The Mortgage Bankers Association filed suit against the Department of Labor (DOL) after a Wage and Hour Division Administrator’s Interpretation concluded that typical loan officers were exempt from Fair Labor Standards Act (FLSA) requirements for overtime payments under the “administrative exemption.”
“In 2006, the department issued a clear opinion to MBA interpreting DOL regulations that exempted typical mortgage loan officers from overtime pay,” said MBA’s President and CEO John A. Courson. “If the department wanted to reverse that opinion, it should have provided notice and an opportunity for public comment. In issuing this administrative interpretation, the department ignored that statutory requirement.”
According to the MBA, the lending industry has relied on the 2006 DOL opinion letter and the underlying regulations indicating that a loan officer can qualify for the administrative exemption under the FLSA. MBA claims that the abrupt reversal of this ruling subjects mortgage lenders to unnecessary litigation.
“This abrupt reversal by the department not only opens lenders up to lawsuits for past actions, but also could require them to make costly changes to their internal operations and compensation structure, costs that will ultimately be borne by the consumer,” continued Courson. “Requiring loan officers to be paid overtime will not increase their compensation and asking them to now track and report their hours will deprive them of the flexible schedules they and their customers have enjoyed.”
The MBA is asking the court to set aside the ruling and if it the DOL wants to reverse the 2006 ruling, it follow the APA and issue a proposed rule for public comment. “If the department were to do that, we are confident it would find that the existing ruling providing an administrative exemption for loan officers from overtime should remain,” said Courson.
View a copy of the filings here.