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