Yesterday, the United States Supreme Court issued its ruling in of Perez v. Mortgage Bankers Ass’n, No. 13-1041, 2015 WL 998535, at *1 (U.S. Mar. 9, 2015). The facts leading to this case were explained by the Court as follows:
In 1999 and 2001, the Department of Labor’s Wage and Hour Division issued letters opining that mortgage-loan officers do not qualify for the administrative exemption to overtime pay requirements under the Fair Labor Standards Act of 1938. In 2004, the Department issued new regulations regarding the exemption. Respondent Mortgage Bankers Association (MBA) requested a new interpretation of the revised regulations as they applied to mortgage-loan officers, and in 2006, the Wage and Hour Division issued an opinion letter finding that mortgage-loan officers fell within the administrative exemption under the 2004 regulations. In 2010, the Department again altered its interpretation of the administrative exemption. Without notice or an opportunity for comment, the Department withdrew the 2006 opinion letter and issued an Administrator’s Interpretation concluding that mortgage-loan officers do not qualify for the administrative exemption.
Perez v. Mortgage Bankers Ass’n, No. 13-1041, 2015 WL 998535, at *9 (U.S. Mar. 9, 2015)
While the majority of the opinion revolves around a government agency’s ability to interpret its own rules, the impact to the Mortgage Bankers Association (“MBA”) is that mortgage-loan officers are now subject to the overtime provisions of the FLSA. However, as the Court points out, the MBA would have a defense to any FLSA liability that occurred before the agency reversed its interpretation.
As amended by the Portal–to–Portal Act of 1947, 29 U.S.C. § 251 et seq., the FLSA provides that “no employer shall be subject to any liability” for failing “to pay minimum wages or overtime compensation” if it demonstrates that the “act or omission complained of was in good faith in conformity with and in reliance on any written administrative regulation, order, ruling, approval, or interpretation” of the Administrator of the Department’s Wage and Hour Division, even when the guidance is later “modified or rescinded.” §§ 259(a), (b)(1).
This shows why it is important for employers to not only understand the FLSA, but the rules and interpretations promulgated by the Department of Labor. By understanding and following these rules, interpretations, and opinions, an employer reduce its potential FLSA liability. At Smith & Associates, we provide all aspects of Employment Related Legal Representation to Employers including: Compliance Review, Litigation, Appeals, Employment Contracts, Handbook and Policy Drafting, and Unemployment Appeals. If you need held with employment related law issues, contact us for a free consultation.