Posted by Stoli on 11/26/13 1:55pm
Msg #494154
Federal appeals court - loan officers are not hourly employe
http://nationalmortgageprofessional.com/news44858/false-hope-mortgage-bankers-appeals-court-win?utm_source=MadMimi&utm_medium=email&utm_content=NMP+Daily%3A+NAMB+Encouraged+by+CFPB%27s+New+Consumer+Disclosure+Measure+and+More+___&utm_campaign=20131125_m118073324_NMP+Daily%3A+Negative+Equity+Rate+Down+in+Q3%2C+BofA+Leading+in+Layoffs+and+More+___+2&utm_term=False+Hope+for+Mortgage+Bankers+in+Appeals+Court+Win_3F
False Hope for Mortgage Bankers in Appeals Court Win?
Mon, 2013-11-18 16:46 — Kimberly Priest...
These are heady times for a vast majority of the mortgage banking industry, following a recent federal appeals court ruling that mortgage loan officers shouldn’t be classified as hourly employees.
The appellate victory for the Mortgage Bankers Association (MBA) essentially reversed a 2010 policy change enacted by the U.S. Department of Labor (DOL) to classify mortgage loan officers as hourly employees.
The recent decision issued by the U.S. Court of Appeals for the District of Columbia Circuit came as welcome news to most MBA members, who have anxiously awaited the opportunity to return to their longtime system of compensating loan officers based on the number or volume of loans closed. Many industry veterans also view the ruling as insulation against liability from loan officers’ claims under the Fair Labor Standards Act (FLSA).
But a closer inspection of the court’s decision in Mortgage Bankers Association v. Harris, No. 12-5246, is required for those mortgage bankers who believe now is the time to move back into their pre-2010 business model.
In fact, as you review the case, here are three things you and your business need to consider.
Plaintiffs’ lawyers are still interested
The real impact of the 2010 DOL policy change, which was issued under an Administrative Interpretation, was to put loan officers and the mortgage industry on the radar of the nation’s plaintiffs’ lawyers. These resourceful attorneys are unlikely to simply turn their attention elsewhere and forget about the industry and its practices. Indeed, the recent court decision inevitably will draw attention to some non-compliance matters that garnered little attention prior to 2010.
For example, historically, some mortgage lenders treated loan officers as though a blanket administrative exemption was appropriate based simply on job title. Others assessed the duties performed by the loan officers and accordingly classified them as exempt. Even fewer assessed the compensation structure and ensured that the salary component of the exemption also was satisfied.
The legal reality is that the administrative exemption has a two-fold requirement:
1. The duties prong; and
2. The minimum salary requirement.
Failure to satisfy both prongs still requires that loan officers be paid at least the federal minimum wage for all hours worked and overtime pay equal to time-and-a-half the regular rate of pay for all hours worked beyond 40 hours a week.
The duties prong
To qualify for the administrative exemption, a loan officer’s primary duty must be:
1. 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.
2. Primary duties must include the exercise of discretion and independent judgment with respect to matters of significance.
The regulations and the jurisprudence interpreting the FLSA have attached particular meaning to “primary duty,” “directly related to the management or general business operations of the employer,” and “exercise of discretion and independent judgment.”
For example, employers must conduct a case-by-case assessment of a loan officer’s job duties to determine whether the administrative exemption applies. Job titles do not determine exempt status. When employers conduct the individualized inquiry, some loan officers may very well fail to satisfy the duties prong of the administrative exemption test.
The salary requirement
Administratively exempt loan officers also must be guaranteed and paid at least $455 every week ($23,600 per year) on a “salary basis.”
Obviously, this guaranteed salary amount need not be the entire compensation received, and loan officers can be paid on a commission basis above and beyond the weekly salary, but the $455 weekly “guaranteed minimum” must be paid for any work week during which an employee performs work, regardless of the quality or quantity of the work, the number of days or hours worked, and whether the employer actually has work for the employee to complete. One exception would be if an employee performs no work at all during a particular workweek, but the permissible deductions from the guaranteed minimum are few and far between.
So, as the mortgage industry continues to rejoice—indeed, the appeals court has foreclosed the DOL’s authority to make such abrupt upheavals in the law such as the 2010 Administrative Interpretation—and employers venture to retrace their steps on roads once traveled, they should proceed with caution with eyes opened wide for the legal traps that will snag the unwary.
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Reply by Bear900/CA on 11/26/13 5:26pm
Msg #494175
Probably goes in JP, however,
since it's here I will add some explanations. It ain’t over until the Fat Lady sings.
It’s a strange situation in which the court’s ruling threw the loan industry in limbo.
http://www.housingwire.com/articles/court-ruling-loan-officer-overtime-pay-throws-industry-limbo
“Jumping the gun could mean companies refusing to pay overtime under the 2006 rule only to face additional expenses or back-pay if the 2010 ruling eventually sticks.”
http://www.mortgageorb.com/e107_plugins/content/content.php?content.14049
“Although the D.C. District Court on July 2 vacated the DOL's ruling, it did not weigh in on the validity of the revised interpretation. As such, the DOL could still warn and hold a formal comment period and implement the change in a separate action.”
It’s perhaps a “False Hope” for the MBA because the decision was not based on hourly (non-exempt) vs exempt pay, but on the DOL not using a ‘Comment Period’. The DOL now has a comment period open until Dec 9, 2013. What does that mean? Dunno.
The odd thing is, as the author put it, when you consider non-exempt (hourly) vs exempt:
“The salary requirement [for] administratively exempt loan officers also must be guaranteed and paid at least $455 every week ($23,600 per year) on a “salary basis.”
So where’s the win? Not sure if you’re looking for a correlation to independent contractors, but I would roll this over to JP and let it hibernate until at least January.
Best!
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