Supreme Court Ruling Makes Mortgage Loan Officers Eligible for Overtime

bio_rogerhoodBy Roger Hood | In March, the United States Supreme Court ruled on a case that basically ended the use of the Fair Labor Standards Act’s administrative exemption for mortgage-loan officers.

The FLSA provides an exemption from both minimum wage and overtime pay for employees employed as (i) bona fide executives, (ii) administrative personnel, and (iii) professional and outside sales employees. (In addition, exempt certain computer employees were exempted. Read our blog post here.)

The exempt/non-exempt status of mortgage-loan officers dates back to 1999 when the Department of Labor issued an interpretative ruling that mortgage-loan officers do not qualify for the FLSA administrative exemption, meaning that mortgage-loan officers must be paid overtime for work over forty hours per week.

However, in 2006, DOL issued a new opinion letter that interpreted the FLSA regulations as exempting mortgage-loan officers from overtime.

Then, in 2010, DOL changed its position when it withdrew the 2006 opinion letter and issued an Administrator’s Interpretation concluding that mortgage-loan officers did not qualify for the administrative exemption; thus, mortgage-loan officers must (again) be paid overtime.
The Mortgage Bankers Association challenged DOL’s 2010 Administrator’s Interpretation and successfully argued to the D.C. Circuit that the 2010 Administrator’s Interpretation was invalid because DOL did not use a required “notice-and-comment procedure” in its interpretation process.

On appeal, the Supreme Court rejected this argument and reversed the D.C. Circuit’s decision. In doing so, the Supreme Court affirmed that Administrator’s Interpretations are not subject to a notice-and-comment procedure in its interpretation process. The net result based on the Supreme Court ruling: Mortgage-loan officers must now be paid overtime for work over forty hours per week.

To learn more, contact Roger Hood.