A recent opinion issued by the Department of Labor (DOL) determined that mortgage loan officers do not qualify as bona fide administrative employees exempt under section 13(a)(1) of the Fair Labor Standards Act (FLSA), 29 U.S.C. Sec. 213(a)(1). As a result, they are entitled to receive overtime pay, typically one and one half times their regular rate of pay for all hours worked over 40 hours in any workweek.

The DOL issued its opinion after reviewing whether a mortgage loan officer was “exempt” based on the 3-part test set forth by Federal Regulations. This test asks the following questions:
1) Is the employee paid more than $455 a week?
2) Is the employee’s “primary duty the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers? and 3) Does the employee’s primary duty include the exercise of discretion and independent judgment with respect to matters of significance? 29 C.F.R. Sec. 541.200.

In considering the status of mortgage loan officers, the DOL focused primarily on the second question – are mortgage loan officer’s duties are directly related to the management or general business operations of the company?

The DOL determined that a mortgage loan officer’s main job function is sales – each action that they take such as analyzing financial data, is in furtherance of making a sale. Determining whether a customer qualifies for a mortgage loan and the benefits of different types of loan products, relates to the sale of a product, for which the mortgage broker or loan officer receives a commission. These actions are not part of the internal operation of the company – they are not servicing the company itself or providing advice to the company. Rather, they are selling a product and “fall squarely on the production (non-exempt) side of the business.” Further, to the extent mortgage loan officers provide customers advice for their personal needs and not for “management of general business operation” these actions are not exempt.

Based on these considerations, the DOL determined that mortgage loan officers are not considered “bona fide administrative employees” and hence are entitled to receive overtime compensation.

As Georgia employment attorneys, we help or clients ensure they receive fair compensation. Many times, employees are denied overtime compensation because their employer has told them they are exempt. If you believe you are entitled to overtime pay, but are unsure if you qualify, please contact our offices.