The Mortgage Bankers Association filed a complaint in federal court in Washington, D.C., on January 12 that seeks to vacate a Department of Labor (DOL) interpretation issued in March 2010 concluding that mortgage loan officers do not qualify for the so-called administrative exemption from overtime pay requirements under the Fair Labor Standards Act (FLSA). The March 2010 interpretation departed from DOL opinion letters issued in 2001 and 2006 that found that mortgage loan officers were exempt from the FLSA’s overtime requirements. The complaint contends the March 2010 administrative opinion should be invalidated because it was issued without following the necessary notice and comment rulemaking procedures and because it conflicts with existing DOL regulations. In its complaint, the Mortgage Bankers Association cites reliance by many mortgage lenders on the earlier DOL opinion letters in classifying mortgage loan officers as exempt and the private party litigation exposure that mortgage lenders now face as a result of the DOL’s change in position. The Mortgage Bankers Association also filed a motion for summary judgment on the same day it filed its complaint.

Notes: DOL administrative interpretations are not binding precedent in a court action but they are given deference as an opinion of the agency charged with enforcing the FLSA. Depository institutions that do not currently track hours worked by their mortgage loan officers or pay overtime for hours worked in excess of forty per week should review these practices while the trade association’s case is pending. Institutions should also note that a job title does not determine whether an employee is exempt from FLSA minimum wage and overtime requirements. The employee’s actual job duties and compensation determine whether the employee is exempt or nonexempt. The challenged interpretation applies to employees who perform the typical job duties of a mortgage loan officer and spend the majority of their time working inside the institution’s offices, including employees who work in home offices from time to time. It does not apply to mortgage loan officers who customarily and regularly work away from their employer’s place of business.