Academic journal article ABA Banking Journal

Still Clear as Mud: Recent Case Helps but Does Not Settle MLO Overtime Quandary

Academic journal article ABA Banking Journal

Still Clear as Mud: Recent Case Helps but Does Not Settle MLO Overtime Quandary

Article excerpt

One Saturday morning, I received a Washington, D.C., citation after parking in front of a sidewalk displaying contradictory signs. One read: "No parking during rush hour Monday-Friday." But the sign below it warned: "No Parking Anytime." Luckily, I contested the ticket through the mail and won, but the two-sentence adjudication letter did not resolve the incongruous signage. Likewise, the Department of Labor's contradictory guidance on whether mortgage loan officers (MLOs) are exempt from the overtime provisions of the Fair Labor Standards Act (FLSA) has triggered inconsistent approaches to MLO classifications.

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FLSA requires employers to pay minimum wage and overtime to employees working more than 40 hours per week. However, the statute exempts outside salespeople from minimum wage and overtime requirements if they "customarily and regularly" engage in sales-related activity outside of the office. In a 2006 opinion letter, DOL concluded that MLOs were exempt. But then in 2010, the agency issued an administrative interpretation declaring without explanation that MLOs were not exempt. In July 2013, in Mortgage Bankers Association v. Perez, the D.C. Circuit vacated DOL's 2010 administrative interpretation and held that the department improperly enacted the new rule. The court did not address the merits of DOL's "new" interpretation; it simply held that the agency did not follow all the required steps to lawfully change its position. What does this mean? DOL may still be able to modify its 2006 position if the agency complies with the administrative rulemaking procedures. This uncertainty caused some lenders to reclassify their MLOs as nonexempt; while others clarified the duties of MLOs hoping to clearly classify them as exempt. …

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