Mortgage Loan Officers Entitled to Minimum Wage and Overtime Pay

Until recently, mortgage loan officers were not legally entitled to overtime pay because they were deemed to fall within the administrative exemption of the Fair Labor Standards Act (FLSA"). In breaking with this long-standing legal determination, the U.S. Department of Labor issued an Administrator Interpretation in 2010 stating that mortgage loan officers are not exempt under the administrative exemption. This Interpretation is not necessarily limited to employees whose job title is that of a mortgage loan office, but rather covers all employees in the financial services industry who perform the typical job duties of a mortgage loan officer, such as mortgage loan representatives, mortgage loan consultants, and mortgage loan originators.

The DOL stated that its Interpretation applies to those employees who work mostly inside their employer's place of business (or who work mostly from home). These employees typically perform the following duties: receive inside leads and contact prospective clients or are contacted by prospective clients who are responding to direct mail or other marketing activity; collect financial information from clients with whom they have contact (income, job history, assets, debts, etc.) and enter the information into a computer database that selects loan products that meet the client's needs; run credit reports; match loan products with the client's needs; put together client documents to send to an underwriter or loan processor; and (on occasion) get documents ready for closing.

The administrative exemption of the FLSA requires all of the following elements: (1) the employee must be paid on a salary or fee basis at a rate not less than $455 per week; (2) the employee's primary duty must be the performance of office or non-manual work directly related to the management or general business of the employer or the employer's customers; and (3) the employee's primary duty must include the exercise of discretion and independent judgment with respect to matters of significance. 29 C.F.R. § 541.200. The DOL Interpretation stated that mortgage loan officers do not meet the second element of the administrative exemption, and therefore, are entitled to minimum wage and overtime pay.

The DOL's 2010 Interpretation is consistent with a recent trend by the Courts to reject application of the administrative exemption to certain employees in the financial services industry and allow them to recover unpaid overtime. For example, in late 2009, the Second Circuit Court of Appeals held in Davis v. J.P. Morgan Chase & Co.that a bank underwriter--whose job was to evaluate whether to issue loans to individual applicants--did not meet the administrative exemption and was unlawfully denied overtime pay. Likewise, in Henry v. Quicken Loans Inc., 2009 WL 3199788 (E.D. Mich. Sept. 30+, 2009), in which a group of mortgage loan consultants brought claims for unpaid overtime, the Court declined to apply the administrative exemption to the plaintiffs and held that their claims were allowed to proceed to a jury trial.

If you are a mortgage loan officer or hold a similar job within the financial services industry, and you are not being paid minimum wage and/or overtime, you should contact a St. Louis overtime lawyer to determine your rights under the law.