DOL Seeks Supreme Court Review of the Invalidation of its Mortgage Loan Officer Overtime Ruling

By: Thomas H. Petrides, John L. Longstreth

On February 28, 2014 the Department of Labor, represented by the Solicitor General, petitioned for Supreme Court review of an appellate decision invalidating a 2010 DOL administrative ruling that determined mortgage loan officers generally do not qualify for the administrative exemption from overtime under the Fair Labor Standards Act. The U.S. Court of Appeals for the D.C. Circuit held last July that a prior administrative ruling issued in a 2006 DOL Opinion Letter was established law and that DOL was therefore required to use notice and comment rulemaking to change it. The 2006 Opinion Letter had previously determined that loan officers could qualify for the administrative exemption and therefore would be ineligible for overtime pay based on that exemption. The Solicitor General argues that requiring notice and comment for an interpretive rule in any circumstances is inconsistent with the Administrative Procedure Act, which exempts interpretive rules from notice and comment requirements, and therefore the 2010 interpretation should be reinstated. The petition also argues that the D.C. Circuit decision is inconsistent with the rulings of at least two other federal appeals courts.

The Supreme Court frequently, but not invariably, accepts cases in which the Solicitor General seeks review. Opposition to the petition is due in 30 days (unless the time is extended) and the Supreme Court will decide shortly after that opposition is filed whether to take the case. That decision will almost certainly be made before the Supreme Court ends its term in June. If the Supreme Court were to take the case, it would be heard and decided next term.

The filing of the Solicitors General’s petition seeking review does not stay the lower court rulings. Following the July decision, interveners in the case had sought review by the entire panel of the appeals court, but that petition was denied in October 2013. The district court then issued an order on remand from the court of appeals that the 2010 DOL interpretation is vacated and set aside, and therefore of no continuing effect. If the Supreme Court decides to take this case, the issue will be whether the 2010 DOL interpretation should remain vacated or not. However, the court will not be deciding the ultimate issue of whether mortgage loan officers may qualify for the administrative exemption.