Perhaps no single exemption classification under the FLSA has been subject to as much scrutiny, or generated as much inconsistent authority from courts and the United States Department of Labor, as the classification of loan officers in the mortgage banking industry.  In 2013, the Court of Appeals for the D.C. Circuit invalidated the Department of Labor’s 2010 Administrative Interpretation stating loan officers were typically non-exempt because they do not meet the duties of the administrative exemption, which was contrary to prior opinion letters issued by the DOL.  Mortgage Bankers Ass’n v. Harris, 720 F.3d 966 (D.C. Cir. 2013).  Now, the Supreme Court has accepted review of that decision, presumably with an eye towards clarifying administrative rulemaking under the Administrative Procedure Act so that businesses can have some level of certainty vis a vis agency positions not only from the Department of Labor, but from all such federal agencies.  Any decision will likely be colored by Chief Justice Roberts’ view on the role of such agencies in the federal system of government.  See City of Arlington v. FCC, 133 S. Ct. 1863, 1877 (2013)(Roberts,J., dissenting)(“A court should not defer to an agency until the court decides, on its own, that the agency is entitled to deference. Courts defer to an agency’s interpretation of law when and because Congress has conferred on the agency interpretive authority over the question at issue. An agency cannot exercise interpretive authority until it has it; the question whether an agency enjoys that authority must be decided by a court, without deference to the agency”).

In Mortgage Bankers Association, the Court of Appeals for the D.C. Circuit relied on its own prior precedent to hold that the DOL had made a definitive interpretation and subsequent reversal on the exemption issue, and that to do so without Notice and Comment violated the Administrative Procedure Act.  The question posed by the Department on certiorari is “Whether a federal agency must engage in notice-and-comment rulemaking before it can significantly alter an interpretive rule that articulates an interpretation of an agency regulation.” Perez v. Mortgage Bankers Assoc., 2014 U.S. LEXIS 4275 (U.S. June 16, 2014).  It is  anticipated that the court will receive briefing not only from the Department of Labor and the Mortgage Bankers Association, but also a potentially wide range of “friend of the court” amicus groups with a policy stake in the outcome.

“More so than any single decision on a substantive FLSA issue, administrative flip-flopping is what’s bad for business.  Businesses, and even industries, cannot operate in a climate of perpetual uncertainty,” observed DOL Wage-Hour Administrator Paul DeCamp.