Court Rejects Challenge to DOL's Interpretation That Mortgage Loan Officers are Non-exempt
I wanted to give our readers a quick update on the status of mortgage loan officers. In Mortgage Bankers Ass’n v. Solis, a federal district court in Washington D.C. recently rejected a challenge to the March 2010 DOL administrator’s interpretation that mortgage loan officers do not generally meet the administrative exemption under the FLSA. As previously mentioned, on March 24, 2010, the Wage and Hour Division (WHD) announced it was no longer issuing opinion letters in response to specific questions but would issue administrative interpretations containing general interpretations of the law and regulations. At the same time, the WHD issued its first administrator’s interpretation, which concluded that employees performing typical duties of a mortgage loan officer do not qualify as administrative employees exempt from overtime, thus reversing its own previously issued opinion letter, dated October 5, 2006.
The Mortgage Bankers Association (MBA) were the recipients of the original 2006 opinion letter from the DOL and filed suit in January 2011, claiming that the DOL had improperly reversed its opinion letter without engaging in appropriate rulemaking and notice requirements. In rejecting MBA’s claims, the Court found no substantial and justifiable reliance on the DOL’s 2006 opinion letter and that the interpretation was not arbitrary and capricious and contrary to the law. The Court noted that the 2006 opinion letter had only been in effect for four years, whereas the DOL had previously taken the position that mortgage loan officers were not exempt. The Court reasoned that the exempt status provided in the opinion letter was short lived and there would be no damages resulting from the prior interpretation due to good faith reliance. Moreover, the Court was persuaded by the DOL’s argument that the interpretation was not arbitrary or capricious, despite the flip-flop in its stance.
The issue as to whether mortgage loan officers are exempt is not likely to end with this case. As we previously reported in March 2011, at least one jury has rejected the DOL’s administrative interpretation that mortgage loan officers are non-exempt. The conflict in how courts apply the law is just another example of why employers need to carefully make classification decisions based on the facts related to each specific job.