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Supreme Court: Mortgage loan officers must be paid for overtime

March 12, 2015

Banks and other mortgage lenders now have clarity on an issue that has caused considerable uncertainty for the last several years. In a unanimous decision announced on March 9, 2015, the U.S. Supreme Court held, in the case of Perez v. Mortgage Bankers Association, that it was within the Department of Labor’s (DOL) authority to change (without public input) its interpretation of whether mortgage loan officers should be classified as not exempt from the Fair Labor Standards Act’s (FLSA) overtime requirements. This means that, subject to certain limited exceptions, mortgage loan officers qualify for overtime pay.

This issue originally arose in 2006 when the DOL issued an opinion that mortgage loan officers were exempt from overtime pay requirements under the FLSA. Subsequently, in 2010, the DOL issued an "Administrator’s Interpretation" reversing its 2006 opinion and stating that, in fact, mortgage loan officers should be entitled to receive overtime pay under the FLSA whenever it is earned.

The DOL’s 2010 interpretation prompted the Mortgage Bankers Association to sue, claiming that the DOL overstepped its authority by failing to provide notice and time for public comment on what was essentially an administrative rule change. In 2013, the U.S. Court of Appeals in Washington, D.C., found in favor of the Mortgage Bankers Association, invalidating the DOL’s 2010 interpretation. The Supreme Court has now reversed course and validated the DOL’s 2010 interpretation. However, the Supreme Court also recognized that the FLSA protects employers who have, up to this point, chosen not to provide overtime pay to mortgage loan officers in good faith reliance on the DOL’s 2006 opinion.

What You Need to Know:

  1. If you employ mortgage loan officers and classify them as exempt from overtime pay, you should take immediate action to re-classify those employees as qualifying for overtime pay. There are limited exceptions that may still permit employers to withhold overtime pay to certain mortgage loan officers. Any of the attorneys listed in this Flash can explain these exceptions to you.
  2. Employers who have not paid overtime to mortgage loan officers up to this time in reliance on the DOL’s 2006 opinion should be protected from liability.

Please contact one of the attorneys listed above if you would like to discuss the impact this new development has on your employment and compensation policies.

Media Contact 

If you have a media request or need an attorney with particular knowledge for comment, please contact Susan Steberl, Director of Marketing, at 414.287.9556 or ssteberl@gklaw.com.

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