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Circuit Court Upholds Mortgage Underwriters’ Rights to Overtime Pay
On July 5, 2017, the 9th U.S. Circuit Court of Appeals struck a major blow for the rights of employees to receive overtime pay. The court ruled that a group of mortgage underwriters working for a California bank were entitled to overtime pay because, in the court’s opinion, the employees performed production rather than administrative work.
An Important Reversal
The circuit court overturned the 2015 ruling of a U.S. District Judge who said that mortgage underwriters working for Provident Savings in California had performed administrative duties. According to the Fair Labor Standards Act, employees who perform executive, administrative, or professional roles are exempt from overtime pay.
However, the circuit court reversed that decision, upholding the employees’ argument that they simply applied corporate guidelines when processing applications for mortgages. The district judge had ruled that the employees were responsible for performing administrative quality control duties, but the circuit court accepted evidence that outside firms and other Provident employees performed those duties, not the mortgage underwriters.
The three-judge circuit court panel ruled unanimously in favor of the employees. A group of current and former Provident employees filed a class action lawsuit against the bank, alleging that they routinely worked more than 40 hours a week – often working during rest breaks and meal breaks – and never received any overtime pay. They claimed the bank mistakenly classified them as exempt from the FLSA’s overtime pay requirements.
This latest ruling is not only a reversal from that of the district judge, but also differs from a ruling the 6th U.S. Circuit Court of Appeals made in a separate case in 2016. In that case, the court ruled that underwriters perform administrative tasks because they decide when a bank should assume a credit risk.
If you work as a mortgage underwriter and you feel you haven’t been paid the overtime compensation to which you’re entitled, Baron & Budd may be able to help. Please complete our contact form or call 866-495-1255 for more information.