The U.S. Department of Labor has declared that mortgage loan officers are not exempt from the minimum wage and overtime requirements of the Fair Labor Standards Act (FLSA). Reversing and withdrawing two prior opinion letters on the subject, the DOL stated in an administrator’s interpretation issued March 24, 2010, that employees who perform the typical duties of a mortgage loan officer do not qualify as exempt administrative employees under section 13 of the FLSA, 29 U.S.C. § 213(a).
To qualify as an exempt administrative employee under the FLSA, an employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers. In determining whether this exemption applies to the mortgage loan officers, the DOL concluded that typical loan officers “have a primary duty of making sales for their employers,” and thus the administrative exemption is inapplicable. The DOL cited the fact that most mortgage loan officers are paid primarily by commissions, are often trained in sales techniques, and are frequently evaluated based on their sales volume, to reach this conclusion. The DOL also noted that many employers defending themselves against FLSA lawsuits brought by mortgage loan officers argue that the employees qualify as exempt as “outside sales employees,” not as administrative employees, and that courts have repeatedly found that such loan officers have a primary duty of sales, further demonstrating that the administrative exemption does not apply.
In light of the DOL’s new interpretation, banks and financial institutions who employ mortgage loan officers, or individuals with similar job duties, should carefully review these employees’ job descriptions and duties to determine whether these individuals are properly classified under the FLSA. Varnum attorneys Beth Skaggs, Dick Hooker and Joe Vogan are ready to assist with such reviews, or answer any wage and hour questions you may have.