July 2, 2020

Volume X, Number 184

July 02, 2020

Subscribe to Latest Legal News and Analysis

July 01, 2020

Subscribe to Latest Legal News and Analysis

June 30, 2020

Subscribe to Latest Legal News and Analysis

June 29, 2020

Subscribe to Latest Legal News and Analysis

Supreme Court: Mortgage Loan Officers Must Be Paid For Overtime

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.

Copyright © 2020 Godfrey & Kahn S.C.National Law Review, Volume V, Number 71

TRENDING LEGAL ANALYSIS


About this Author

Peter Wilder Financial Attorney Godfrey Kahn
Shareholder

Peter Wilder is a shareholder with the Banking and Financial Institutions Practice Group. His clients include banks, mortgage companies, finance companies, financial services company vendors, and business executives. Peter provides a wide range of corporate and regulatory advice on topics including mergers and acquisitions, strategic revenue enhancement strategies, branch sales, capital raises, vendor contracts, and consumer finance laws. He has also provided legislative support to the Wisconsin community banking and mortgage banking industries.

Peter is a graduate of the Graduate...

414-287-9609
Rufino Gaytán, Labor & Employment Attorney, Godfrey Kahn Law Firm "
Associate

Rufino Gaytán is an associate member of the firm's Labor & Employment Practice Group in Milwaukee. Rufino assists private and public employers in addressing general human resource issues and counsels employers in every aspect of labor and employment law. In particular, Rufino provides assistance with discrimination claims, wage and hour issues and drafting and enforcing restrictive covenant agreements. Rufino also represents clients before the Equal Employment Opportunity Commission and the Wisconsin Equal Rights Division.

414-287-9572
Scott LeBlanc, Labor & Employment Attorney with Godfrey Kahn
Member

Scott LeBlanc is an associate in the firm's Labor, Employment & Immigration and Health Care Practice Groups. Scott represents a wide range of employers, including health systems, hospitals, physician groups, and other health care related organizations, with respect to employment law and health care regulatory issues.

Scott assists employers of all types during the hiring process, through employment terminations, and at all points in-between. In addition to advising clients on day-to-day employment issues such as...

414-287-9614