Yesterday, the U.S. Supreme Court reversed a federal appeals opinion that had invalidated a U.S. Department of Labor interpretation stating that Mortgage Loan Officers are entitled to overtime pay.Click here to read the Supreme Court Opinion. The details of the opinion are tricky, and involve how the U.S. DOL makes its rules and whether it has to ask for public comments before it changes its mind on an issue. However, the outcome of the opinion is that a 2010 interpretation from the U.S. DOL stating that Mortgage Loan Officers are not “administrative” employees, and therefore should be paid overtime when they work more than 40 hours per week. Read the Administrator’s Interpretation here
Generally, Mortgage Loan Officers work for banks- such as Bank of America, First Niagara, and Webster Bank in Connecticut- that make mortgage loans to customers. These employees’ job duties are generally to accept paperwork from loan applicants, collect information about these applicants and their financial situation at the direction of the bank that employs them, run credit reports, enter information into a computer system, and discuss potential loans and products with customers.
In 2012, a group of Mortgage Loan Underwriters sued People’s United Bank in Connecticut, alleging that they had been misclassified as exempt employees and denied overtime pay. The judge allowed a collective action to proceed, and in April 2014, the case was settled. (Fracasse et al. v. People’s United Bank, Case No. 3:12-cv-00670-JCH, filed 5/4/12.)
The duties of a mortgage loan officer are essentially clerical and customer service oriented. This is not the high level type of work that entitles an employer to pay a flat salary regardless of the number of hours the employee works, such as actually negotiating loan terms with customers, designing financial products, and generally running the employer’s business. The job of a mortgage loan officer is to produce loans- making them non-exempt from overtime.
The U.S. Supreme Court made the right decision in this case, coming down on the side of employees.