Supreme Court Backs the Department of Labor: Interpretations by the DOL are Not Subject to A Notice and Comment Process

In March 2010 the DOL of Labor issued the Administrator’s Interpretation No. 2010-1 (the “Interpretation”), which provided an interpretation that employees who perform the “typical” duties of a mortgage loan officer employee do not satisfy the duties requirements of the FLSA’s administrative exemption. In so doing, the 2010 interpretation withdrew a 2006 opinion letter that reached the opposite conclusion. The Interpretation led to a number of new lawsuits which relied on the DOL interpretation to argue that Loan Officers were not exempt from overtime and should be paid time and half for all hours worked over 40 in a workweek.

In response, the Mortgage Bankers Association filed a lawsuit arguing that the Interpretation was invalid because the significant substantive change in its interpretation required a notice and comment period before it could be “final.” The lower court sided with the DOL, but the D.C. Circuit reversed and held that an agency like the DOL was required to have an interpretation that significantly departed from its precedent to follow notice and comment procedures. Accordingly, the Interpretation was stricken.

In a ruling on March 9, 2015 the Supreme Court reversed and held that  notice and comment procedures were only required for legislative rules (e.g. amend or modify a statute). Interpretation of a regulation or a statute did not have to go through this more rigorous process. The Court did note however that these rules would not be afforded the same deference and also commented that Congress often creates safe harbors for business that rely on such interpretations (there is one in the FLSA). The Supreme Court’s decision the DOL’s Interpretation regarding loan officers can once again be relied upon.

Maduff & Maduff are employment attorneys who specialize in wage theft and overtime, as well as discrimination and civil rights cases. Contact us if you are experiencing any wage or overtime issues, or have a concern with your employment rights.