DEPARTMENT OF LABOR: MORTGAGE LOAN OFFICERS ARE NOT EXEMPT UNDER FAIR LABOR STANDARDS ACT
On March 24, 2010, the Wage and Hour Division of the U.S. Department of Labor (DOL) announced that mortgage loan officers do not qualify as bona fide administrative employees under section 13(a)(1) of the Fair Labor Standards Act (FLSA). The DOL rejected its earlier position that found loan officers to be exempt administrative employees.
The DOL concluded that mortgage loan officers are primarily responsible for making sales for their employers, not performing office or nonmanual work directly related to the management or general business operations of their employer. “Work such as collecting financial information from customers, entering it 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, constitutes the production work of an employer engaged in selling or brokering mortgage loan products,” the Administrator wrote. “Such duties do not relate to the internal management or general business operations of the company; they do not involve servicing the business itself by providing advice regarding internal operations, unlike the duties of employees working in, for example, a firm’s human resources department, accounting department, or research department.” Thus, these employees do not satisfy the second prong of the test for administrative exemption.
The Administrator also considered that mortgage loan officers are typically paid by commissions, are trained by their employers and are evaluated in large part on the basis of their sales volume.
If you are interested in learning how this new interpretation may impact your California business, please contact attorney Susan E. Bishop at (408) 369-0800 or sbishop@prattattorneys.com
Susan E. Bishop graduated from the Santa Clara University School of Law in 1996. She specializes in the representation of management in employment law matters. Her practice includes working with nonprofit and for-profit corporations on many issues, including incorporation, employee relations, personnel policies, wage and hour matters, discrimination, harassment and wrongful termination.To lean more about Susan’s specialties of law, please view her profile under attorneys. If you would like to speak with Susan, please call 408-369-0800.