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March 3, 2014

Court Finds Mortgage Loan Officers to Be Exempt

Filed under: Compensation,FLSA,Legal Issues12:07 pm

A federal trial court in Virginia has ruled that the mortgage loan officers employed by the financial institution involved in that case were exempt from the overtime pay and related requirements of the Fair Labor Standards Act (FLSA). The court based its ruling on the outside sales employee exemption from FLSA. According to the United States Department of Labor (DOL), to be an exempt outside salesperson, the employee’s primary duty must be “making sales (as defined in the FLSA), or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and the employee must be customarily and regularly engaged away from the employer’s place or places of business.” The Virginia court found that the mortgage loan officers involved in that case met these requirements, even though they spent most of their time in the office, by regularly attending outside events, such as open houses, weekly networking events, weekly one-on-one meetings with realtors and monthly home-buying seminars.

Before switching these types of employees back to nonexempt status, employers might want to wait and see how the appeals court deals with this case, as well as how the DOL deals with another recent decision that said it did not enact its “loan-officers-are-nonexempt” letter in the right way. Employers who make the switch now, before the law develops a bit further, might be taking on a large litigation risk. There are still plaintiff-side employment lawyers out there looking to sue financial institutions who classify loan officers as exempt. If, on the other hand, an employer decides to make the change now (or in the near future), it would be wise to carefully study the facts in the recent case and model classifications on the approach that particular employer used. The Virginia case name/citation is Cougill v. Prospect Mortgage, LLC, No. 13-1433 (E.D.Va. Feb. 5, 2014).

 

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