Court Upholds Labor Department Interpretation That Mortgage Loan Officers Are Not Exempt From Overtime

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A federal district judge in Washington, D.C. has upheld an “Administrator’s Interpretation” issued in 2010 by the U.S. Department of Labor (“DOL”) that loan officers in the mortgage banking industry typically do not qualify as exempt employees under the administrative exemption of the federal Fair Labor Standards Act (“FLSA”). The Mortgage Bankers Association (“MBA”) had challenged the March 24, 2010 Administrator’s Interpretation (“Interpretation”) issued by the Acting Administrator of DOL’s Wage and Hour Division because the Interpretation had reversed and rescinded a contrary DOL Opinion Letter issued in 2006 that had concluded mortgage loan officers were generally exempt under the administrative exemption. However, Judge Reggie B. Walton ruled on June 6, 2012 that the 2010 Interpretation was not inconsistent with the FLSA regulations and was not arbitrary, capricious, or otherwise unlawful. The court thus let stand the DOL’s Interpretation that employees performing the typical duties of a mortgage loan officer do not qualify for the administrative exemption and are therefore entitled to receive minimum wages and overtime compensation under the protections of the FLSA. The MBA has the right to appeal this decision to the D.C. Circuit.

Procedural History and Background

The 2004 Amendments to the FLSA Regulations

The FLSA generally requires that covered employers must pay minimum wages to their employees as well as overtime compensation to employees who work more than 40 hours per week. However, the FLSA exempts “any employee employed in a bona fide executive, administrative, or professional capacity . . . or in the capacity of outside salesman…” and authorizes DOL to define and delimit these terms by regulation. In August, 2004, the DOL issued revised regulations stating that the administrative exemption applies to an employee...

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