The recent U.S. Supreme Court decision upholding the Department of Labor interpretation concerning the exempt status of loan officers does not mean that outside loan officers are now subject to minimum wage or overtime requirements under federal law. The DOL opinion was an interpretive letter specific to a defined fact pattern describing an inside loan officer. The opinion did not apply to all loan officers regardless of duties and did not address the applicability of the outside sales exemption to loan officers.
The outside sales exemption under federal law applies to employees whose job is principally sales and who spend a substantial amount of time away from any place of regular business activity for the employer. The challenge for lenders using the outside sales exemption is proving the loan officer worked away from or outside of a regular place of business activity for the employer. Indeed, a home or remote office will be considered an office of the employer under the outside sales exemption. Thus, in order to utilize the outside sales exemption, an employer has to do more than show an employee did not work from a corporate location. Rather, an employer must demonstrate that an employee was going to customers and referral sources regularly and continually to solicit business.
The difficulty of proving whether a loan officer qualifies for the outside sales exemption has caused many employers to abandon the classification. However, this is both unwise and unnecessary if a loan officer is truly "outside." Using activity logs to verify the frequency of outside meetings, outside sales agreements, annual verifications of duties, source of loan data and loan officer "outside" elections, coupled with referral-based (as opposed to lead-based) origination channels can substantiate any outside sales designation. Moreover, employers wishing to maintain the classification should avoid contaminating the "outside" qualification with misclassified "inside" loan officers. These actions - which should be discussed with experienced counsel — can allow lenders to maintain the outside sales classification under federal law and most (but not necessarily all) state laws.