KeyCorp has agreed to pay $4.9 million to settle a class action lawsuit by a group of employees who claim the bank failed to pay them properly for all overtime hours.

The Cleveland-based bank, the third-largest in Western New York, will pay the money into a fund that will be used to compensate current and former “relationship managers” who qualify for payments, as well as for attorneys’ fees, service awards, litigation costs and the expenses of administering the settlement, according to a settlement document.

The settlement stems from a lawsuit, filed in federal court in Manhattan in October by 12 former KeyBank employees, that accused KeyBank of improperly classifying relationship managers as “exempt” employees who are not entitled to receive overtime pay under state and federal wage and hour laws. It also charged that KeyBank failed to pay relationship managers overtime premium pay for working in excess of 40 hours a week.

A relationship manager is an industry term for a customer service representative. The suit covers relationship managers who worked at KeyBank in New York between June 13, 2006, and Dec. 11, 2012, and in Ohio, Colorado, Washington, Oregon or Maine who worked for the bank from June 13, 2009 to Dec. 11, 2012.

KeyBank denies any wrongdoing. Both sides agreed to settle to avoid costly and time-consuming litigation. The settlement is still subject to approval by the court, which will hold a hearing on March 19.

“The parties have resolved their differences to their mutual satisfaction,” said KeyBank spokeswoman Therese Myers. She declined to comment further.