The Mortgage Bankers Association (MBA) has filed suit against the U.S. Department of Labor (DOL) in the United States District Court for the District of Columbia under the Administrative Procedure Act (APA). The suit seeks to set aside DOL's Wage and Hour Division Administrator's Interpretation No. 2010-1 (March 24, 2010) that reversed and withdrew a 2006 opinion letter from DOL to MBA. The 2006 opinion letter interpreted DOL's own regulations and concluded that typical loan officers were exempt from Fair Labor Standards Act (FLSA) requirements for overtime payments under the "administrative exemption."
"In 2006, the department issued a clear opinion to MBA interpreting DOL regulations that exempted typical mortgage loan officers from overtime pay," said MBA's President and Chief Executive Officer John A. Courson. "If the Department wanted to reverse that opinion, it should have provided notice and an opportunity for public comment. In issuing this administrative interpretation, the department ignored that statutory requirement."
The mortgage lending industry has relied on the 2006 DOL opinion letter to MBA and the underlying regulations indicating that a loan officer can qualify for the administrative exemption under the FLSA. MBA claims that the abrupt reversal of this ruling subjects mortgage lenders to unnecessary litigation.
"This abrupt reversal by the Department not only opens lenders up to lawsuits for past actions, but also could require them to make costly changes to their internal operations and compensation structure, costs that will ultimately be borne by the consumer," said Courson. "Requiring loan officers to be paid overtime will not increase their compensation and asking them to now track and report their hours will deprive them of the flexible schedules they and their customers have enjoyed. What we are asking the court to do is to set aside this ruling, effectively requiring that, if the Department wants to reverse the 2006 ruling, it follow the APA and issue a proposed rule for public comment. If the department were to do that, we are confident it would find that the existing ruling providing an administrative exemption for loan officers from overtime should remain."
In its suit, MBA asks the court to declare that the department violated the APA, vacate and set aside the Administrator's Interpretation (AI) and prevent enforcement, application and implementation of the AI.
The suit also urges that, because the DOL's interpretation in the AI is contrary to the plain language of the regulations and the preamble interpreting them, the AI is arbitrary, capricious, an abuse of discretion, and otherwise contrary to law.
A copy of the filings can be found by clicking here.
For more information, visit www.mortgagebankers.org.
