On March 24, 2010, the Department of Labor’s Wage and Hour Division issued an Administrator’s Interpretation effectively reversing a 2006 Department Opinion in which it had found that mortgage loan officers were generally exempted from the pay requirements of the Fair Labor Standards Act (“FLSA”). In the recently-issued Interpretation, the Department concluded that mortgage loan officers are not ordinarily covered by the administrative exemption to the minimum wage and overtime pay provisions of FLSA.
Though this Interpretation only directly applies to banks and other lenders, who will need to revise their pay practices for mortgage loan officers, employers in other industries should also take note because the reversal and the manner in which it was issued signals a fundamental shift in how the agency will work with employers seeking assistance with classification. First, the substance of the Interpretation highlights the Department’s willingness to re-evaluate its approach to exemption classifications. And second, as noted in a prior blog post, it reveals that the Department, going forward, will not respond to specific inquiries lodged by employers.
Banks and lenders should take note that the March 24th Interpretation did not address a prior, but apparently still valid, Administrator opinion finding that the “outside sales exemption” (as opposed to the administrative exemption) may apply to certain mortgage loan employees. Thus, banks and lenders are encouraged to consider applying that analysis to the positions in question as it would appear that at least some will fall under that exemption.
Although the views of the DOL are often cited by the courts as being persuasive, those views are not technically binding on the courts, so it remains to be seen how much deference the courts will afford the DOL’s new position. What is clear, is that the DOL’s 2006 opinion no longer provides a safe harbor for classifying mortgage loan officers as exempt from the pay requirements of FLSA. Employers of who previously classified mortgage loan officers as exempt should re-evaluate the classifications in light of the “outside sales” exemption or revise their pay practices for these employees.