Mortgage Loan Officers No Longer Exempt, Says DOL

In an Administrator’s Letter from the Wage & Hour Division of the U.S. Department of Labor, mortgage loan officers are said to be non-exempt employees under the Fair Labor Standards Act,  instead of exempt employees under the administrative exemption of the FLSA. This letter reverses two previous Administrator Letters on this subject. The new letter is based on the following facts:  

The financial services industry assigns a variety of job titles to employees who perform the typical job duties of a mortgage loan officer. Those job titles include mortgage loan representative, mortgage loan consultant, and mortgage loan originator. For purposes of this interpretation the job title of mortgage loan officer will be used. However, as the regulations make clear, a job title does not determine whether an employee is exempt. The employee’s actual job duties and compensation determine whether the employee is exempt or nonexempt. 29 C.F.R. § 541.2. 

Facts found during Wage and Hour Division investigations and the facts set out in the case law establish that the following are typical mortgage loan officer job duties: Mortgage loan officers receive internal leads and contact potential customers or receive contacts from customers generated by direct mail or other marketing activity. Mortgage loan officers collect required financial information from customers they contact or who contact them, including information about income, employment history, assets, investments, home ownership, debts, credit history, prior bankruptcies, judgments, and liens. They also run credit reports.

Mortgage loan officers enter the collected financial information into a computer program that identifies which loan products may be offered to customers based on the financial information provided. They then assess the loan products identified and discuss with the customers the terms and conditions of particular loans, trying to match the customers’ needs with one of the company’s loan products. Mortgage loan officers also compile customer documents for forwarding to an underwriter or loan processor, and may finalize documents for closings.

Further, in addition to the job duties described above, the facts set out in the case law demonstrate that historically mortgage loan officers were often compensated entirely by commissions and that today many mortgage loan officers continue to be paid primarily by commissions, sometimes with a base wage, salary, or draw against the commissions. The commissions are based upon sales that are completed (i.e., loans that actually close), with the commission amount typically based upon the value of the loan.

On these facts, the Administrator concluded that the primary duty of such employees was sales rather than administrative work related to the management and general business operations of the employer. Applying the production-administration dichotomy, the loan officers’ sales activity falls on the side of production rather than the running of the business itself.