Do Not Start Reclassifying Your Loan Officers

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Earlier this week a federal appeals court vacated the 2010 Department of Labor opinion which found that loan officers were non-exempt workers entitled to minimum wage and overtime. At first blush this would seem to be a huge victory. A closer inspection of the decision is necessary.

As opposed to disagreeing with the merits of the DOL's decision, the appeals court found that the DOL's failure to provide for notice and comment precluded it from adopting the 2010 opinion. The court stated the DOL was in fact free to adopt such an analysis in the future so long as it provided notice and an opportunity for comment.

Beyond the fact that the court did not reach the actual merits of the opinion, the existing 2006 opinion remains in place. Although many lenders view that opinion—which finds the administrative exemption can apply to loan officers—favorably, an important caveat to the opinion is that it assumes the loan officer is not primary engaged in sales. In other words, if the loan officer is primarily engaged in sales the administrative exemption does not apply and the loan officer is not exempt. Obviously, this is a critical detail as it is difficult in most cases to argue that a loan officer's job is not primarily sales related. As such, lenders should not jump to reclassify their loan officers into exempt positions.

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Law and regulation