recent opinion issued by the Department of Labor (DOL) determined that mortgage loan
officers do not qualify as bona fide administrative employees exempt under
section 13(a)(1) of the Fair Labor Standards Act (FLSA), 29 U.S.C. Sec.
213(a)(1). As a result, they are entitled to receive
overtime pay, typically one and one half times their regular rate of pay for all hours
worked over 40 hours in any workweek.
The DOL issued its opinion after reviewing whether a mortgage loan officer
was “exempt” based on the 3-part test set forth by Federal
Regulations. This test asks the following questions:
1) Is the employee paid more than $455 a week?
2) Is the employee’s “primary duty 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? and 3) Does
the employee’s primary duty include the exercise of discretion and
independent judgment with respect to matters of significance? 29 C.F.R.
In considering the status of mortgage loan officers, the DOL focused primarily
on the second question – are mortgage loan officer’s duties
are directly related to the management or general business operations
of the company?
The DOL determined that a mortgage loan officer’s main job function
is sales – each action that they take such as analyzing financial
data, is in furtherance of making a sale. Determining whether a customer
qualifies for a mortgage loan and the benefits of different types of loan
products, relates to the sale of a product, for which the mortgage broker
or loan officer receives a commission. These actions are not part of the
internal operation of the company – they are not servicing the company
itself or providing advice to the company. Rather, they are selling a
product and “fall squarely on the production (non-exempt) side of
the business.” Further, to the extent mortgage loan officers provide
customers advice for their personal needs and not for “management
of general business operation” these actions are not exempt.
Based on these considerations, the DOL determined that mortgage loan officers
are not considered “bona fide administrative employees” and
hence are entitled to receive overtime compensation.
Georgia employment attorneys, we help or clients ensure they receive fair compensation. Many times,
employees are denied overtime compensation because their employer has
told them they are exempt. If you believe you are entitled to overtime
pay, but are unsure if you qualify, please contact our offices.