The Fair Labor Standards Act (FLSA) is a federal law that requires employers to pay minimum wage and overtime compensation (under specific circumstances) to their employees. For most employees, this means that the employer must compensate the employee for all hours worked in excess of forty (40) in a work week. If an employer's overtime pay practices are in violation of the FLSA, employees may file a lawsuit against the employer and obtain back pay (which may be doubled to include what is known as "liquidated damages"), reimbursement for attorneys' fees, and litigation expenses.

In most circumstances, loan officers and processors, as well as some other loan industry employees are entitled to receive overtime pay for hours worked above 40 in a work week, at a rate not less than 1.5 times the employee's regular rate of pay. For these purposes, the term "regular rate of pay" means all remuneration for employment paid to an employee except specifically designated payments referred to as "statutory exclusions." For an example of particular significance to loan industry employees, the regular rate of pay must be based on the employee's base pay plus all non-discretionary bonuses or commissions.

The typical duties performed by loan industry employees include activities such as the following:

1. Contacting potential customers using leads provided by employer. These leads can be internal company leads, or leads generated by direct mail, websites or other marketing activity. Just one example would be leads generated by a dialer system;

2. Collecting required financial information from customers. This could include information about employment history, income, assets, debts, home ownership, and credit history;

3. Running Credit reports;

4. Entering collected financial information into a computer system that identifies what loan products may be available for the customer;

5. Discussing with customers the terms and conditions of various loans;

6. Compiling and forwarding information to an underwriter or other employee, and

7. Finalizing documents for closing.

It is not necessary for the loan officer to perform each of these tasks to be considered entitled to overtime. Rather, the above is simply a listing of some of the typical job duties for individuals employed under the title of "Loan Officer," or similar positions.

In an "Administrator's Interpretation" released on March 24, 2010, the U.S. Department of Labor carefully analyzed the position of mortgage loan officer and concluded that typically, loan officer positions are non-exempt, and therefore are entitled to receive overtime pay. This "Administrator's Interpretation" is likely to be given significant weight by the federal courts in handling FLSA cases brought by loan officers.

The rule for commissioned employees who work in retail industry and are paid more than 50% of their income by commission are different. Commissioned employees are exempt from overtime provided that most of their income is by commission, their compensation equals the minimum wage (currently $7.25 per hour) for the first 40 hours of work per week and 1.5 times the minimum wage for hours worked over 40 hours per week $10.87 per hour.

If you are a loan industry employee with questions about how these issues apply to your individual situation feel free to contact Woodley & McGillivary by filling out our  questionnaire or write to us at:

Woodley & McGillivary
1101 Vermont Avenue, N.W.
Suite 1000
Washington, D.C. 20005