In 2010 the Department of Labor (DOL), in an administrative interpretation, declared that mortgage loan officers do not fall under the administrative exemption to the Fair Labor Standards Act (FLSA) and are thus owed overtime pay for all work beyond 40 hours in a workweek (some states have stricter rules).
Now a three-judge panel of the U.S. Court of Appeals for the District of Columbia — the same court that earlier this year ruled Obama's 2012 recess appointments were unconstitutional — has overturned that interpretation and ruled that mortgage loan offers do fall under the exemption — at least for the time being.
“Whether mortgage loan officers qualify for this 'administrative exemption' is a difficult and at times contentious question. So difficult, in fact, DOL has found itself on both sides of the debate,” U.S. Appeals Court Judge Janice Brown wrote in her opinion. “In 2006, the agency issued an opinion letter concluding on the facts presented that mortgage loan officers with archetypal job duties fell within the administrative exemption. Just four years later, in 2010, Deputy Administrator Nancy J. Leppink issued an 'Administrator’s Interpretation' declaring that ‘employees who perform the typical job duties’ of the hypothetical mortgage loan officer 'do not qualify as bona fide administrative employees'."
The case was Mortgage Bankers Assocation v. Seth D. Davis, which challenged the DOL for changing the 2006 exemption without due process. The July 2 Appeals Court ruling was issued solely on procedural grounds, and the court left open the option of the DOL's issuing a new rule (rather than an interpretation) and subjecting it to a public commentary period before finalizing it.