The U.S. Supreme Court recently reversed the D.C. Circuit court decision that had determined that the process by which the 2010 opinion letter on the exempt status of loan officers was adopted was incorrect.
The Supreme Court upheld the 2010 opinion letter, in which the DOL determined that loan officers were not exempt administrative employees and were therefore subject to overtime, minimum wage and timekeeping rules under the Fair Labor Standards Act.
Many lenders are concerned with this ruling. First, it is important to note that the scope of the ruling does not actually change the law. It's merely an opinion based on a set of facts that apply to what are commonly referred to as inside loan officers — those individuals who staff the phones in call centers, for example. The opinion itself does not apply to outside loan officers, who regularly spend a significant part of their day going from place to place meeting referral partners, clients and potential clients to originate loans. Moreover, the ruling from the Supreme Court was limited to the procedural issue before it: whether the 2010 opinion letter was properly adopted.
The decision did not rest on whether the administrative exemption applied to specific types of loan officers, although many Courts have previously ruled that the exemption does not apply to the typical inside loan officer. As such, the decision does not necessarily change the law. It does solidify the position that inside sales loan officers are typically not exempt from the FLSA, but that was a ship that likely sailed some time ago.
The importance of the ruling is that it likely revitalizes interest from the plaintiffs' bar regarding FLSA claims against lenders, who continue to struggle with legal compliance on this issue. Fortunately, lawyers familiar with the industry and the FLSA can normally navigate the laws in a manner to achieve compliance in a manner consistent with streamlined operations. Lenders who are not confident they have a good handle on the compensation of loan officers under the FLSA should contact counsel to avoid being stung by what is most certainly going to be a renewed interest in FLSA litigation against banks and other lenders.
