Mortgage Loan Officers Are Not Exempt Employees Per The DOL And The Supreme Court Says That Is Okay

The legal ping-pong match between the Department of Labor (DOL) and the Mortgage Bankers Association (MBA) over whether mortgage loan officers are eligible for overtime appears to be at an end. The Supreme Court recently issued its opinion in Perez v. Mortgage Bankers Association, holding that the DOL's amendment of its interpretive rules to provide that mortgage loan officers do not qualify for the administrative exemption—despite the fact that the DOL did not go through a public notice and comment period when it amended its guidance—seems dispositive. Accordingly, when an administrative agency such as the DOL amends or repeals one of its interpretive rules, it does not need to go through the public notice and comment period for rule making.

Employers should take note of the ruling as it affirms the DOL's ability to amend or repeal its previous interpretations without having to go through the notice and comment process, overruling a previous D.C. Circuit case that had held that the amending of a previous interpretation did require the public notice and comment period.

As a quick overview, the Administrative Procedures Act (APA) provides that a federal administrative agency can issue "legislative rules" that are the agency's "statement[s] of general or particular applicability and future effect" designed to "implement, interpret, or prescribe law or policy." 5 U.S.C. § 551(4). Issuance of legislative rules requires public "notice and comment" in which the agency must issue notice of the proposed rule, give opportunity for written comment, among other things. "Interpretative rules," by contrast, are those that are "issued by an agency to advise the public of the agency's construction of the statutes and rules which it administers." Perez, p. 3 (quoting Shalala v. Guernsey Memorial Hosp., 514 U.S. 87, 99 (1995)). As the Court and others recognize, issuing interpretative rules for an agency is comparatively easier than legislative rules. Id.

The Perez case centered around the question of whether mortgage loan officers fall under the administrative exemption of the FLSA for those "employed in a bona fide executive, administrative, or professional capacity." 29 U.S.C. § 213(a)(1). The FLSA gives the...