Supreme Court upholds
180 degree switch on
Mortgage Loan Officers
In Perez v Mortgage Bankers Association, __US___, No. 13-1041 (March 2015), banks had sued over the failure of the US Department of Labor to publish for comment a 2010 interpretation of regulations governing exempt employees under the Fair Labor Standards Act. Perez and others were mortgage loan officers and the DOL interpretation was that they were not administrative exempts.
The banks claimed that the agency had violated the Administrative Procedure Act. The APA requires that any rule sought to be implemented by a government agency must first be published in the Federal Register for comment. According to a standard adopted by the DC Circuit Court of Appeals, this requirement also applied to interpretations that “deviated significantly” from a previously adopted interpretation. An agency is not required to follow the notice and comment procedure if a new interpretation is “interpretative.”
The 2010 DOL interpretation, which reasoned that officers were fundamentally performing tasks to generate revenue for the bank, had reversed a 2006 interpretation that such employees were administrative exempts.
The US Supreme Court, in a 6-3 ruling, refused to apply the DC Circuit rule that an interpretation of a regulation was in effect an amendment to the regulation. The Court did acknowledge that there may be occasions when an agency’s shifting of gears on an interpretation may be motivated by the desire to avoid the notice and comment provisions of the APA.
Perez therefore is non-exempt, the Wage and Hour Administrator being vindicated.