Mortgage Underwriters: Deciphering Exempt Status under the FLSA's Enigmatic Administrative Exemption

By Goodnight, Austin | Journal of Corporation Law, Spring 2019 | Go to article overview

Mortgage Underwriters: Deciphering Exempt Status under the FLSA's Enigmatic Administrative Exemption


Goodnight, Austin, Journal of Corporation Law


I. INTRODUCTION                                                     629 II. BACKGROUND                                                      630       A. The Fair Labor Standards Act                               630       B. The Administrative Exemption to the FLSA                   631           1. Who's in Charge: DOL's Wage and Hour Division          631           2. Evolution of the Administrative Exemption's            632              Requirements           3. The Administrative Exemption's Ambiguity               634       C. Circuit Split: Exempt Status of Mortgage Underwriters      634          Under the Administrative Exemption           1. Case Holding Mortgage Underwriters Exempt from FLSA    635              Protection Under Administrative Exemption           2. Cases Holding Mortgage Underwriters Non-Exempt from    635              FLSA Protection Under Administrative Exemption III. ANALYSIS                                                       637       A. The Administrative-Production Dichotomy                    637       B. The Duties Test                                            638           1. Directly Related to the Management or General          638              Business Operations           2. Exercise of Discretion and Independent Judgment with   640              Respect to Matters of Significance       C. Scope of the Administrative Exemption                      643 IV. RECOMMENDATION                                                  645 V. CONCLUSION                                                       647 

I. INTRODUCTION

The Fair Labor Standards Act (FLSA) exempts "administrative" employees from its protection. (1) Yet, ambiguity persists about who constitutes an "administrative" employee for the purposes of the exemption, (2) which has specifically led to a federal circuit split about the exempt status of mortgage underwriters. (3) This circuit split was recently extended by the Ninth Circuit in McKeen-Chaplin v. Provident Savings Bank, which ruled that mortgage underwriters should not be exempt under the FLSA administrative exemption. (4)

Overall, this Note will advocate for a new analytical tool that should resolve any ambiguity over whether an employee qualifies for administrative exemption. Thus, this Note's purpose is broad, suggesting the creation of a new analytical instrument used for each case in which ambiguity arises. Because mortgage underwriters have recently fallen victim to the administrative exemption's ambiguity, however, this Note will illustrate the exemptions ambiguity and the suggested analytical tool throughout by focusing on resolving the mortgage underwriter's situation, ultimately suggesting a non-exempt status consistent with the Ninth Circuit's ruling in McKeen-Chaplin. However, this same analysis has a far broader application outside of this Note.

First, this Note will provide background on the FLSA, the administrative exemption and its ambiguous nature, and what led to the circuit split. Second, this Note will analyze the specific duties of mortgage underwriters using the administrative-production dichotomy and guidance provided by the Department of Labor (DOL), ultimately concluding that their duties, though non-dispositive, fail to meet the requirements for the administrative exemption. Finally, this Note will analyze the scope of the administrative exemption, concluding that the exemption should be construed narrowly to create a presumption of non-exempt status when ambiguity is present, in part because of negative social and health consequences caused by high levels of mandatory overtime work. Confusion about the application of the administrative exemption's requirements has persisted too long, and this Note should lead to more efficient resolutions for employers and courts in all situations where this confusion arises, focusing specifically on mortgage underwriter confusion.

II. BACKGROUND

This Note's background section will first discuss the history and purpose of the FLSA, will delve into the FLSA's administrative exemption, and will finally summarize the circuit split about the exempt status of mortgage underwriters under the administrative exemption. …

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