Recently, I heard in the news about a two million dollar settlement from a single business unit of large bank for minimum wage and overtime violations. On top of this, I’ve received several calls from clients on this very same issue in recent weeks. Loan officers, in particular, pose a high risk of triggering non-compliance with the Department of Labor due to their complex compensation structures. Why are mortgage companies dealing with this problem?
The first thing is to recognize the reason why minimum wage and overtime violations are still such a challenge. The Fair Labor Standards Act was enacted in 1938, before the contemporary model of mortgage lending was really developed. At this time, the thinking was to solve unemployment by incentivizing companies to hire two people to work forty hours per week rather than one person to work eighty. The problem is that, eighty years later, the economy is different but the laws are the same.
Today, although it may seem absurd, mortgage industry executives must look at the compensation of their loan officers through the lens of the 1930s. In order for companies to avoid getting into hot water with the Department of Labor on the FLSA, they must take the law into consideration as it is–not as it should be. For starters, think about the provisions you build into the contracts when you hire loan officers. How you structure the contract upon hiring your loan officers can and will determine how the Department of Labor views the compensation expectations of your loan officers. The best way to avoid non-compliance is to be prepared from day one.
ABOUT ARI KAREN
email@example.com | 240.507.1740
Ari Karen is an experienced litigator and speaker who has focused his practice in representing financial institutions in both government investigations and litigation before state and federal trial and appellate courts nationwide. Mr. Karen’s practice is diverse, representing clients on matters concerning banking regulations, Dodd Frank financial reform laws, contractual disputes, employment and labor statutes, wage-hour class actions, employment discrimination and fair lending matters, whistleblower complaints and non-competition claims, among others.
ABOUT OFFIT KURMAN
Offit Kurman is one of the fastest-growing, full-service law firms in the Mid-Atlantic region. With over 120 attorneys offering a comprehensive range of services in virtually every legal category, the firm is well positioned to meet the needs of dynamic businesses and the people who own and operate them. Our eight offices serve individual and corporate clients in the Maryland, Delaware, New Jersey, and Northern Virginia markets, as well as the Washington DC, Baltimore, Philadelphia, and New York City metropolitan areas. At Offit Kurman, we are our clients’ most trusted legal advisors, professionals who help maximize and protect business value and personal wealth. In every interaction, we consistently maintain our clients’ confidence by remaining focused on furthering their objectives and achieving their goals in an efficient manner. Trust, knowledge, confidence—in a partner, that’s perfect.
You can connect with Offit Kurman via our Blog, Facebook, Twitter, Google+, YouTube, and LinkedIn pages. You can also sign up to receive Law Matters, Offit Kurman’s monthly newsletter covering a diverse selection of legal and corporate thought leadership content.
MARYLAND | PENNSYLVANIA | VIRGINIA| NEW JERSEY | NEW YORK | DELAWARE | WASHINGTON, DC