Outdated Labor Laws: A 65-Year-Old Law Enacted to Protect Low-Wage Workers from Being Exploited Is a Focus of Concern in Today's Mortgage Business
Bergsman, Steve, Mortgage Banking
IN THE MIDST OF A RECORD YEAR FOR ORIGINATIONS, worrying about whether originators are getting paid sufficiently for their overtime strikes one as hopelessly arcane. These same originators are pulling down annual incomes easily in the six figures, as record numbers of loans close month after month. If they are working long hours--and many of them are--they are getting paid handsomely in commissions for doing so. The income potential is so good, that huge numbers of new brokers and loan officers have been attracted to these lucrative positions in the past few years. Does this sound like a prescription for employee abuse? Some have been looking at outdated federal labor laws and trying to make that case. Meanwhile, back in Washington, D.C., the U.S. Department of Labor (DOL) has decided to update the nation's antiquated overtime regulations (29 C.F.R. Part 541), first devised in 1938--in the heart of the Depression. These overtime provisions were created with the good intention of protecting low-wage workers from being exploited--working too many hours without a guarantee of overtime pay. Now, 65 years later, some of the rules are clearly outdated and job categories that no longer exist are still on the books. Meanwhile, decades of new jobs have been created that didn't exist in 1938 that now must be fit somehow into existing categories.
"The rules contain jobs like 'straw boss' and 'key-punch operator,' which don't apply in the 21st-century working environment," explains Craig Shearman, vice president of public relations for Washington, D.C.-based National Retail Foundation (NRF), which supports the DOL changes. "As a result, we have employers trying to shoehorn jobs like 'computer programmer' into 'key-punch operator.'"
The NRF is part of a large group of business organizations that support the changes. Others include the Mortgage Bankers Association (MBA), Washington, D.C.; the U.S. Chamber of Commerce, Washington, D.C.; the National Association of Manufacturers (NAM), Washington, D.C.; the National Restaurant Association, Washington, D.C; the National Retail Federation; the National Council of Chain Restaurants (NCCR), Washington, D.C.; the National Federation of Independent Business (NFIB), Washington, D.C.; the National Association of Convenience Stores (NACS), Alexandria, Virginia; the Food Marketing Institute (FMI), Washington, D.C.; and dozens more.
But nothing is ever as simple as it seems--especially when politics is involved. A number of organizations, particularly labor-related groups such as the American Federation of Labor-Congress of Industrial Organizations (AFL-CIO), Washington, D.C.; Communications Workers of America (CWA), Washington, D.C.; and 9 to 5 National Association of Working Women, Atlanta, strongly oppose the rule changes because they would allow employers to work more employees in an overtime capacity without, as these groups claim, "just" compensation allowed by law.
"The basic argument that we have with the proposed regs the DOL wants to implement is that it would disqualify millions of workers from overtime protection--many of the workers [being] middle-income as well as even some low-income," says Suzanne Ffolkes, a spokesperson for the AFL-CIO.
A matter of importance for mortgage bankers
Overtime pay--who gets it and who doesn't--may become an expensive and contentious issue for the mortgage banking industry. Since the mid-1990s, when low interest rates fueled a massive consumer movement to refinance home loans or buy starter or move-up homes, mortgage bankers and lending officers have worked at a breakneck pace to keep up with the volume of loans. This has meant more work and longer hours, but it has also meant a sharp increase in annual compensation--at a time when many other industries were suffering layoffs, frozen salaries or limited work hours.
"Certainly loan officers for the past 10 to 15 months have been originating a record number of loans, and that has meant longer hours, but they have also been earning more money," says Rod Alba, director of government affairs for MBA. …