Validity of USDOL 2010 White Paper on Loan Officers Being ChallengedDecember 26, 2012 – Articles Lexology
FLSA regulations (from 2004) postulate that a financial services employee can fit administrative exemption if their main job duty is not the selling of financial products. In March 2010, the US Department of Labor issued a “white paper” in which it went into great detail, explaining the circumstances under which these financial services employees could be exempt.
The Mortgage Bankers Association (MBA) has now taken this initiative to task, claiming that a lower court decision affirming the white paper should be overturned. The case is entitled Mortgage Bankers Association v. Solis and is before the Court of Appeals for the District of Columbia Circuit. The Association argues that the agency violated the Administrative Procedure Act and a long line of cases holding that along with others, the DOL must go through the usual process of notice-and-comment rulemaking when the agency intends to “clarify” or “interpret” a regulation. The MBA claims that the 2010 interpretation conflicts with the holding (by the DC Circuit) in Paralyzed Veterans of America v. D.C. Arena LP. In that case, the Court ruled that “once an agency gives its regulation an interpretation, it can only change that interpretation as it would formally modify the regulation itself: through the process of notice and comment rulemaking.”
The new interpretation triggered a number of class action lawsuits alleging misclassification and claiming overtime. The MBA suit, filed in January 2011, contended that the 2010 interpretation illegally reversed the DOL’s earlier interpretation, but it deprived interested parties the right/ability to comment. That violated the Administrative Procedure Act. The district court judge, however, granted summary judgment to the DOL, finding that the 2010 interpretation was not inconsistent with 2004 regulations and was not arbitrary, capricious or an abuse of discretion.