Department of Labor Guidance on Wage and Hour Laws

Mortgage Loan Officers

The Department of Labor (DOL) recently issued new guidance concerning the classification of certain mortgage loan officers under the Fair Labor Standards Act, which stated that mortgage loan officers do not qualify as exempt employees for overtime purposes. The new guidance withdraws prior DOL opinion letters, which said that mortgage loan officers satisfy the Administrative Exemption to the overtime rules.

To qualify under the Administrative Exemption, an employee must have a base salary of at least $455 per week, and the employee’s primary job duty must relate to the management or business operations of the employer. Employees who do not fall into an FLSA exemption category are entitled to overtime pay. In finding that the mortgage loan officers of the particular employer did not qualify as an administrative employee, the DOL examined the job duties of that employer’s mortgage loan officers:

• Contacting potential customers;
• Collecting financial information from customers and running credit reports;
• Identifying loan products to offer to customers based on the customers’ financial information; and
• Matching customers’ needs with the company’s products.

Based on these typical duties, as well as the fact that the mortgage loan officers are usually trained in sales techniques and compensated based on sales volume, the DOL determined that a mortgage loan officer’s primary duty is to make sales - not to influence internal management or business operations, the essence of the Administrative Exemption.

If you employ mortgage loan officers, you need to examine their job duties and decide whether they resemble the “typical” duties listed by the DOL. If your loan officers fail to qualify as exempt employees, you are required to pay overtime to your mortgage loan officers and required to have them keep records of their hours worked. You will need to determine how you will calculate overtime.

Unpaid Internships

As the current economy has limited employers’ ability to offer new paid positions, the number of unpaid internships has increased. Officials at the Department of Labor’s Wage and Hour Division have taken notice of this increase and warned that many of these unpaid arrangements might violate minimum wage and overtime laws. Please consult the following six-factor test to determine whether your unpaid internship is permissible under the law. If all six factors are satisfied, your intern is a “trainee”, and you are not required to provide compensation. Otherwise, your intern is an employee, and you must compensate the intern in accordance with the Fair Labor Standards Act.

1. The training is similar to what would be given in a vocational school or academic educational instruction;
2. The training is for the benefit of the trainee;
3. The trainee does not displace regular employees but works under their close observation;
4. The employer derives no immediate advantage from the activities of the trainee;
5. The trainee is not necessarily entitled to a job at the end of the training period; and
6. The employer and the trainee understand that the trainee is not entitled to wages for the training time.

For more information about the new DOL guidance and how it may apply to your business, please contact one of the attorneys in our Employment Law group at (314) 231-2800: Doreen D Dodson, H Kent Munson, Jennifer J. Raymond, Susan Nell Rowe, or Ann T Stillman.