Pub. 3 2015 Issue 2

www.uba.org 12 COMPLIANCE CORNER Two Updates You Need to Know Now By Silvia Garcia Maggio I n our fast-paced industry, it can be easy to miss important updates on the day-to-day. In the last few months, there have been some important and interesting developments which could affect your bank. My top two “need-to-know” updates include an important Supreme Court decision regarding the Department of Labor’s interpretation of Mortgage Loan Officers vis a vis the administrative exemption to overtime and the upcoming ability to purchase a .BANK domain name which will set financial institutions apart from the traditional .COMs on the internet. Is Your Bank Required to Pay Your Loan Officers Overtime? On March 9, 2015, in Perez v. Mortgage Bankers Association, 575 U.S. ___(2015), the U.S. Supreme Court overturned the U.S. Court of Appeals – District of Columbia’s 2013 ruling that the Department of Labor (DOL) had violated the Admin- istrative Procedure Act (APA) via the DOL’s interpretation letters regarding Mortgage Loan Officer Compensation. The DOL issued an opinion letter in 2010 stating that Mortgage Loan Officers (MLOs) do not qualify for the administrative exemption to FLSA in regards to overtime compensation. That interpretation was counter to the Department’s previous interpretation in 2006 that Mortgage Loan Officers did qualify under the administrative exemption to the Fair Labor Standards Act (FLSA). The Mortgage Bankers Association brought suit alleging that the change in interpretation was done in violation of the APA because there was no public notice-and-comment process. The Supreme Court has subsequently disagreed with that interpretation and has found the action to be in line with the Department’s ability to interpret the FLSA. What does all of this mean for bankers? This means that the DOL letter in 2010 was not outside the authority of the De- partment of Labor and therefore, that letter was not an invalid change in interpretation. Therefore, the current Department of Labor interpretation is that Mortgage Loan Officers do not qualify for an administrative exemption from FLSA. To qualify for the exemption an employee: 1) must be compensated at rate of at least $455 per week; 2) the employee’s primary duty must be the performance of office or non-manual work directly related to the management or federal business operation of the employer or the employer’s customer; and 3) the employee’s pri- mary duty includes the exercise of discretion and independent judgment with respect to matters of significance, even though many bankers would argue their MLOs fall under this defini- tion, the DOL has interpreted that they do not, simply by being a “loan officer”. Therefore, your mortgage loan officers may not be exempt from the requirement to receive overtime compensa- tion for working over 40 hours a week. All that being said, being a registered mortgage loan origina- tor does not wholly preclude the employee from being able to qualify for the administrative exemption – in fact, the 2010 Administrator’s letter, at issue in Perez, says as much (U.S.