Most Mortgage Loan Officers Must be Paid Overtime
June 28, 2012
June 28, 2012
Back in 2010 the Department of Labor (DOL) issued an administrative interpretation that said mortgage loan officers in the banking industry typically do not qualify as exempt employees under the Fair Labor Standards Act (FLSA). According to that interpretation, if your loan officers are employees whose primary duty is selling financial products, they are not exempt. If, on the other hand, your loan officers’ duties include internal management and general business operations, providing advice regarding internal operations or marketing, or loan servicing and collections, they may be exempt. This interpretation caused a significant amount of angst among employers of mortgage loan officers.
The Mortgage Bankers Association (MBA) filed a lawsuit against the department, alleging that the new interpretation was contrary to an opinion letter the DOL issued in 2006, which stated that mortgage loan officers were generally exempt under the administrative exemption. The MBA went on to claim that mortgage loan officers who were not compensated with overtime pay were well compensated through other means, such as competitive salaries, bonuses and commissions.
Recently, a U.S. District judge in Washington, D.C., upheld the DOL administrative interpretation that says mortgage loan officers are not exempt from overtime under the Fair Labor Standards Act.
In the decision, which could have repercussions for credit unions, U.S. District Judge Reggie B. Walton denied the MBA’s motion for summary judgment and granted in part and denied in part DOL’s cross-motion to dismiss the case, saying that the 2010 opinion letter interpretation was not inconsistent with the FLSA regulations and was therefore not arbitrary, capricious or otherwise unlawful.
Judge Walton also let stand the DOL’s interpretation that employees performing mortgage loan officer duties do not qualify for the administrative exemption and are entitled to receive minimum wages and overtime compensation under the FLSA. Mortgage lending companies had challenged the DOL interpretation because many are facing lawsuits by loan officers seeking back overtime pay.
Not all mortgage loan officers must be paid overtime though. Each credit union will need to look carefully at the loan officer’s duties to determine if he or she is exempt per the FSLA.
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Posted in Compliance.