If you’re a seasoned loan officer, underwriter, or mortgage appraiser, you may be familiar with the fact that overtime has never been an option for you. If you’re new to the financial services industry, you may be unaware of it as well.
However, that’s all changed with recent updates and lawsuit settlements against companies who have violated the FLSA. Read more to see if you might qualify for overtime back pay/loss by contacting a FLSA lawyer to evaluate your potential unpaid overtime lawsuit.
Financial Industry Workers and Changes to Overtime
The financial industry is one of many moving pieces of the fast-paced American economy. Loan officers, loan processors, residential loan appraisers, underwriters, and more deserve more compensation for their extra hours. Employers, however, routinely misclassify them as exempt from the Fair Labor Standards Act.
In the past, loan officers were considered “administrative” employees and exempt from protections under the FLSA. In March 2010, the Department of Labor changed its protections to allow a majority of mortgage loan officers to be entitled overtime wages. This is because their primary job duties are to sell financial products.
There were many tumultuous legal battles over this decision, but it all came to an end with a case from the US Supreme Court, Perez v. Mortgage Bankers Association.
These decisions have been able to extend the same wage and overtime rights to residential loan appraisers or other similar positions in financial services industry. However, it can be hard to understand.
Are you considered an “Administrative” employee?
The Department of Labor relies on the actual job duties in order to classify one under the FLSA. Regardless of your title or number of clients you have, the work you perform in the financial services industry is the most important piece.
These are the guidelines to qualify as an “administrative” employee, which is what leads to the vast majority of misclassification of financial service workers.
- You must be paid on a salary or fee basis
- You must be paid at least $455 per week
- Your primary job duties must be “office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers”
- Your primary duty must entail the use of “discretion and independent judgment with respect to matters of significance”
All four of these are required. If you answer no to any of them, you are not considered an administrative employee. In regards to question one; many employees in the home mortgage industry are paid in commissions. For a variety of reasons, this is not a guaranteed salary. Unless you are making a salary in addition to the commissions you earn, more than likely you are entitled to overtime pay.
An employee can satisfy questions #1, #2, #3, but what about #4? If you spend more than half of your time using “independent judgment” you are probably entitled to backpay and overtime.
How much should you be making?
Most loan officers, loan processors, and underwriters should make one-and-a-half times their regular rate of pay. Few of these employees are paid on an hourly basis, and calculating their regular rate can become tricky.
This is how you find out how much overtime you’re entitled to, whether or not you receive a commission, salary, or both. Regardless, you still have to determine your “regular rate” of pay; how much you make in less than 40 hours per work week. This regular rate is subject to change.
The most important part of being a salaried employee is double-checking what your employer handbook has on the hours your salary is meant to cover. For example, if you were to receive $800 for 35 hours of work each week, but the next week you worked 46 hours, the next step would be to divide that number by 35. This would put your “regular rate” of pay at $22.86 per hour.
Federal overtime kicks in when you work more than 40 hours of work in a week. In the example above, you’d take the remaining five hours between 35 and 40, and multiply by $22.86. This would be a total of $114.26. Add this to your $800 salary and now overtime is ready to be calculated.
Take your regular rate of pay ($22.86) and multiply it by 1.5 (overtime is one-and-a-half times your regular rate of pay). This gives you a sum of $34.29. This is the number you then use to multiply your overtime hours (46-40=6). Thus, $34.29 x 6 = $205.74. Once you add all three of these sums together, your weekly pay at 40 hours a week ($914.26) + overtime pay (205.74) = $1,120.
The math for a commission-only employee is much simpler than that of a salaried employee. Take how much you make in a given week, divide it by the hours you worked, and this gives you your regular hourly wage. You then multiply that number by 1.5 and this equals your overtime pay rate. Any hours worked over 40 in a workweek then get divided by that overtime pay rate.
These changes from the Department of Labor regarding extended overtime privileges for loan officer and underwriters don’t always happen overnight. It can sometimes take an employer years to fix their overtime calculations; especially if it’s a corporate bureaucracy. Many financial service employees should be making overtime, but still haven’t received it.
The FLSA provides workers with the ability to file an overtime lawsuit. This allows you to gain access to back wages, and sometimes the court may increase this amount.
There are some employees who are willing to work hard for their justified overtime back pay. In 2015, Bank of America settled an overtime class action lawsuit filed by a residential real estate company. About 365 current and former appraisers received a little over $64,500 each from the $36 million settlement.
Do I Have a Financial Services Industry Overtime Lawsuit? Contact our FLSA Overtime Lawyers for a Free Case Review.
If you feel that your employer is violating their requirement to pay you what you deserve, you should contact us for a free, no obligation case evaluation. We are actively filing new overtime lawsuits across the county and you may be entitled to financial compensation for your unpaid overtime wages.
We offer a Free Case Evaluation. Please contact us using the form below or by calling us at (800) 279-6386. We would be honored to speak with you and respond promptly to every inquiry we receive.