An ex-broker's disability lawsuit against his former employer Morgan Stanley highlights a growing trend: complaints about how companies handle employees' mental health issues in the post-COVID era.
The unnamed broker, who said he had been a star employee in the firm's sports and entertainment division, sued the Wall Street bank on March 3 in a California state
The anonymous advisor, who joined the bank from Wells Fargo in June 2015, alleged he suffered "punitive" actions, "humiliation" and "retaliation" after he requested accommodations and mental health disability leave. He had reported diagnoses of aerophobia, or fear of flying, as well as generalized anxiety disorder and post traumatic stress disorder — the aerophobia dating back to earlier before the pandemic, and the other two disorders apparently in 2020. Morgan Stanley terminated the advisor on March 9, 2021.
The John Doe case's merits are unclear. But its filing is a potential bellwether for the lawsuits wealth management companies and those in other industries may face as the pandemic wanes and fallout from the disruption emerges.
"This is really going to be one of the first cases where we're going to be dealing with an anxiety disorder as we begin to emerge from COVID," Bill Singer, a securities litigation attorney and the author of the
Asked to comment on the case, a Morgan Stanley spokesperson said that, "This former employee was terminated in March 2021 and he has since been barred from the securities industry by the Financial Industry Regulatory Authority. His claims are completely meritless." The spokesperson declined to comment further. Brian Krueger, the plaintiff's former manager and a current advisor at Morgan Stanley in Woodland Hills, California, also declined to comment.
The broker disclosed in the complaint that a client had previously sued him prior to his termination but did not mention the result of that case. AdvisorHub
'Not really sure I buy it'
The lawsuit will be seen through the lens of the federal
The ADA
The broker alleged that Morgan Stanley fired him for "false and pretextual reasons" while he was on mental health disability leave.
That may or may not be true. Either way, "What this case is being watched for isn't so much the facts of the case, because some of it, candidly, I'm not really sure I buy," Singer said.
Rather, he added, it's what the case could portend for other complaints about mental health in the workplace.
'Blinded by the light'
During the pandemic, many financial advisors discovered they could do their jobs remotely. Clients who used to request in-person meetings with their advisor embraced meeting virtually. "So if the client doesn't want to come in to meet with you, then why are you forcing me to come into the office?" Singer asked.
Major firms, including Goldman Sachs, Morgan Stanley and JPMorgan Chase, have
"Firms are not asking employees to return, they're demanding that they return. And that demand, in and of itself, is going to be viewed as stressful," Singer said. "What none of us have thought about is now that we're emerging from the cave, and we're in the sunlight, we're blinded by the light," Singer said.
Not all claims of a need for accommodation will be legitimate. "There's going to be real reasons and fake reasons," Singer said. "There are going to be employees who are going to use an excuse of anxiety in order to get severance from an employer, or threaten to go to EEOC."
That could pose a particular problem for the brokerage industry.
"Under FINRA's rule, if you assert a statutory employment termination such as wrongful conduct — anything that is statutory sexual harassment, racial discrimination, ADA — you can't be forced to go into arbitration, which is why this thing is in court. So it's a very clever and interesting case."
Tyrone Blackburn, a lawyer at T.A. Blackburn Law in New York who has brought several complaints on behalf of ex-employees against Morgan Stanley, including for discrimination based on disability, agreed that the pandemic had changed things. "I think COVID did have an impact on what people are able to tolerate," he said.
Ashley Nixon, a professor of Human Resources & Organizational Behavior in the Atkinson Graduate School of Management at Willamette University, said that last year, 43% of employers reported a spike in mental health-related reasonable accommodation requests for disabilities.
Nixon was citing a
'A lot of lawsuits coming down the pipe'
With or without merit, the unnamed broker's case could be a sign of things to come, Blackburn said.
"I do think that there are going to be a lot of lawsuits coming down the pipe. That's just my prediction, that with these mask mandates being lifted and employees required to go back to the office, you're going to see a lot of ADA claims popping up" — some legitimate, others not.
While Blackburn was also skeptical about John Doe's argument in his case against Morgan Stanley, he said some of the allegations fit what he called a familiar pattern with the Wall Street bank.
"Morgan Stanley has a system in place where if they have an employee who they consider a problem, someone who raises concerns blows the whistle, says something, they [Morgan Stanley] tend[s] to engage in acts of heightened scrutiny of their clients or work products. And as a result of that, it causes stress, anxiety, depression, all the things."
Reif, the unnamed broker's lawyer, said in an email that his client was a "disabled employee" who was "coerced to surrender his personal phone, pressured to return from an approved workplace leave of absence, blamed for a customer complaint and unceremoniously fired."
Takeaways for employers
Court papers show that Morgan Stanley initially offered John Doe a settlement.
Sharron Ash, the chief litigation counsel at the Hamburger Law Firm, said that might suggest that the firm was acknowledging some legitimacy in his disability claims.
"I suspect that this is not a clear-cut, black and white case, or there may have been enough here that Morgan Stanley sought to resolve it. There was a settlement on the table," Ash said.
Regardless of how the case turns out, she added, employers could take away valuable lessons.
One is reviewing their manager training programs and ensuring those who directly manage financial advisors understand how to treat employees under the law.
Said Ash: "A policy doesn't do any good if the only people that know about it are at the very top."
