On March 24, 2010, the U.S. Department of Labor (DOL) announced a change in its interpretation of the federal law governing employee compensation that will dramatically affect the compensation of mortgage loan officers, whether they are employed by mortgage companies, state-chartered banks, federally-chartered banks, bank subsidiaries, savings and loan associations, credit unions, insurance companies or any other entity that makes or brokers mortgages.
Mortgage loan officers generally have been treated by their employers as exempt from the overtime requirements of the federal Fair Labor Standards Act (FLSA). In a Wage and Hour Opinion Letter issued in 2006, the U.S. Department of Labor (DOL) opined that mortgage loan officers satisfied the administrative exemption of the FLSA, and thus were not entitled to overtime pay (time-and-a-half) for hours worked in excess of 40 hours in a workweek. Now, in its first-ever Administrator’s Interpretation (AI), the DOL has found that mortgage loan officers do not satisfy the administrative exemption because the typical mortgage loan officer’s primary duty is to make sales, which is production, as opposed to administrative, work of their employers. The 2006 Opinion Letter is now “withdrawn.”