A three-judge panel from the Court of Appeals for the Washington, D.C., Circuit has reportedly vacated a 2010 Department of Labor (DOL) administrative interpretation declaring that mortgage loan officers did not qualify under the "administrative exemption" to overtime pay.
The ruling is a victory for the Mortgage Bankers Association, which had opposed the revised interpretation.
The Fair Labor Standards Act (FLSA) requires that most employees in the U.S. be paid at least the federal minimum wage for all hours worked and time-and-a-half for all hours worked over 40 hours per week. However, Section 13(a)(1) of the FLSA, which the DOL adopted in 2006 under the Bush Administration, provides an exemption from both minimum wage and overtime pay for those working as bona fide executive, administrative, professional and outside sales employees.
However, in 2010, the DOL under the Obama Administration reversed its position and declared that loan officers are not exempt under the FLSA. That prompted the MBA to file its case, Mortgage Bankers Association v. Seth D. Harris, which asserts that the DOL changed the rule without due process, in January 2011.
"When an agency has given its regulation a definitive interpretation and later significantly revises that interpretation, the agency has in effect amended its rule, something it may not accomplish [under the APA] without notice and comment," the MBA wrote in its suit against the DOL. However, later that same year a lower court upheld the DOL's revised ruling.
Although the D.C. District Court on July 2 vacated the DOL's ruling, it did not weigh in on the validity of the revised interpretation. As such, the DOL could still warn and hold a formal comment period and implement the change in a separate action.
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