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Neil E. Klingshirn
Melanie V. Miguel
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LOAN OFFICER OVERTIME FAQ'S
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Are loan officers entitled to overtime
pay? |
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Yes, with limited exceptions. The general rule is that employers
must pay employees for overtime hours, unless the employee is
“exempt” from overtime. The United States Department of Labor (“DOL”),
which regulates overtime compensation, did not consider loan
officers exempt from overtime before August 23, 2004. The DOL
changed its rules as of that date to allow an exemption for loan
officers, but only if the employer pays the loan officer a
salary of $455.00 or more each week. |
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Why did I not receive overtime pay even though I worked more
than 40 hours a week? |
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Good question. First, it is possible that you were exempt from
overtime. For example, if you performed “executive” type duties,
such as supervising other employees, you may have fallen under
the “executive” exemption from overtime pay.
Another possibility is that you were entitled to overtime pay,
but your employer simply did not pay it. If that was the case
during the last three years, you may have a claim for unpaid
overtime compensation. |
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How could
my employer fail to pay overtime if I was entitled to it? |
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Employers might not pay overtime for the same reason people
drive over the speed limit - they may be willing to take the
chance that they will not get caught. In some cases,
however, employers may not realize that
they
have to pay overtime to certain employees. If
an employer can prove that they had a good faith basis for
believing that they did not owe overtime, they may reduce
the amount that they must pay, but they cannot avoid the
overtime pay obligation altogether.
For
employers who wilfully choose not to pay overtime, the law
allows employees to collect an extra year of unpaid
overtime, plus an additional amount equal to the overtime
owed. In other words, for employers who take their chances
but get caught, the law allows employees to recover as much
as three times more
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What exactly are the
exemptions to overtime pay? |
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The Fair Labor Standards Act (FLSA), the law the requires
overtime pay, has quite a few exemptions. The ones that matter
most to a discussion about loan officers are the administrative,
executive and retail or service industry commissioned sales
exemptions. |
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Do the new overtime rules
now say that loan officers are not entitled to overtime? |
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Not exactly. The new rules say that loan officers can be exempt
from overtime, but only if the employer pays them, on a salary
basis, at least $455.00 each week. |
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What does it mean to be
“paid on a salary basis?” |
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An employee is paid “on a salary basis” if he
regularly receives each pay period a predetermined
amount constituting all or part of his compensation,
which amount is not subject to reduction because of
variations in the quality or quantity of the work she
performed. The clearest example is a guaranteed
salary of, say, $500.00 per week.
The salary may be all or part of the employee's
compensation. In other words, additional
compensation besides the salary, such as commissions
on top of a salary, is still pay “on a salary
basis,” so long as the employee receives at least
the minimum salary every pay period. An example of
this type of compensation arrangement is an
arrangement that pays the guaranteed salary or
commission earnings for that pay period, whichever
is greater. So long as the employer pays the salary
in the weeks in which the employee earns less than
$455 in commissions, the employer has paid the loan
officer on a salary basis.
The key, however, is that the employer must agree
beforehand to pay the minimum salary of $455.00 per
week. Thus, if an employee earning pure commissions
always earns more than $455.00 per week, but his pay
is tied solely to production, he is probably not
paid on a salary basis. This employee’s case becomes
clearer if he receives less than $455.00 per week
during a pay period because he did not earn enough
commission income for that pay period. |
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If I only earn
commissions, what is my overtime rate? |
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If you only earned commissions, without any guaranteed salary,
you are probably entitled to overtime. Your overtime rate, which
is called the “regular rate,” is the total amount that you earn
during a pay period divided by the total number of hours that
you worked. Thus, if you earned $2,500 in a two week pay period
and worked 55 hours the first week and 59 hours the second week,
your regular rate is $2,500 divided by 114 hours, or $21.92. |
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How is my
overtime calculated? |
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Generally you are entitled to 1.5 times of your regular rate
of pay for every hour of overtime that you work. However, since
the regular rate of pay is based upon the total hour that you
work, INCLUDING OVERTIME HOURS, it treats you as if you already
received the regular rate of pay for the overtime your worked.
For example, lets look to the example above. Your regular rate
of pay is $21.92 her hour. This rate is for ALL 144 hours that
you worked. That includes the 80 straight time hours plus the
34 overtime hours. Thus, you are only entitled to the ".5" part
of the "1.5" times equation.
To complete this example, if you receive $2,500 in commission
earnings in a pay period in which you worked 80 straight time
hours plus 34 overtime hours, you would get $2,500.00 plus
($21.92/2) x 34 hours, or $2,500.00 plus $372.64, or $2,872.64.
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How much
can I recover in unpaid overtime? |
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How much
you recover in unpaid overtime depends on three factors:
- The
number of overtime hours that you worked in each pay
period;
- The
amount you earned in each pay period; and
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Whether your employer's failure to pay overtime was
"willful" or not.
If your
employer correctly pays you overtime when you earn it, you
would receive the overtime as calculated in the above
example. That is, you would receive $372.64 for each pay
period that you worked the same number of hours and earned
the same amount as in the example. If you earn and work the
same amount for an entire year, you would earn nearly
$10,000 that year in overtime.
If your employer failed to pay you the overtime owed because
it can prove that, in good faith, it believed that you were
not entitled to it, then you could recover unpaid overtime
from the last two years. You can also recover your
attorneys' fees.
If, however, your employer had no good faith basis for
failing to pay you overtime, then you should be able to
recover unpaid overtime for the last three years. In
addition, the court will likely double the amount as
“liquidated damages” and you are generally entitled to an
award of attorneys’ fees.
In most cases the employer cannot prove a good faith belief,
which requires something such as reliance on a DOL opinion
letter. Sticking with the above example and assuming that
you earned, on average, $372.64 each two week pay period for
three years, you could recover $29,250 in unpaid overtime,
another $29,250 as liquidated damages and an award of
attorneys fees, or $58,500 plus your attorneys fees.
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What should I do if I
believe I am entitled to unpaid overtime? |
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You should contact an attorney or the DOL quickly, especially if
you no longer work for that employer. You can only recover
overtime for, at most, the three years prior to filing suit. If
you wait 18 months to file suit, you can only recover the
remaining 18 months of unpaid overtime.
You should find out first, whether you are likely exempt from
overtime or not and, if not, how much you would be entitled to
receive.
If you are a loan officer who was not paid on an hourly basis
during the last three years, contact us for a brief evaluation
of your claim. If it appears that you have a valuable claim for
unpaid overtime, we can discuss your options for pursuing it.
Generally speaking, when we accept a case to recover your unpaid
overtime, you owe us a fee only if we recover overtime for you.
If you would like to find out more about a claim for overtime,
call or email us at: |
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Neil Klingshirn
Board Certified Employment Law Specialist
Fortney & Klingshirn
4040 Embassy Parkway
Suite 280
Akron, Ohio 44333
Neil@fklaborlaw.com
330.665.5445.
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Melanie V.
Miguel
Board Certified Employment Law Specialist
Melanie V. Miguel
614 Superior Avenue W.
Rockefeller Bldg. 15th Floor
Cleveland, Ohio 44113
mvm@melanie-miguel.com
216.621.2030. |
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