An appeals court ruling stating that mortgage loan officers are considered exempt employees not entitled to overtime pay has thrown the industry into limbo. Loan officers had been considered exempt back in 2006, but that changed in 2010 when the U.S. Department of Labor re-classified them as non-exempt and therefore eligible for overtime pay.

The recent ruling by the U.S. Court of Appeals for the District of Columbia upended that 2010 re-classification, leaving mortgage firms unsure of how to proceed.

"It leaves them (employers) in the middle of a great big void," said Ballard Spahr partner Brian D. Pedrow. "One view of the situation is the 2006 interpretation comes back to life." However, he added, "The more prudent action would be to treat your loan officers as non-exempt and wait to see what is going to develop at the Department of Labor."

Ballard Spahr partner Richard J. Andreano, Jr., said the mortgage industry is likely to hold back and see whether the Department of Labor appeals the court ruling.

"If they move into a rulemaking phase, the industry might decide the best thing to do is to go to Congress and say this is an issue," Mr. Andreano said.

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Labor and Employment
Mortgage Banking