Federal Court Declares That Mortgage Underwriters Are Non-Exempt
August 21, 2017

Compliance Bulletin

The 9th Circuit Court of Appeal ruled that a California bank’s residential mortgage underwriters are entitled to overtime compensation under the federal Fair Labor Standards Act (“FLSA”). It found that the underwriters are not exempt under the FLSA’s “administrative” exemption, applicable to employee whose primary duty, among other things, is the performance of “office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers.” The court applied a rule known as the “administrative-production” dichotomy and determined that the underwriters’ work is analogous to working on a manufacturing production line.

The application of this rule has led some courts to limit availability of the administrative exemption to high level employees at the department or enterprise level. Thus even a highly compensated office worker in a complex field who works with little supervision might be deemed non-exempt because his or her work can be analogized as part of a production line of a manufacturing firm.

CBA is supporting the bank’s petition for certiori with the U.S. Supreme Court by filing an amicus brief. See CBA’s Regulatory Compliance Bulletin for more information.