LO, lender spar over out-of-office lunchtime in wage claim

A mortgage lender is arguing a loan officer's lunch hours and use of personal technology are reasons to toss his class action wage claims. 

Ex-Draper and Kramer Mortgage Corp. LO Jose Vasquez and 24 of his colleagues are seeking millions of dollars in unpaid overtime wages and penalties from the lender in a suit filed in 2020. The Fair Labor Standards Act complaint, like many other industry lawsuits, hinges on whether the originators were considered exempt from receiving overtime pay according to labor laws.

The suit covers the employer's actions between April 2019 and May 2021. The financial services firm has since ceased residential lending but is still fighting the complaint, and filed a motion for summary judgment in California federal court last week. 

Vasquez was exempt from receiving overtime pay because of outside sales activity, including client lunches out of the office 1-2 hours a day and up to two times a week, attorneys for Draper and Kramer said. They also point to golf tournaments and networking mixers as satisfying the FLSA's outside-sales exemption.

Attorney Timothy Paul Rumberger disputed that argument in the same joint filing on behalf of Vasquez. Some of those lunchtimes during the pandemic were simply food deliveries, for example. They were noncritical work and more public relations-oriented than sales-related. 

Spending up to an hour-and-a-half each week for something as ubiquitous as lunch doesn't transform an employee into an exempt status, when his nonexempt job tasks consume 99% of his work time, he wrote. 

"Such a ridiculous 'tail wagging the dog' application of the exemption falls far outside the FLSA's intent," wrote Rumberger. 

The plaintiff's attorney highlighted portions of his argument in the recent filing in an email Friday. Neither Draper and Kramer nor its attorneys returned requests for comment. 

The LO also claims his workplace failed to reimburse him for cell phone, home internet and personal-vehicle expenses. Draper and Kramer contests that Vasquez could have worked at the lender's Santa Barbara office which never closed during the pandemic; and that he could've used the Ringcentral application on his laptop for phone calls.

Draper and Kramer also points to Vasquez's employment agreement in which he acknowledges his outside-sales position, but the LO argues the reference lacks definition. 

Vasquez, according to case filings, was paid on a commission-only basis and also received an $8,000 marketing allowance. He submitted at least 182 meal receipts for reimbursements. The lender claims it fired the LO because he engaged in unauthorized behavior, including submitting incomplete loan documents and failing to receive consent from applicants prior to loan disclosures. 

"Vasquez, an individual who earned in excess of $350,000 over the course of his nearly two-year tenure with DKMC, is hardly an individual the FLSA was designed to protect," attorneys for the lender wrote. 

The sides will meet for mediation next month, days before a hearing regarding the latest motion and possible class decertification.

Mortgage professionals have experienced mixed success in FLSA claims against mortgage lenders, sometimes capturing multimillion dollar settlements or being forced to head to arbitration. Some cases have been mired in litigation for several years, and more are fought in state courts.