article in today's Star-Telegram about the Labor Department investigating builders, including but not limited to: Putle, Lennar, Horton, and KB. They are looking for nonpayment of overtime and minimum wage. They are mostly looking at the construction side. The article mentions workers with limited English; therfore construction not sales.
In Las Vegas, there was a major land acquisition partnership between KB Homes, Pulte, Woodside, Meritage and a local bidder named Ritter. Essentially the weighted voting of the partners decided to shut down the wind-tunnel area project, and Ritter objected. Ritter sued the other builders and won a huge judgment for itself, something like $75 Million. Obviously, that is on appeal.
Somehow, the Inspirada entity, called "South Edge LLC" ended up in an involuntary Chapter 11, on the motion of the major A&D loan lender, JP Morgan Chase. At the bank's request a Chapter 11 trustee was appointed to run South Edge LLC, over the vehement protestations of of the builder-parters other than Ritter.
Ritter thought he had a deal with JP Morgan Chase to continue to build out the property with Ritter as manager. Ritter thought that JP Morgan Chase and the Trustee would sue KB Homes and the other partners to pony up their share of thein infrastructure costs.
However, it turns out that KB Homes and Pulte went behind Ritter's back, and made a deal with JP Morgan Chase and the Chapter 11 Trustee to buy the property out of the Chapter 11, essentially stiffing Ritter.
The odd part of the story is Meritage's position. They don't want to pay to settle with JP Morgan Chase, even if they would get partial ownership of the property through the Chapter 11 Plan. Instead, Meritage wants to litigate with JP Morgan Chase, the Trustee, Ritter, and its former partners, not wanting to pay anyone to obtain what appears to be a very good settlement.
So, to me, from a cash flow point of view it looks to me that Meritage's management has decided it is more cost effective to litigate with the universe than cough up some cash and buy into the KB Homes/Pulte entity which will end up owning the property at a massively huge discount off what is actually owned to JP Morgan Chase.
So either Meritage's bankruptcy lawyers are brilliant and think they are going to get their company off scot free, or there is tight cash budgeting going on at Meritage.
If I was a plaintiff in the Meritage overtime pay lawsuit, I'd want to settle my claim ASAP.
_________________ Aristotle
As Yogi Berra said "It's like deja vu all over again."
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