United States: Supreme Court To Review DOL’s Position On Mortgage Loan Officer’s OT Status

The United States Supreme Court will determine whether a 2010 opinion letter from the Department of Labor, which held that mortgage loan officers are entitled to overtime pay under the Fair Labor Standards Act, was properly issued.  Although the Court is not expected to make a decision either way on the merits, it decisions in Nikols v. Mortgage Bankers Association and Perez v. Mortgage Bankers Association  will affect the amount of deference that Courts must give to the DOL's most recent interpretation.

The underlying issue is whether the loan officers qualify for the administrative exemption under the FLSA because they exercise discretion on "matters of significance."  In 2006, the Department of Labor found that loan officers were exempt  (and therefore are not required to be paid overtime pay) because they analyzed customers' financial information and advised on loan programs.  In 2010, however, the Department of Labor (under a different administration) found the loan officers were not exempt (and therefore must be paid overtime) because they primarily engaged in sales.  There have been several court challenges that focus on whether the DOL's opinion was properly issued in accordance with the Administrative Procedure Act.

It is important to note that the Supreme Court's decision will not result in a final resolution to this ongoing issue.  Courts will continue to review, on a case by case basis, whether the loan officers in question are exercising independent discretion on matters of significance.  Further, the DOL may respond by reissuing its decision using the proper procedures, although that is uncertain in a different political landscape.  What it does mean is employers may be able to argue that the 2006 interpretation is still valid and should be followed, or at a minimum that the 2010 opinion has no binding effect.

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