Class Action Lawsuit Follows New DOL Interpretation of Mortgage Loan Officer Status
We blogged in January 2011 about a 2010 Department of Labor (DOL) interpretation concluding that mortgage loan officers were not exempt employees under the FLSA’s overtime pay regulations. The Mortgage Broker’s Association (MBA) had warned at that time that this interpretation reversing the DOL’s 2006 position finding that mortgage loan officers were exempt employees would cause the sky to fall on lenders.
The MBA was concerned that, after years of relying in good faith on the DOL’s previous interpretation, banks would now face massive liability for unpaid overtime wages for an alleged “misclassification” of mortgage loan officers. This time, it looks like Chicken Little was right. The sky has started to fall—at least for one bank.
On February 11, 2011, a class action lawsuit was brought in Ohio against the Fifth Third Bank [INSERT 2] claiming mortgage loan officers were improperly denied overtime pay. Fifth Third had tried to do everything right: first following the prior interpretation and, then, after the new DOL interpretation, it reclassified its formerly exempt loan officers as nonexempt and paid them overtime pay.
Plaintiffs’ attorneys in the class action suit are arguing that if the proper way to classify loan officers is as non-exempt, then they should always have been non-exempt and “it still owes its current and former loan officers for the overtime hours they worked prior to the change.” The number of mortgage loan officers employed nationwide is staggering. Could the DOL have foreseen the effect this interpretation would have on banks, large and small, across the country?
Now that the MBA’s dire predictions seem as they may come true, will the DOL re-reverse itself and conclude that mortgage loan officers were actually exempt all along? Stay tuned for the next installment in this litigious drama.
