A Michigan jury this week ruled that Quicken Loans Inc., one of the nation's largest mortgage banking firms, does not have to pay nearly 350 plaintiffs over-time for extra hours they worked at the company.
Not only does Quicken save an estimated $10 million in "half-time" payments, but it sets a precedent for owners of mortgage banking firms, including nonbanks and depositories alike.
Quicken is the nation's sixth largest residential retail lender, according to the Quarterly Data Report.
At press time, an attorney with Nichols Kaster, the firm representing the plaintiffs, told National Mortgage News they would appeal. (As of this writing, the law firm was holding a press conference on the decision.)
The trial, which started Feb. 8, ends a long process for a case filed in 2004.
Although Quicken scored a major "win" on the minimum wage/overtime issue, it may not be entirely smooth sailing ahead for the industry.
Ken Markison, associate vice president and general counsel of the Mortgage Bankers Association, noted that although the jury sided with Quicken that it properly used an allowable exemption under federal law, he warned that this is just "one decision in one court."
Speaking Wednesday morning on a panel at the Regional Conference of Mortgage Bankers Association in Atlantic City, N.J., Markison noted that the trade group is suing the Department of Labor over its interpretation of the Fair Labor Standards Act.
Markison said he recently heard a response from the Department of Justice on the case but doesn't expect a quick resolution on the issue. "It is anybody's guess on how it will come out ultimately," he warned.
Ari Karen, an attorney with Offit Kurman who specializes in labor law issues, called the Quicken outcome a huge decision and one of the first which has come out positively for the industry.
A mortgage banker/broker from California asked the panel a question regarding the independent contractor vs. employee issue now that the Federal Housing Administration has done away with the "mini-Eagle."
Karen said there is a conflict of what might be considered to be an independent contract and the oversight required for loan officers under the SAFE Act. He used the example of a house painter, which someone hires but has little oversight on what they do.
He added the U.S. Department of Labor is leery of defining loan officers as independent contractors. Markison said the new layers of liability for the industry make it even more challenging to go in the direction of using independent contractors.
Jack Konyk, executive director, government affairs for Weiner Brodsky Sidman Kider, noted that FHA's answer regarding the allow-ability of independent contractors only represents how the agency views the situation in its own context. One of the positives regarding the Consumer Financial Protection Board aligning along industry, rather by individual laws, is that answers to such questions will now have a broader context, he said.
