Legal Alerts

Not So Fast! Mortgage Loan Officers Status Still Not Settled

07.09.13

Although the D.C. Circuit Court voided the Department of Labor Wage and Hour Division's first "Administrator Interpretation" in a recent decision (Mortgage Bankers Association v Harris, July 2, 2013), there has been no definitive determination of the exempt status of mortgage loan officers under the Fair Labor Standards Act (FLSA). Employers are cautioned not to change mortgage bankers from "exempt employee" to "non-exempt employee" because of that decision. The Department of Labor announced in 2010, it would issue Administrator Interpretations to clarify the interpretation of a statutory or regulatory issue, in lieu of previously issued Opinion letters. The 2010 Administrator Interpretation rescinded a 2006 DOL Opinion letter which determined  that mortgage loan officers were "exempt" under the FLSA. The Mortgage Bankers Association challenged the 2010 "Administrator Interpretation" which concluded that mortgage loan officers were "nonexempt" under the FLSA.

The appeals court found that the 2010 DOL Administrator Interpretation was inconsistent with existing regulations, and thus had to follow notice and comment rulemaking procedures. The appeals court reaffirmed that when an agency has given its regulation a definitive interpretation, and later significantly revises that interpretation, the agency has effectively amended its rule, which requires notice and comment under the Administrative Procedure Act. Thus, the appeals court reversed a lower court order and remanded the case with instructions to vacate the 2010 Administrator Interpretation. 

So, for now, the 2010 Administrator's Interpretation has been invalidated, but whether an employer can rely on the 2006 Opinion letter is uncertain. Many employers changed the status of mortgage loan officers in 2010 in response to the Administrator Interpretation, making them "non-exempt" employees, eligible for minimum wage and overtime pay, and requiring them to keep track of their hours worked. Other employers looked to the requirements of the "white collar" administrative exemption and significantly changed job duties of mortgage loan officers in an effort to meet the statutory exemption test and continue to pay them on a salary basis. Since there is no definitive answer in this decision, employers are urged to maintain the status quo of their mortgage loan officer employees, or seek legal counsel to determine whether the actual duties and responsibilities of mortgage loan officers warrant a change in exemption status.

Contact
LaFromboise, Antoine J.
Communications and Brand Manager
T 612.371.3269

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