Loan officer wage, overtime cases have ties to Quicken Loans former employees’ lawsuit

by MPA02 Dec 2014
The U.S. Supreme Court heard oral arguments on Monday in cases that question whether mortgage loan officers are exempt from minimum wage and overtime pay regulations. However, the overtime and wage issue dates back to almost a decade ago.

In 2004, more than 300 former employees who worked as a loan consultants for Quicken Loans filed a lawsuit against the company in the U.S. District Court in Detroit. At the time, the group argued that as salespeople, they should have been paid time-and-a-half for overtime hours. Quicken employees are expected to work at least 55 hours per week, according to the Cleveland Scene.
Quicken disagreed. The employees’ base salary was between $25,000 and $30,000, and Dan Gilbert previously told the Cleveland Scene, commission wages for those mortgage officers are between $60,000 to $70,000 more. He added that employees make more in commissions than they would if they earned a salary plus overtime. 
The case lasted for a few years and in 2011, a federal jury ruled in favor of Quicken Loans, which brings us to the current overtime and wage cases in front of the U.S. Supreme Court.
The cases before the U.S. Justicies, Perez v. Mortgage Bankers Association and Nickols v. Mortgage Bankers Association, follow a 2010 decision by the U.S. Labor Department (DOL) to begin applying overtime and minimum wage rules to mortgage loan officers.
That 2010 ruling reversed a 2004 finding, which prompted the MBA to file its case. In July 2013, the Court of Appeals for the Washington, D.C., Circuit vacated the 2010 decision declaring that mortgage loan officers did not qualify under the “administrative exemption” to overtime pay.
Now, the Supreme Court will decide whether a federal agency is required to put out a formal notice and take public comment before changing its interpretation of regulations.
Although, the Supreme Court isn’t technically deciding whether loan officers should receive overtime, the outcome of the case will heavily impact the mortgage industry. The lending industry has relied on a 2006 Department of Labor opinion letter to the MBA, which underlies regulations indicating that a loan officer can qualify for the administrative exemption under the Fair Labor Standards Act. 
MBA claims that the 2010 ruling subjects mortgage lenders to unnecessary litigation. “This abrupt reversal by the department not only opens lenders up to lawsuits for past actions, but also could require them to make costly changes to their internal operations and compensation structure, costs that will ultimately be borne by the consumer,” John Courson, who was president and CEO of MBA between 2009 and 2011, said.
Courson added that requiring loan officers to be paid overtime would not increase their compensation and asking them to now track and report their hours will deprive them of their flexible schedules.



Is TILA-RESPA a good or bad thing long term?