U.S. Supreme Court Allows Pay for Overtime for Mortgage Loan Officers

The U.S. Supreme Court recently approved overtime for mortgage loan officers, after it was ruled the Department of Labor (DOL) was within its rights to reclassify loan officers as non exempt employees.

The U.S. Supreme Court unanimously voted for this decision, stating that overtime for mortgage loan officers should be paid if they work over 40 hours in a week.

State and federal labor laws require companies to pay non exempt employees 1.5 times the hourly rate if they work for over 40 hours a week or over eight hours in a single work day.

In addition, non exempt employees are entitled to overtime benefits and bonuses to adequately compensate employees for their hard work.

However, exempt employees, like outside sales representatives and employees paid salaries, are not eligible for overtime benefits.

Overtime for mortgage loan officers was not previously offered, but the recent court ruling has changed this custom.

Overtime for Mortgage Loan Officers: Key Ruling

The ruling comes from a 2010 ruling the Department of Labor made to reclassify loan officers as non exempt employees.

The ruling was a reversal of 2006 decision made by the Department of Labor, which had changed loan officers to exempt status employees.

After the Department of Labor had made the 2010 ruling, the Mortgage Bankers Association (MBA) had sued stating the Department of Labor had violated the Administrative Procedures Act.

The Mortgage Bankers Association argued that the DOL had failed to notify them of any intention to change significant rules, which denied them to chance to give their input.

The MBA won in the D.C. Circuit’s Court of Appeal in 2013, but both sides had eventually led the suit into Supreme Court.

In the ruling of the lawsuit, Perez v. Mortgage Bankers Association, the Supreme Court stated the Department of Labor did not violate the Administrative Procedures Act when it implemented changes to the loan officer classification rule.

“Because an agency is not required to use notice-and-comment procedures to issue an initial interpretive rule, it is also not required to use those procedures to amend or repeal that rule,” Justice Sonia Sotomayor wrote in the consensus opinion.

Even though the MBA stated that it was “disappointed” by the decision, they said they were ready to move forward with the ruling’s decision.

According to attorneys, the MBA was hoping that the court would keep the to lower court’s decision so they would not have to adjust its operation management to adhere to overtime for mortgage loan officers.

Even though there was concern from the more conservative members of the Supreme Court, many experts believe that overtime for mortgage loan officers will not impact the company or the industry in general.

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