The U.S. Supreme Court has upheld the Department of Labor (DOL) 2010 Administrator's Interpretation, which concluded that mortgage loan officers do not qualify for an exemption to the overtime pay and minimum wage requirements in the Fair Labor Standards Act of 1938 (FLSA). Perez v. Mortgage Bankers Association, Nos. 13-1041 and 13-052 (March 9, 2015).
Background. The DOL has issued two interpretive letters over the years on the application of the FLSA's overtime requirements to mortgage loan officers (MLOs). In 2010, the DOL rescinded its earlier guidance and concluded that mortgage loan officers are not exempt from overtime pay and minimum wage requirements. The Mortgage Bankers Association sued the DOL, arguing that its 2010 interpretation was procedurally invalid because the agency reversed its earlier position without the necessary public notice and opportunity to comment. In the Perez decision, the Supreme Court held that the DOL was not required to provide public notice and an opportunity to comment, since it was changing its own interpretation, and not a rule.
What does it mean for our bank? In practice, this ruling means that many MLOs likely are entitled to overtime pay and minimum wage requirements.
The DOL's 2010 Administrator's Interpretation states that “employees who perform the typical job duties of a mortgage loan officer” are “non-exempt” (meaning they do not fall under the FLSA's administrative exception). The DOL concludes that an MLO's “typical job duties” include contacting potential customers, collecting customer information, identifying which loan products to offer to particular customers, compiling customer documents, and more. Employees whose job duties match those described in the DOL guidance should be treated as non-exempt, meaning they are entitled to the FLSA overtime pay and minimum wage requirements. See the DOL Fact Sheet on overtime pay requirements. Stay tuned for further updates.
Broader implications. This ruling paves the way for all federal agencies to bypass the public notice and comment process when issuing interpretations of statutes and their rules, even when significantly revising earlier interpretations.