Former Staff Sue Sprout Mortgage Over Unpaid Salaries

Following last week’s news of an abrupt closure, Sprout Mortgage is once again in the news—and it’s not good.

Two former staff have filed a class-action lawsuit on behalf of teammates, alleging unpaid salaries. According to Housing Wire, the suit against Sprout, its affiliated company Recovco Mortgage Management LLCand chief executive officer Michael Strauss, alleges that around 100 employees at the New York office were laid off on Wednesday without giving legally required written notice and that the company failed to pay their paychecks due the following day. 

A former member of the Sprouts team tells California Listings that they believe company execs waited until the day before payroll to announce the closure after an alleged three weeks of missed compensation. The sentiments are also echoed in the suit itself, claiming that Strauss instructed accounting not to issue the paychecks due last Thursday.

In last week’s closure announcement to staff, Sprout President Shea Pallante informed the team that a deal for financing fell through and Strauss made the decision to close up shop. Palate allegedly said employees would receive benefits through the end of the month, but former staff say they’ve yet to see owed paychecks. 

The class-action lawsuit seeks to recover alleged unpaid minimum wages and withheld salaries. The plaintiffs also want compensation for damages caused by the company’s failure to provide 60 days’ notice under the WARN Act and 90 days’ notice under the NY WARN Act.