Michael R. Lied

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Federal Court Agrees With Department of Labor That Loan Officers Do Not Qualify For Administrative Exemption From Overtime Pay Obligations (Thursday, June 21, 2012)

The Fair Labor Standards Act ("FLSA") generally requires a covered employer to pay overtime wages to employees who work more than 40 hours per week unless they are exempt. The FLSA provides such an exemption for any employee employed in a bona fide executive, administrative or professional capacity or in the capacity of an outside sales person.

In March 2010, the U.S. Department of Labor created a considerable stir by issuing Administrative Interpretation 2010-1. The Administrative Interpretation expressed that to qualify for the exemption, an employee's work must be directly related to management or general business operations of an employer, which includes work in functional areas such as accounting, budgeting, quality control, purchasing, advertising, research, human resources, labor relations, and similar areas. In essence, the 2010 Administrative Interpretation states that the administrative exemption was designed for employees whose work involves servicing the business itself, rather than selling the business' product or service. The Administrative Interpretation concluded that most mortgage loan officers, because of their typical duties, do not qualify for the administrative exemption from overtime pay under the FLSA.

On June 6, 2012, a federal district court in the District of Columbia upheld Administrative Interpretation 2010-1.  Unless there is a successful appeal of this decision, or unless other courts refuse to follow the logic of Administrative Interpretation 2010-1, many mortgage loan officers will be found to be entitled to overtime pay, depending on the nature of their day-to-day duties. Banks should immediately set about evaluating the job duties of their mortgage loan officers if they have not already done so after issuance of Administrative Interpretation 2010-1.

· Michael R. Lied
· Howard & Howard Attorneys PLLC
· One Technology Plaza, 211 Fulton Street, Suite 600, Peoria, IL 61602
· (309) 999-6311
· MLied@howardandhoward.com