The United States Department of Labor recently opined that the typical mortgage loan officer is not exempt from the overtime and minimum wage requirements of the Fair Labor Standards Act (“FLSA”). Employers should take this new administrative interpretation into account in classifying their loan officers as FLSA-exempt or not. This new interpretation also raises broader questions about a federal agency’s role in determining congressional intent.  

Mortgage Loan Officers under the FLSA

Financial institutions often treat their mortgage loan officers as exempt administrative workers primarily engaged in customer service. The Wage and Hour Division is of the opinion that the typical mortgage loan officer is a salesperson, and a non-exempt production worker. As non-exempt, an employee is subject to overtime and minimum wage requirements. This raises questions for many financial institutions, particularly those whose loan officers are commissioned.  

The deputy administrator of the Wage and Hour Division issued the administrative interpretation on March 24, 2010.1 It states that a typical mortgage loan officer receives leads; contacts potential customers; collects and enters customer financial information into a lending program software; procures credit reports; assesses customer eligibility; discusses loan product options with customers; compiles customer documents for underwriting or processing; and, sometimes, finalizes documents for closings. The Wage and Hour Division determined such loan officers do not qualify as administrative staff exempt from the FLSA under section 13(a)(1) of the Fair Labor Standards Act, 29 U.S.C. § 213(a)(1).  

The Wage and Hour Division considers the FLSA exemption for administrative work limited to work in functional areas such as accounting, budgeting, quality control, purchasing, advertising, research, human resources, labor relations, and similar areas. 29 C.F.R. § 541.201(b). It distinguishes such work from “selling a product in a retail or service establishment.” 29 C.F.R. § 541.201(a). The Division found a loan officer’s primary duty is the selling of loan products, and rejected two prior DOL opinion letters in announcing that mortgage loan officers are production, not administrative, workers.  

Who Decides What a Statute Means?

In the past, the Wage and Hour Division issued opinion letters, limited to a specific set of facts. With these new “administrator interpretations,” however, the Division issues broad policy pronouncements whenever it believes “further clarity regarding the proper interpretation of a statutory or regulatory issue is appropriate.” It remains to be seen how much deference the courts, who have the final say in statutory interpretation, will give to these interpretations.