The Department of Labor (DOL) Interpretation is focused on both mortgage loan originators (MLOs) and “employees who perform the typical job duties of a mortgage loan officer.” While the DOL Interpretation does not specifically address non-residential loan officers, its guidance does provide a framework for determining the treatment of other bank employees as non-exempt employees entitled to overtime pay and minimum wage requirements under the Fair Labor Standards Act (FLSA).

Consumer Loan Officers

If your consumer loan officers’ job duties are similar to the MLO job duties described in the DOL Interpretation, they likely should be treated as non-exempt and entitled to overtime pay and the minimum wage required by the FLSA.

The DOL Interpretation focuses on the question of “whether an employee who performs the typical duties of a mortgage loan officer has the primary duty of making sales.” After reviewing typical MLO job duties and various court opinions, the DOL concluded that an MLO’s “primary duty is making sales,” and therefore MLOs are non-exempt. The DOL identifies specific factors indicating that an MLO’s primary duty is making sales: (1) the employee’s job description, (2) the employer’s qualifications for hire, (3) sales training, (4) method of payment, and (5) proportion of earnings directly attributable to sales. The DOL also notes additional factors indicating that an MLO’s primary duty is making sales: performing other typical MLO job duties incidental to and in support of their sales duties, being paid by commission, having been trained in sales techniques, and being evaluated according to sales volume. If your consumer loan officers’ job duties and other factors reflect those described in the DOL Interpretation, they likely should be treated as non-exempt employees.

A Loan Officer with Other Job Duties

It is possible that a loan officer who is an officer with the bank and has other job duties may qualify for an administrative exemption (meaning that the employee would not be subject to the overtime and minimum wage requirements). However, if you apply the factors discussed above and find that the employee’s primary duty is making sales, the employee should be treated as non-exempt.

Notably, in its most recent update to the DOL regulations, the agency also clarified that employees who “are involved in some selling to consumers” may nevertheless qualify for the administrative exemption, provided that the employee does not have the primary duty of making sales. Examples of employee activities that fall under the administrative exemption are “servicing existing customers, promoting the employer’s financial products, and advising customers on the appropriate financial product to fit their financial needs,” provided that the employee’s primary duty is not making sales.

Determining whether an employee qualifies for the administrative exemption will require a careful comparison of the factors listed in the DOL rules, the DOL Interpretation, and the cases that it cites.

For more information on the DOL Interpretation, see our IBA Compliance Connection Featured Development.

For resources related to our guidance, please see:

• DOL Administrator’s Interpretation No. 2010-1 (“The regulations state that among the factors to be considered in determining whether an employee has a primary duty of making outside sales are: the employee’s job description; the employer’s qualifications for hire; sales training; method of payment; and proportion of earnings directly attributable to sales.”)

• DOL Final Rule, 69 Federal Register 22122, 22146 (April 23, 2004) (“ . . . many financial services employees qualify as exempt administrative employees, even if they are involved in some selling to consumers. Servicing existing customers, promoting the employer’s financial products, and advising customers on the appropriate financial product to fit their financial needs are duties directly related to the management or general business operations of their employer or their employer’s customers, and which require the exercise of discretion and independent judgment.”)

• DOL Final Rule, 69 Federal Register 22122, 22146 (April 23, 2004) (“ . . . the final rule rejects the view that selling financial products directly to a consumer automatically precludes a finding of exempt administrative status.”)