Magazine article American Banker

New Overtime Regulations +Seen Reducing Lawsuits

Magazine article American Banker

New Overtime Regulations +Seen Reducing Lawsuits

Article excerpt

A new federal regulation that exempts most financial services workers from overtime pay will curtail employment-related lawsuits, bankers say.

In the 500-page revision, released Tuesday, to rules stemming from a 50-year-old law, the Labor Department said employees who earn up to $100,000 a year are eligible for overtime when they work more than 40 hours in a week. But the agency also expanded the ranks of workers ineligible for the extra pay to include many bank employees.

The previous regulations said companies do not have to pay overtime to supervisors or any employee who "regularly exercises discretion and independent judgment," but it made no specific mention of bank workers.

Banks and other financial firms have long argued that the regulations exempted most of their employees, but lawyers have successfully argued in court that loan officers and other financial services workers were being cheated out of overtime pay.

"If there was any uncertainty before, now that's gone," said Kurt Pfotenhauer, the senior vice president of government affairs at the Mortgage Bankers Association of America. "We're very pleased. We think it's much needed and most welcome."

According the new rules, financial services employees will generally not be eligible for overtime pay if their jobs require them to analyze data or recommend financial products to customers.

The department said that a bank employee whose job is primarily sales-related would qualify for overtime pay, as would any worker who earns less than $23,360.

"Financial services are singled out for special treatment, and I'm not sure why," said Ross Eisenbrey, the vice president at the Economic Policy Institute, a liberal think tank in Washington that opposes the changes. "There is no industry that I can see that got this broad-brush treatment that financial services did. …

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