The Department of Labor Issues Its Very First "Administrator's Interpretation" -- Mortgage Loan Officers Are Entitled To Overtime

On March 24, the DOL issued Administrator's Interpretation No. 2010-1, which is a significant document for a number of reasons.

First, this is the very first in a new breed of interpretative guidance which is apparently intended to replace the DOL's prior practice of issuing "opinion letters" responding to the specific facts and questions submitted by interested parties.  The new "Administrator's Interpretation" is more like an advisory opinion based on hypothetical or generalized facts.

Furthermore, the substance of the letter reinforces a recent judicial trend we have blogged about last year -- i.e., that salaried financial service workers may be glorified production workers entitled to overtime pay.    

In particular, the Administrator's letter addresses overtime for positions in the mortgage industry which may carry titles such as "loan representative," "loan consultant," or "loan originator."  Whatever the title, the duties of these positions are generally defined as follows:

Mortgage loan officers enter the collected financial information into a computer program that identifies which loan products may be offered to customers based on the financial information provided.  They then assess the loan products identified and discuss with the customers the terms and conditions of particular loans, trying to match the customers' needs with one of the company's loan products.  Mortgage loan officers also compile customer documents for forwarding to an underwriter or loan processor, and may finalize documents for closings.

According to the Administrator, "a careful examination of the law as applied to the mortgage loan officers' duties demonstrate that their primary duty is making sales and, therefore, mortgage loan officers perform the production work of their employers."  As a result, mortgage loan officers fall squarely on the non-exempt side of the so-called production/administrative dichotomy and they are therefore entitled to overtime pay. 

This interpretation is entitled to "deference" by federal courts applying the FLSA and will no doubt also carry persuasive weight in interpreting the California Labor Code exemption as well.  Employers are thus well advised to review the exempt of status of any financial service workers who have duties comparable to those described in this first Administrator's Interpretation.    


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