Brokers Fear Overtime Rules
by Lew Sichelman
New federal wage-and-hour regulations regarding overtime, an issue that wasn't even on the National Association of Mortgage Brokers' radar screen a year ago, have emerged as a top priority for the 27,000 member group. NAMB is still actively engaged in lobbying lawmakers in Washington on legislation to control abusive lending practices, reform of the Real Estate Settlement and Procedures Act and create a new regulator for the government sponsored enterprises. But with those and other measures bogged down in the legislative process, NAMB has turned much of its attention to the overtime rules that went into effect last August, rules that, if violated, call for fines association officials say could force small mom-and-pop loan originators out of business. Maintaining that the mortgage brokerage business was blindsided by the new Fair Labor Standards Act regulations regarding overtime pay, NAMB has asked the Department of Labor for an exemption for loan officers. Unless an exemption is granted, all employees, including loan officers and processors, must be paid overtime for hours worked beyond 40 in a seven-day period. Real estate agents are excused from the law's overtime provisions, largely because they are independent contractors who pay their own expenses and determine their own hours. And NAMB wants the same exemption for loan officers. "We're looking for a Realtor exemption," outgoing NAMB President Robert Armbruster said at the group's annual convention in Minneapolis earlier this month. "Many of our loan officers operate in the same way as Realtors. We'd like to see a total exemption if possible." Under the law, exemptions for overtime apply to administrative, executive and professional employees, but not to salaried workers. Commission-only employees do not necessarily qualify because of the method by which they are paid, either, nor do employees engaged in sales away from their employer's place of business. The actual job duties of the particular employee determine whether a waiver is warranted. Moreover, employees cannot waive their legal rights to overtime. Absent an exemption for loan officers, NAMB is asking for guidance from the Labor Department about how to comply with the rules. "When the law was created, the mortgage broker business wasn't even in existence yet," Armbruster told reporters. "The people who put mom-and-pop brokerages in business, the so-called attorneys and financial planners, never advised us that we had to comply with overtime rules." Noting that loan officers don't follow any particular work pattern -- some operate out of their homes and never come to the office, for example, while others work the phones and never leave their offices -- the NAMB officer said his members need help in determining how to adhere to the wage-and-hour rules. Penalties under the FLSA are severe. Violators can be required to pay back wages for up two years, or up to three years if the infraction is found to be willful. For willful violations, twice the back pay owed can be assessed. And there also are civil penalties of $1,000 per violation as well as criminal penalties for repeated or willful transgressions, plus attorneys' fees and costs. The fines can add up quickly, Armbruster pointed out, noting that few small brokerage firms have the wherewithal to write a five or six-figure check to Uncle Sam and remain in business. | 
