by Brian Mahany
We have been following the overtime pay debate involving loan officers and the financial service industry in general. Presently we have several cases brought on behalf of present or former loan officers. In this economy, it’s not unusual to work long, long hours and for very little pay. Employees say they are entitled to at least minimum wage and to pay be paid for their overtime. The banks and lenders claim they are exempt or even that their loan officers are independent contractors and not employees (more on that below.)
Recently, the United States 6th Circuit Court of Appeals rules in favor of one lender. Arguments are expected in another industry case pending in the D.C. Circuit next month.
The Mortgage Bankers Association is leading the charge on behalf of lenders and mortgage companies. They say that selling mortgages is an exempt activity not entitled to overtime. The United States Department of Labor disagrees. The government won the first round at trial. That case is on appeal with arguments scheduled for March 22nd.
The decision will only effect loan officers. Other financial workers are still subject to overtime laws.
Another front in the battle concerns “net branches.” When convenient, some lenders like to claim the branches and their personnel are independent contractors yet that often is a violation of HUD regulations.
By pushing the costs of running a branch to individual managers, there is an increased risk of poor quality loans coming from financially strapped branches. Operating an illegal net branch (sometimes called a shadow branch) is a HUD violation and may be grounds for a False Claims Act (whistleblower) suit. Classifying workers as independent contractors may also be a violation of IRS rules and the Fair Labor Standards Act.
We know that there are many illegal net branch operations and overtime violations too. The fraud lawyers at Mahany & Ertl represent loan officers, processors and underwriters. We do not represent lenders. If you have information about an illegal shadow branch operation, call us. Whistleblowers can receive up to 30% of whatever penalties are levied by the government. [The largest false claims case in the U.S. against a lender was brought by our firm; HUD’s $2.4 billion case against Allied Home Mortgage for running in an illegal net branch operation.]
We also represent loan officers and workers in overtime pay claims against lenders, stockbrokers and banks.
For more information, contact attorney Brian Mahany at or by telephone at (414) 704-6731 (direct). All inquiries are protected by the attorney – client privilege and kept in strict confidence.
Mahany & Ertl – America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine; Minneapolis, Minnesota and San Francisco, California.
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