Should loan officers be exempt from wage and hour laws?

by Rachel.Norvell08 Oct 2014
The U.S. Supreme Court returned for its October term on Monday and on the docket are two cases that will decide whether mortgage loan officers are exempt from minimum wage and overtime pay regulations.

Perez v. Mortgage Bankers Association and Nickols v. Mortgage Bankers Association follow a 2010 decision by the U.S. Labor Department to begin applying overtime and minimum wage rules to mortgage loan officers.

That 2010 ruling reversed a 2004 finding made during the administration of President George W. Bush that had concluded mortgage loan officers were exempt from the regulations. 

That prompted the MBA to file its case, and 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 U.S. Supreme Court will decide is whether a federal agency is required to put out a formal notice and take public comment before changing its interpretation of regulations. The decision could affect the 2013 ruling.

In 2010, the Obama administration did not put out a formal notice or take public comment on the change — arguing that the Administrative Procedure Act doesn’t require those measures for regulatory interpretations, according to The Hill.

The MBA argues that the government was required to conduct a formal rule making process, which would have allowed interested parties to submit comments, according to Reuters.

The association previously stated 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 abrupt reversal of this 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 said 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.

Perez v. Mortgage Bankers Association is Supreme Court, No. 13-1041 and Nickols v. Mortgage Bankers Association is No. 13-1052.

What do you think?  Should loan officers receive overtime? Sound off in the comments below.
 
 

Poll

Should CFPB have more supervision over credit agencies?