Mortgage Loan Officers Are Not Exempt From the FLSA's Overtime Rules
A recent opinion letter issued by the United States Department of Labor has determined that mortgage loan officers do not fall under the Fair Labor Standard Act's administrative exemption provision. The Department of Labor explained that an employee's actual job duties and compensation determine exempt or nonexempt status, and not job title.
The administrative exemption is limited to employees with job duties that relate to the administrative operations of the business as distinguished from its production operations. The Department of Labor determined that mortgage loan officers perform the production work of their employers.
The Department of Labor found that certain job duties were typical for a mortgage loan officer. These job duties included responsibilities such as receiving internal leads, collecting required financial information from customers, running credit reports, assessing loan products, compiling customer documents, and finalizing documents for closings. Under the FLSA's administrative exemption, "the employee's primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer's customers."
The Department of Labor went on to analyze the job responsibilities of a typical mortgage loan officer. Case law and the regulations were reviewed, and a determination was made that a mortgage loan officer's primary duty is that of making sales. Any work performed incidental to, or in furtherance of, sales would also be considered sales work according to the Department of Labor. The Department of Labor reasoned that collecting financial information from customers and explaining to potential customers what their terms and options would be, constituted the "production work of an employer engaged in selling or brokering mortgage loan products." Selling or brokering mortgage loan products do not "relate to the internal management or general business operations of the company." Such duties involve carrying out the employer’s business on a day-to-day basis.
To the extent that the Department of Labor opinion conflicted with earlier opinions or guidance, those earlier opinions were withdrawn.
The administrative exemption also exists under the New York minimum wage and overtime laws, although what constitutes an administrator for purposes of the exemption is slightly different, and in some respects, substantially broader. Consequently, it is likely that the New York Department of Labor or New York courts would find that a mortgage loan officer was not exempt from New York's overtime and minimum wage requirements.
