The Mortgage Bankers Association (MBA) recently sued the United
States Department of Labor (DOL) seeking to set aside the
agency's new interpretation that mortgage loan officers are not
exempt administrative staff under the Fair Labor Standards Act
(FLSA). The MBA alleges the DOL unlawfully charted a new course
when it withdrew a 2006 opinion advising that typical loan officers
were exempt from overtime payments under the FLSA's
"administrative exemption."
According to the complaint, the DOL's interpretation runs afoul
of the Administrative Procedure Act (APA), which sets forth certain
procedural requirements that govern the way in which administrative
agencies, such as the DOL, propose and establish regulations. More
specifically, the MBA argues the Agency violated the APA when it
failed to provide notice and opportunity for public comment before
acting. Additionally, the MBA asserts that the interpretation
conflicts with existing DOL regulations and is therefore arbitrary,
capricious and an abuse of discretion.
In a related development, the American Bankers Association (ABA)
has filed an amicus brief in a federal lawsuit in Michigan over
this issue, also arguing against the dramatic shift in the
DOL's position. Among other things, the ABA argues that the
DOL's interpretation is inconsistent with its regulations and
results in unfair surprise to employers who have reasonably relied
on its prior interpretation.
In the meantime, banks, mortgage lenders and other financial
institutions should consult counsel to evaluate how the DOL's
abrupt reversal could impact their classification of mortgage loan
officers and similar employees. Moreover, the DOL's
interpretation serves as a reminder to all employers about the
importance of conducting wage-and-hour audits to ensure their
employees are properly classified.
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