Following the DOL’s controversial 2010 Administrative Interpretation concluding that the administrative exemption to overtime does not apply to mortgage loan officers, numerous industry responses followed, including a Mortgage Bankers Association (MBA) lawsuit challenging the Interpretation. The MBA suit was initiated pursuant to the Administrative Procedure Act (APA) and sought a court ruling that the DOL violated the Act by reversing course from its previous position on the issue (set forth in a 2006 opinion letter) without the appropriate “notice and comment” procedure, and that the Interpretation itself contradicted the DOL’s own regulations. Federal Judge Reggie B. Walton of the District of Columbia, recently rejected that challenge. Mortgage Bankers Ass’n v. Solis, 2012 U.S. Dist. LEXIS 78270 (D.D.C. June 6, 2012).
In holding that the DOL did not violate the APA rulemaking procedure, Judge Walton focused on the MBA’s failure to demonstrate the existence of reliance on the 2006 opinion letter finding loan officers to be exempt, as the Court stated such was a requirement to show that the new rule was invalid.
Mortgage Bankers confirms what industry employers already know: at present, the DOL’s regulatory position with respect to classification of loan officers remains the same, i.e., they do not qualify for the administrative exemption. Courts continue to differ on this issue, and other exemptions may apply to loan officers depending upon facts at issue and jurisdiction. Wong v. HSBC Mortg. Corp., 749 F. Supp. 2d 1009 (N.D. Cal. 2010)(outside sales exemption); Gatto v. Mortgage Specialists of Ill., Inc., 442 F. Supp. 2d 529 (N.D. Ill. 2006)(“7(i)” exemption). Suffice to say, the mortgage banking industry ranks amongst the hardest hit by wage cases, increasing the probability that the MBA will appeal this ruling to the D.C. Circuit. This space will advise readers of any developments.