Real estate brokerage and referral site operator ZipRealty Inc. will pay $1.7 million to settle a class-action lawsuit filed by two real estate agents formerly employed by the company in Arizona.
The settlement, which is subject to court approval, resolves the last class-action claim pending against the company related to its former compensation practices of employee real estate agents.
ZipRealty began converting its California agents to independent contractor status in the latter half of 2010, and transitioned all of the firm’s agents to independent contractors in January 2011. Former employee agents soon began filing class-action lawsuits against ZipRealty, alleging the company had failed to pay minimum and overtime wages as required by law.
ZipRealty denied the allegations, saying its agents were classified as “outside salespersons” exempt from overtime wage requirements.
By the end of 2012, ZipRealty had paid at least five settlements in cases making similar claims, including $5 million to settle a suit brought by the California Labor Commissioner.
The $1.7 million settlement, announced in a public filing Friday, resolves a February 2012 suit filed by two former ZipRealty agents in Arizona, Patricia Anderson and James Kwasiborski, on behalf of themselves and “all other similarly situated individuals” seeking damages in addition to wages and overtime.
A former ZipRealty agent in California, Tracy Adewunmi, also sought class-action standing in a February 2012 lawsuit over the company’s compensation practices, but dropped the class claims in May 2013, according to a public filing. Adewunmi’s individual claims remain, as do ZipRealty’s cross claims against her alleging fraud and breach of contract. The case is set to go to trial in February, according to the filing.
In reporting preliminary 2013 results Friday, ZipRealty said fourth-quarter revenue was down 4 percent from a year ago, to $17 million, “reflecting a sharper-than-expected slowdown in real estate sales in ZipRealty markets.” The company’s fourth-quarter net income will also reflect the $1.7 million expense from the settlement, the company said.
Net revenue for the year was up 3 percent from 2012, to approximately $75.9 million, and the company expects to break even on an adjusted earnings basis (earnings before interest, taxes, depreciation and amortization).
ZipRealty has also filed a shelf registration statement that paves the way for the company to issue up to $50 million in new stock and warrants.