Should Underwriters get Overtime Pay?
[headline]Underwriters May be Non-Exempt Employees[/headline]
Administrator’s Interpretation No. 2010-1 was announced by the Department of Labor stating they believe that “employees in the financial services industry, regardless of the job title assigned, who perform the typical job duties of a mortgage loan officer, may be entitled to overtime pay.” This statement will have a large effect on the banking and loan industry because the California courts do take the federal opinions in to great consideration when interpreting California law. It could mean countless numbers of law suits resulting in millions in back wages for overtime pay and missed meals and breaks
Banking and loan employees in California such as underwriters, loan officers, analysts, escrow closers, claims adjusters, and brokers of financial products who have been misclassified as exempt from overtime may now be entitled to overtime pay.
Under Federal regulations, a financial services employee works in a bona fide administrative capacity if they perform work
“directly related to management policies or general business operations” and “customarily and regularly exercises discretion and independent judgment, then they are likely classified as an exempt employee.”
This is different than an employee who may work in a “‘production’ or, in a retail or service establishment, ‘sales’ work.”
The Administrator’s interpretation stated, “a careful examination of the law as applied to the mortgage loan officers’ duties demonstrate that their primary duty is making sales and, therefore, mortgage loan officers perform the production work of their employers.”
The Second Circuit Court of Appeals recently issued a similar decision in Davis v. J.P. Morgan Chase & Co. The court decided that underwriters use company guidelines to approve loans and thus were performing non-exempt duties, so they should be classified as “production” workers and entitled to overtime pay. The Court noted that a distinction between employees directly producing the goods or services that were the primary output of a business, and employees performing general administrative work applicable to the running the business, who regularly exercised discretion and independent judgment.
There are a lot of California banking and loan employees who may have been misclassified as exempt employees just like Davis was. As a result, thousands of California’s financial services employees may be entitled to overtime pay. If owed overtime pay, the employees may collect up to four years of back pay under California’s overtime pay laws.
California underwriters are likely owed overtime pay. The duties and job function of underwriters have been reviewed in a recently decided case called Davis v. J.P. Morgan. The second circuit court found that underwriters approved loans under established company guidelines and their duties are for the most part non exempt duties, and therefore these employees are entitled to overtime pay. The Second Circuit stated, “Underwriters were given a loan application and followed procedures specified in the Credit Guide in order to produce a yes or no decision.”
This case raises a few red flags that many California underwriters may be misclassified as exempt employees when in fact they should probably be hourly employees. This could mean millions of dollars in back pay for overtime and missed meal and rest breaks. Some of the largest institutions employing underwriters in California are Citigroup (NYSE: C), J.P. Morgan(NYSE:JPM) Bank of America (NYSE:BAC) and Wells Fargo (NYSE:WFC).
Underwriters in California, if owed overtime pay, may collect up to 4 years of back pay under the liberal California overtime pay laws.
Labor law is complex; if you have any questions regarding your employment it is recommended that you contact a California labor law attorney who can help you understand your rights and in many cases will review your situation without charge.
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