A number of large collective action FLSA overtime cases have challenged the exempt status of mortgage loan officers. Many banks and mortgage companies classify these employees as administrative exempt, relying on several Department of Labor Opinion Letters from 2006. Although the mortgage officers sell products to customers, DOL initially concluded that their primary duties involved exempt marketing activities and matching the best loan product to the specific borrower.

Last week, DOL published notice of its decision to rescind the 2006 Opinion Letters. In its announcement, DOL basically admitted that it now disagrees with the conclusions reached by the Bush DOL with regard to mortgage loan officers. Instead, DOL considers these employees to be primarily engaged in sales activities, which constitute production work incompatible with the administrative exemption.

Given the uncertainty over this dichotomy, many financial institutions reclassified these employees to non-exempt in order to avoid potential overtime claims. DOL's announcement should prompt other employers to follow suit. In addition to withdrawing the 2006 Opinion Letters, DOL announced that in the future, it will stop its traditional practice of issuing Opinion Letters that analyze specific factual scenarios raised by employers. Instead, DOL will simply provide general guidance as to existing regulations and interpretations. This employee-friendly position will likely generate more uncertainty among employers as to applicability of the exemptions, and increased FLSA litigation.