The Sixth Circuit Court of Appeals recently ruled that mortgage underwriters are exempt from the overtime provisions of the Fair Labor Standards Act (FLSA). This is a significant development for financial institutions because it makes clear they don’t need to pay overtime to underwriters whose job duties and salary meet the FLSA’s exemption requirements. The court reasoned that an underwriter’s work is integrally tied to a financial institution’s operation because of the analysis that underwriters perform as part of the recommendation on whether or not to issue a loan. The Court also noted that underwriters exercise discretion and independent judgment in performing their jobs – both important factors in determining exemption.
Are your employees properly classified? The Department of Labor is substantially revising the exemption requirements of the FLSA in 2016. Many employees who are not entitled to overtime under the FLSA’s current standards will be entitled to overtime under the new standards. That cost is significant. Penalties for non-compliance are steep. Don’t get caught off guard! Now is the time for banks, financial institutions and other employers to perform an FLSA audit to ensure compliance with the new regulations. If you have questions about the best practices for completing an FLSA audit, don’t hesitate to ask.
Gregory Lutz v. Huntington Bancshares Inc., 2016 U.S. App. LEXIS 3860 (Mar. 2, 2016).