U.S. Department of Labor Issues New Opinion: Loan Officers Must Be Paid Overtime

Posted on March 30, 2010 by Fred Rivera

A March 24, 2010, ruling by the U.S. Department of Labor declared that commissioned loan officers are entitled to overtime pay.  The DOL ruling not only addresses the exempt status of loan officers, but also represents a change in the DOL's process for issuing interpretive guidance:  Rather than issuing opinions in response to specific requests, the agency will issue "Administrator's Interpretations" that provide general interpretations of the laws and regulations applicable to all those affected by the provision at issue. 

The March 24 DOL ruling provides that commissioned loan officers do not qualify for the administrative exemption under the Fair Labor Standards Act.  Loan officers who work more than 40 hours per week must be paid for overtime hours at time and a half of their regular rate.  According to the DOL ruling:

 

This Administrator’s Interpretation applies to employees who spend the majority of their time working inside their employer’s place of business, including employees who work in offices located in their homes, rather than mortgage loan officers who are customarily and regularly engaged away from their employer’s place of business. It also applies to employees who do not spend the majority of their time engaging in “cold-calling”, contacting potential customers who have not in some manner expressed an interest in obtaining information about a mortgage loan. However, because many of the duties of all mortgage loan officers are similar, cases arising in these other contexts are referred to for guidance and cited in this interpretation.

 

The Washington Labor & Employment Wire reported that the DOL's loan officer ruling also  withdrew a 2006 DOL opinion letter that misinterpreted 29 C.F.R. §541.203(b) by inaccurately applying an alternative standard for the administrative exemption applied to the financial services industry.

Employers who violate the Fair Labor Standards Act may be liable for two times back pay plus attorney’s fees, and triple damages in the case of willful violations.  The new DOL ruling may trigger a host of class action lawsuit brought by loan officers who were presumed to be exempt and not entitled to overtime under the FL SA.

 

 

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DOJ Settles Lending Discrimination Case Against AIG Subsidiaries

Posted on March 5, 2010 by Fred Rivera

The DOJ's Civil Rights Division announced a $6.1 million settlement with two AIG subsidiaries that the government alleged had engaged in a pattern and practice of lending discriminated against African-Americans.  According to the Wall Street Journal, the government identified approximately 2,500 African-American borrowers that will each receive about $2,300 in compensation under the agreement. 

The Justice Department's settlement resolved its complaint filed under the federal Fair Housing Act and Equal Credit Opportunity Act.  The complaint alleges that African-American borrowers were charged higher fees on wholesale loans made by AIG Federal Savings Bank and Wilmington Finance Inc., an affiliated mortgage lending company.

According to the WSJ article, the AIG subsidiaries disagreed with the Justice Department's allegations but were pleased to reach the settlement and "avoid the distractions and burdens of protracted litigation over contentious issues."

The settlement comes a month after the Department of Justice announced the creation of a Fair Lending Task Force, and resulted from a 2007 referral by the Treasury Department's Office of Thrift Supervision to the Justice Department's Civil Rights Division.   In announcing the AIG settlement, Assistant Attorney General Thomas Perez signaled that  more such cases were in the pipeline.  Perez said that for a long time, lenders' supervision over their mortgage brokers was inadequate.

The DOJ's full press release and links to the complaint and settlement agreement are available at the Civil Rights Division's website: DOJ, Civil Rights Division.

The recent settlement sends a clear message that lending discrimination matters are a top priority for the Obama Justice Department, and this is likely the tip of the iceberg.  As DOJ's Civil Rights Division continues to staff its new Lending Discrimination Task Force and communications between the various federal banking regulatory agencies improve, many more complaints and settlements can be expected over the next several months.

 

 

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