Nonexempt mortgage loan officers, performing inside sales work at the company, were paid a minimum monthly commission only and often either received no wages for a month or received wages less than the federal minimum wage of $5.15 an hour, a 2003 investigation by the department’s Wage and Hour Division found. Payments allegedly owed to the employees range individually from $60 to $3,485.

Alliance violated the recordkeeping provisions of the Fair Labor Standards Act by not adequately making and preserving records of the employees’ wages and hours, the department also alleged in the complaint. Alliance’s employee records failed to show the hours worked each workday and the total hours worked each workweek.

The department has also asked the court to enjoin the company from further violations of the act.

Alliance, which did not return MortgageDaily.com’s calls for comment, operates from Dayton, Ohio, and in West Palm Beach, Boca Raton and Aventura, Fla.

The Fair Labor Standards Act, the federal law that regulates employer pay practices, requires employees to be paid the federal minimum wage for all hours worked and time and one-half the regular rate of pay for hours worked over 40 in a work week, unless the employee is exempt from overtime pay. The federal law provides that overtime does not have to be paid to employees who are properly classified under one of several allowed exemptions. Employers must also maintain accurate time and payroll records.

A ruling earlier this spring that loan officers can be paid as independent contractors, thus avoiding employer liability for federal minimum wage and overtime pay violations, only covered mortgage brokers who qualify for the outside sales exemption.

Indeed, a criticism of the department’s ruling was that it did not reach far enough because it did not address application of the inside sales exemption to federal minimum wage and overtime pay requirements for loan officers who primarily work inside the office.

The department spokesman Brad Mitchell declined further comment on the story.

Lisa D. Burden is a legal analyst for MortgageDaily.com and holds a law degree from the University of Maryland. She is currently a freelance journalist who previously wrote for Institutional Investor publications and the Baltimore Daily Record.

e-mail Lisa at: burdenlisa@yahoo.com