Self audits safeguard mortgage brokerages from DOL investigations

The Wage and Hour division of the U.S. Department of Labor (DOL) is investigating several mortgage brokerage firms throughout Western Pennsylvania and Western Virginia for possible violations of federal wage and hours laws, according to a notice issued by the DOL.

The notice was sent to mortgage brokerages to inform them of the situation and offer "assistance in complying with the law." A violator of the laws often must pay substantial back wages owed to his current and former employees.

The Wage and Hour division administers the Fair Labor Standards Act (FLSA), which requires that non-exempt workers (usually employees who are paid hourly) be paid at least minimum wage (currently $5.15 per hour) and receive overtime pay for hours worked in excess of 40 in a work week at a rate not less than time and one-half their regular rates of pay.

The notice outlines several common mortgage industry violations of the law, such as:

• Failure to guarantee minimum wage to loan officers for all hours worked each pay period, regardless of the level of earnings in prior or subsequent periods. Loan officers are entitled to receive minimum wage pay even if they're employed on a commission basis.

• Failure to pay overtime premiums to non-exempt employees who work more than 40 hours a work. Loan officers and loan processors are entitled to overtime pay even if they are employed on a salaried basis.

• Failure to accurately record all hours worked by employees.

The notice comes on the heels of the DOL's clarification of its overtime regulations, which cleared up some gray areas for those in the financial services industry. The revised rules exempted loan officers from overtime pay eligibility to make the rules regarding overtime pay more consistent with industry practice.

In reaction to the heightened awareness of overtime rights and responsibilities caused by the new regulations, the National Association of Mortgage Brokers (NAMB) advises mortgage industry employers to conduct self audits to determine whether their employees are properly classified as receiving overtime or not receiving overtime.