A three-judge federal appeals panel has ruled that credit unions do not have to pay their mortgage loan officers overtime – at least for now.
The July 2 decision from the U.S. Court of Appeals for the District of Columbia in Mortgage Bankers Association v. Seth D. Harris, Acting Secretary of United States Department of Labor reversed a previous decision which ruled that the Department of Labor could change its determination that mortgage loan officers are not exempt, and are thus due overtime pay, without writing a new rule and putting it through the rule-making process.
The Department of Labor is free to make such a determination if it wishes, the court ruled, but if it does so it has to issue a new rule with a new comment period and other procedures.
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"Whether mortgage loan officers qualify for this 'administrative exemption' is a difficult and at times contentious question. So difficult, in fact, DOL has found itself on both sides of the debate," U.S. Appeals Court Judge Janice Brown wrote in her opinion. "In 2006, the agency issued an opinion letter concluding on the facts presented that mortgage loan officers with archetypal job duties fell within the administrative exemption. Just four years later, in 2010, Deputy Administrator Nancy J. Leppink
issued an 'Administrator's Interpretation' declaring that 'employees who perform the typical job duties' of the hypothetical mortgage loan officer 'do not qualify as bona fide administrative employees.'
The MBA filed suit against the Department of Labor, alleging that the reversal of its decision without a new rule violated the Administrative Procedures Act. While a lower court upheld the agency, the appeals court sided with the trade group.
The Department of Labor indicated it would not appeal the decision but has remained silent on whether or not it will write a separate rule addressing the status of mortgage officers as exempt.
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