Originators return to Bush-era overtime rules

by Diana Aqra10 Jul 2013
An appeals court has decided to reverse a 2010 Department of Labor “administrative interpretation” decision that concluded that mortgage loan officers could not be exempted from overtime pay. 
On July 2, an appeals court in Washington DC made of up of three judges decided to return to a Bush-era rule that allowed mortgage companies to exempt mortgage loan originators from being required to receive overtime pay.
The reversal was pushed by the Mortgage Bankers Association which filed a suit in 2011, that argued that the Department of Labor shouldn’t have been able to issue an amendment to a rule without proper industry notice and request for comment, according to attorney Michael E. Barnsback at LeClairRyan, a law firm in Alexandria, Virginia.  The motion by the MBA was at first denied, but was recently reversed by an appeals court. 
“This was a big win for the MBA,” said Barnsback, explaining that it was mostly a procedural win, making sure the Department of Labor doesn’t overstep its boundaries by amending rules as it pleases, he said. 
But, in actual terms, it does help reduce companies’ liabilities to pay overtime to employees, he added. The 2010 administrative interpretation was in direct contrast to Bush-era rules that allowed mortgage loan originators the administrative exemption for its employees, thus saving them the costs of paying overtime. 
The debate over wage and pay classification for originators will continue, Barnsback added.  Whether originators are considered part of production or part of management will determine whether or not they are eligible for overtime. 
In 2011, in Michigan, for example, employees of Quicken loans argued that its employer incorrectly considered them administrative positions, to avoid paying overtime. Employees, however,  filed a suit explaining their main duties related to production, rather than management, and therefore they should have been considered eligible for overtime, according to a summary report of the case by Franczek Radelet in Chicago, Illinois.  The jury ended up classifying the originators as administrative exempt employees, and as a result, the company did not owe the plaintiffs any overtime, the summary report said.


  • by John Deleva | 7/10/2013 9:24:37 AM

    When ideology enters into agency rule making the outcome is flawed and always subject to attack. While ideology left or right should not be considered sinister it sure can make a mess of public policy at times.

  • by margo | 7/11/2013 6:44:59 AM

    why shouldnt production staff be entitled to overtime if they work all those hours and are required to do it they should be paid from a person who has been in the industries for 43 years i know how many hours production works much more then mangement that get the big money because there taking it from the workers

  • by Dan | 7/12/2013 11:42:06 AM

    A small subset of Loan Originators(LO) might benefit from the overtime pay, but LOs paid on commission do not. Simply said, a commission paid LO wants the ability to work ovetime when because that means they will earn more commissions. If commission paid LOs are deemed non-exempt, the employers will (and have) forbid overtime or severely restrict it, in order to keep expenses under control. The result of the "non-exempt" ruling is that it reduced most LO's earning potential. Lets take a poll and see how many LOs think the DOL's ruling was a good idea. The problem here is that the DOL fails to understand that there are different kinds of LOs (because they didn't ask). It might well be that some should or could be non-exempt, but most if not all the LOs I know are sales people and relationship managers. The current DOL interpretation makes it harder for those LOs to feed their family.


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