Due to recent guidance from the U.S. Department of Labor, financial institutions should examine their classification of mortgage loan officers and similar employees. Last month, the DOL’s Wage and Hour Division released its first Administrator Interpretation (Interpretation No. 2010-1). In the Interpretation, the Division concluded that mortgage loan officers – and employees performing the typical duties of a mortgage loan officer – do not qualify as administrative employees exempt from the provisions of the Fair Labor Standards Act.
The Interpretation states that the typical job titles given to such employees include "mortgage loan representative," "mortgage loan consultant," and "mortgage loan originator." It also lists the job duties of such individuals as: receiving internal leads, contacting potential customers, collecting required financial information from loan applicants, entering collected financial information into a computer program that identifies which loan products may be offered to customers, assessing the loan products identified, discussing with the customers the terms and conditions of particular loans, compiling customer documents for forwarding to an underwriter or loan processor, and/or finalizing loan documents for closings.
Administrative employees are exempt from the minimum wage and overtime requirements of the FLSA. In a 2006 opinion letter, the DOL had previously opined that mortgage loan officers were administrative employees, and therefore exempt under the FLSA. See FLSA2006-31. However, the agency specifically withdrew that opinion letter in its recent Interpretation, finding that such employees are “production, rather than administrative employees” because they have a primary duty of sales, rather than of performing administrative functions for the financial institution.
While its recent Interpretation represents a shift in the DOL’s opinion on the issue, there have been many court opinions, including Chao v. First National Lending Corp., 516 F.Supp.2d 895 (N.D. 2006), holding that mortgage loan officers are non-exempt. Nevertheless, due to DOL’s recent Interpretation, it is now more clear than ever that mortgage officers – and any other employees performing the job duties listed above – must be paid overtime for any hours worked over 40 in a week. Of course, the job title given to an employee will not control whether they are exempt or not. If the employee’s primary duty is the performance of one or more of the tasks listed above, they are likely covered by this Interpretation. Therefore, all financial institutions employing such employees should examine their current classification and determine whether changes need to be made as a result of this guidance.