Mortgage Bankers Win Appeal in LO OT Case

The Mortgage Bankers Association sued the Department of Labor in January 2011 under the Administrative Procedure Act seeking to set aside the department’s Wage and Hour Division Administrator’s Interpretation No. 2010-1 from March 24, 2010.

The industry had been relying on a 2006 opinion letter from the Labor Department that interpreted the department’s own regulations and concluded that typical loan officers were exempt from Fair Labor Standards Act requirements for overtime payments under the “administrative exemption.”

But the 2010 interpretation reversed that letter — resulting in costly overtime lawsuits for many lenders who had relied on the earlier opinion letter.

In June 2012, a federal judge dismissed MBA’s lawsuit.

So the Washington, D.C., association appealed the dismissal with the U.S. Court of Appeals for the District of Columbia Circuit.

On Tuesday, the appeals court reversed the district court order denying MBA’s motion for summary judgment and remanded the case with instructions to vacate the Labor Department’s 2010 administrative interpretation.

“If the Department of Labor wishes to readopt the later-in-time interpretation, it is free to,” the decision stated. “We take no position on the merits of their interpretation. DOL must, however, conduct the required notice and comment rulemaking.”

The appeals court wrote that the government conceded in oral arguments the existence of two definitive — and conflicting — agency interpretations.

“This is an important case,” MBA Senior Vice President -Residential Policy and Member Services Pete Mills said in a written statement. “Ensuring a transparent process where rules are made following a full and fair opportunity for public comment is vital, and we applaud the court’s decision in affirming this fundamental protection.”