It has been established, with very few exceptions, that persons working as loan originators are entitled to overtime pay under federal and state wage laws. This includes but is not limited to: loan officers, mortgage consultants, and mortgage loan advisors.
Knowing this, many banks and mortgage companies implemented pay schemes which appear to comply with the law. However they appear, many of these schemes violate a loan originator’s compensation rights. Here are some common schemes that Donelon, P.C. has successfully litigated.
This is not a scheme, per se, if a loan originator is not required to record and report hours worked. But if that originator works over 40 hours in any workweek, and is paid on a pure commission basis, this employer is violating overtime laws.
This is the most common scheme used by employers. In this, the employer requires the originator to report hours worked, and pays a minimal hourly rate for these hours. Later, this hourly pay is deducted from future commission checks.
While paying an hourly draw against commissions is not against the law, two common schemes often violate this. This would include your situation if:
- Even though you work over forty hours in a week your employer only allows you to record forty hours or less.
- You accurately report all your overtime hours, but your employer only pays an overtime rate based on the hourly draw rate.
The law requires your overtime rate to be based on all compensation paid to you, including commissions. Therefore, in calculating your overtime hourly rate of pay, it should include all commissions you have been paid and not just the low hourly draw rate.
Employers often pay this incorrect lower overtime and later deduct that overtime pay from commissions. In that case, they are not paying you overtime. In reality, these schemes are paying you a pure commission only, which violates the law because no premium is being paid for working more than forty hours a week – the main purpose behind these wage laws.
Some employers have gotten creative by calling their loan originators “outside salespersons.” Under the law, workers who legitimately fit into this category are not entitled to overtime pay. However, this law was created under the premise of true outside sales persons, like door-to-door salespeople, who physically travel outside the office to generate their sales. Most loan originators do all their work over the phone, email, and internet. These communications are not “outside,” nor is working from a home office.
Reality beats paper
Many employers have all kinds of written policies stating they will pay overtime, and on each time sheet you submit you swear to its accuracy, and your failure to do so is a violation of policy. This does not matter if you your employer knew you were working overtime.
What actually happens is counts under the law. An employer cannot avoid this with simple paper policies.
Up to three years
Under the federal law, an employee can seek lost overtime pay from a current or former employer going up to two (and possibly three) years from when they assert their claims.