No, we are not aware of any Illinois laws specific to compensation provided to a loan originator on a commission basis, outside of general employment laws applicable to any type of commissioned employee. Of course, federal law prohibits paying commissions to a loan originator that are “based on a term of a transaction,” such as a loan’s interest rate. We are not aware of similar restrictions in Illinois law — and we note that the Illinois Residential Mortgage License Act is inapplicable to banks and their employees.

There are Illinois employment laws that apply generally to any employee compensated on a commission basis. For example, the Illinois Wage Payment and Collection Act requires that commissions be paid at least once a month, and commissioned employees who qualify under the Fair Labor Standards Act are exempt from the Illinois Minimum Wage Law. However, we are not experts on labor or employment law, and we recommend consulting with a human resources expert to address any potential concerns about compensating this employee.

For resources related to our guidance, please see:

• Regulation Z, 12 CFR 1026.36(d)(1)(i) (“ . . . in connection with a consumer credit transaction secured by a dwelling, no loan originator shall receive and no person shall pay to a loan originator, directly or indirectly, compensation in an amount that is based on a term of a transaction . . . .”)                                      
• Regulation Z, 12 CFR 1026.36(d)(1)(ii) (“ For purposes of this paragraph (d)(1) only, a ‘term of a transaction’ is any right or obligation of the parties to a credit transaction. The amount of credit extended is not a term of a transaction or a proxy for a term of a transaction, provided that compensation received by or paid to a loan originator, directly or indirectly, is based on a fixed percentage of the amount of credit extended; however, such compensation may be subject to a minimum or maximum dollar amount.”)

• Illinois Residential Mortgage License Act of 1987, 205 ILCS 635/1-3(a) (“No provision of this Act shall apply to an exempt person or entity as defined in items (1) and (1.5) of subsection (d) of Section 1-4 of this Act.”)

• Illinois Residential Mortgage License Act of 1987, 205 ILCS 635/1-4(d)(1) (“‘Exempt person or entity’ shall mean the following: (1) . . . any national bank, federally chartered savings and loan association, federal savings bank, federal credit union; . . . any bank, savings and loan association, savings bank, or credit union organized under the laws of this or any other state; . . .”)

• Illinois Residential Mortgage License Act of 1987, 205 ILCS 635/1-4(d)(1.5) (“‘Exempt person or entity’ shall mean the following: . . . (1.5) Any employee of a person or entity mentioned in item (1) of this subsection, when acting for such person or entity, or any registered mortgage loan originator when acting for an entity described in subsection (tt) of this Section.”)

• Illinois Wage Payment and Collection Act, 820 ILCS 115/3 (“Every employer shall be required, at least semi-monthly, to pay every employee all wages earned during the semi-monthly pay period. Wages of executive, administrative and professional employees, as defined in the Federal Fair Labor Standards Act of 1939, may be paid once a month. Commissions may be paid once a month. . . .”)

• Minimum Wage Law, 820 ILCS 105/4a(2)(F) (Exempting from the minimum wage requirements “Any commissioned employee as described in paragraph (i) of Section 7 of the Federal Fair Labor Standards Act of 1938 . . . .”)