Mortgage Loan Officer

The U.S. Court of Appeals for the District of Columbia in Mortgage Bankers Ass'n v. DOL on July 2, 2013 overturned a DOL Administrative Interpretation published in 2010 that stated that mortgage officers are not exempted from the FLSA Rules on Excess Hours. Will this mean that bosses can now hide their mortgage officers to release the remuneration scheme?

Appeals Court overturned DOL's administrative interpreting due to a formality - the court found that it did not meet the deadline for publication and submission before publication of the 2010 Administrative Interpreting. However, the Court of First Instance did not rule on the reasons for the interpreting of the draft regulation and even asked the draft regulation to reopen the interpreting after it had gone through the necessary procedure of publication and commentary.

This Court's position was a confirmation of the requirement of the Act on Procedural Management ('APA'), which regulates decision-making by the managing authorities, and not a decision on the correct categorisation of mortgage loan officers. The DOL published a report in 2006 stating that Mortgage Loan Officers are eligible as exempted personnel under the FLSA.

The DOL explained in this report that the archetypical tasks of the construction financiers were covered by the administration waiver. The DOL flip-flopped four years later, in 2010, and published an administration interpretation stating that mortgage officers were not eligible for administration break. DOL argued that the main role of a mortgage officer is to make disposals that are not directly related to general managerial or operational work.

Referring to crippled veterans of America v. D.C. Arena, L.P. and Alaska Professional Hunters Ass'n v. FAA, the Court of Appeal affirmed that the APA required agents to go through a notification and comment rulemaking procedure when an agent (1) has given its rules a final ruling and ( 2) later substantially revised that ruling.

According to the Court, confidence in the previous reading is a determinant to be taken into account when establishing the finality of the previous regulation and not, as the DOL reasoned, a third necessary in order to meet the conditions of the APA scheme. Accordingly, the Court has decided that the 2010 Administrative Interpretations of the DOL have been repealed because the DOL has failed to comply with this APA provision and to meet the commentary requirement.

Attention of the employer is drawn to the fact that this ruling should not be used as a basis for changes in the present mortgage loan agents' rank. The DOL is likely to re-issue its interpretations that the mortgage officer will not fall under the administration waiver in the near term, this case under APA mandate.