FEB 13, 2013 12:47pm ET

MBA Gets New Day in Court to Challenge LO Overtime Pay

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The Mortgage Bankers Association is getting another chance to overturn an administrative interpretation that requires lenders to pay their loan officers for overtime.

On March 22 the U.S. Court of Appeals for the District of Columbia will hear the MBA’s challenge to the Department of Labor’s overtime interpretation.

And it appears the MBA has a good chance of winning.

The MBA lost the first legal round in a U.S. district court, which upheld DOL’s 2010 overtime interpretation. That interpretation says loan officers are entitled to overtime pay if their primary duty involves selling mortgages.

Since then, the Supreme Court has rejected a DOL overtime interpretation in a case involving sales representatives for pharmaceutical companies.

The MBA’s attorneys contend that the Labor Department violated the Administrative Procedures Act when it suddenly reversed a 2006 interpretation on LO overtime. The 2006 interpretation says LOs engaged in administrative duties are exempt from the overtime requirements of the Fair Labor Standards Act.

The APA violation stems from failing to give the mortgage industry advance notice of the change and failing to seek public comment and input on the new overtime interpretation.

“Employers could have weighed in on what types of employees they believe should be [entitled to overtime] and employees could have weighed in on not wanting to clock in and out like a shift worker and wanting to be paid for success rather than hours,” the MBA’s brief says.

The appeals court has overturned other rulings where agencies have altered or reinterpreted rules without notice and comment.

“DOL’s deliberate about-face in issuing [the 2010 interpretation] was unlawful,” the MBA’s brief says, and the district court’s ruling should be reversed.

The MBA is being represented by the Morgan, Lewis & Bockius law firm.

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