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.

Employers have traditionally and frequently relied on the Department of Labor Wage and Hour Division’s “Opinion Letters” in their efforts to comply with increasingly complex wage and hour laws.  In seeking guidance from the Wage and Hour Division, employers would present specific factual situations and the Division would provide specific guidance based on those concrete factual situations.  Just as important, if not more important to the employer, by receiving such an Opinion from the Division, the employer was provided with an “absolute good faith defense” to liability.

In a March 24th release, the Wage and Hour Division explained that it will no longer provide situation-specific Opinion Letters in response to employer inquiries.  Instead, the Division will periodically release “Administrator’s Interpretations” on issues or concerns that it believes requires addressing.  Unlike Opinion Letters, the Interpretations will “set forth a general interpretation of the law and regulations, applicable across-the-board to all those affected by the provision at issue.”  Employers with specific questions, therefore, will be referred to statutes and regulations for guidance.

While technically under 29 U.S.C. § 259, the new Interpretations qualify for the absolute “good faith defense,” it will now be harder for employers to plausibly assert such a defense.  This is because Administrator Interpretations will not rely on particularized facts submitted by an employer concerning a given position but will be based upon the Division’s generalized assumptions concerning the duties of a given position.  Since exemptions to the FLSA’s overtime and minimum wage requirements depend on an employee’s “actual job duties,” reliance on a generalized Administrator Interpretation may not be appropriate let alone defensible.

Also problematic for employers is that whereas in the past employers could reasonably and reliably turn to the DOL for timely guidance on pressing classification issue through an Opinion Letter request, now the Division will release Administrator Interpretations at its discretion, when it determines that clarification may be needed.

Notably, employers may still rely on previously-issued Opinion Letters in their compliance efforts, so long as these opinions are not superseded by new authority. The new Administrator’s Interpretations, however, provide guidance that is considerably less clear.

In all cases involving compliance with the FLSA and other employment statutes, it is worth consulting counsel when in doubt.