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DOL Changes Position on Exempt Status of Mortgage Loan Officers
Reversing two prior Opinion Letters, the Department of Labor issued its first ever "Administrator Interpretation Letter" on March 24, 2010 finding that mortgage loan officers do not qualify for the administrative exemption to overtime. As a result, the DOL withdrew two opinion letters in which it previously concluded that loan officers were exempt.
In reaching its decision, the DOL focused on the "production versus administrative" dichotomy, finding that mortgage loan officers are production workers whose primary duty is making sales, as opposed to administrative workers whose work is directly related to the management or general business operations of their employer or their employer's customers.
The DOL relied on the following factors in reaching its conclusion:
- The primary job duties of mortgage loan officers - including collecting financial information from customers, entering into the computer program to determine what particular loan products might be available to that customer, and explaining the terms of the available options and the pros and cons of each option, so that a sale can be made - constitute production of work of an employee engaged in selling or brokering mortgage loan products;
- Mortgage loan officers are paid primarily by commission;
- Employers often train their mortgage loan officers in sales techniques and evaluate their performance on the basis of their sales volume;
- Many employers defend against FLSA lawsuits brought by mortgage loan officers by arguing that they are exempt as outside sales employees, thus conceding that their primary duty is sales; and
- Courts have held that mortgage loan officers who work inside their employer's place of business have a primary duty of sales.
The Wage and Hour Division announced that its new Administrator Interpretations "will set forth a general interpretation of the law and regulations, applicable across-the-board to all those affected by the provision in issue. Guidance in this form will be useful in clarifying the law as it relates to an industry, a category of employees, or to all employees."
For assistance in reviewing your existing mortgage loan officers and their exempt status, please do not hesitate to contact us.