A Michigan jury last week ruled that Quicken Loans Inc., one of the nation's largest mortgage banking firms, does not have to pay nearly 350 plaintiffs overtime for extra hours they worked at the company.
The ruling not only saves Quicken an estimated $10 million in "half-time" payments, it sets a precedent for owners of mortgage banking firms, including nonbanks and depositories alike.
Quicken is the nation's sixth-largest residential retail lender, according to National Mortgage News' Quarterly Data Report.
At press time, an attorney with Nichols Kaster, the firm representing the plaintiffs, said they would appeal.
The trial, which started Feb. 8, ends a long process for a case filed in 2004.
Although Quicken scored a major win on the minimum wage/overtime issue, it may not be entirely smooth sailing ahead for the industry.
Ken Markison, associate vice president and general counsel of the Mortgage Bankers Association, noted that although the jury agreed with Quicken that the company properly used an allowable exemption under federal law, he warned that this is just "one decision in one court."
Speaking Wednesday morning on a panel at the MBA's Regional Conference in Atlantic City, N.J., Markison noted that the trade group is suing the Labor Department over its interpretation of the Fair Labor Standards Act.
Markison said that he recently heard a response from the Department of Justice on the case but that he did not expect a quick resolution on the issue.
"It is anybody's guess on how it will come out ultimately," he warned.
Ari Karen, an attorney with Offit Kurman who specializes in labor law, called the Quicken outcome a huge decision and one of the first which has come out positively for the industry.
A mortgage banker and broker from California asked the panel at the MBA conference a question about the independent contractor versus employee issue now that the Federal Housing Administration has done away with the "mini-Eagle."
Karen said there is a conflict of what might be considered to be an independent contract and the oversight required for loan officers under the SAFE Act.
He used the example of a house painter someone hires but has little oversight of.
The Labor Department, Karen added, is leery of defining loan officers as it does independent contractors.
Markison said the new layers of liability for the industry make it even more challenging to go in the direction of using independent contractors.
