Following recent court decisions and actions by the federal Department of Labor (DOL), financial services employers need to pay close attention to the exemption classification of employees. In particular, the Second Circuit Court of Appeals in Davis v. J.P. Morgan Chase found that J.P. Morgan's financial underwriters were nonexempt "production workers" who did not satisfy the requirements of the federal administrative exemption from overtime. Shortly thereafter, the DOL issued its first "Administrator's Interpretation" regarding the exemption classification of mortgage loan officers, stating that employees who "perform the typical job duties of mortgage loan officer" are nonexempt employees whose primary duty consists of inside sales. Both the court's decision in Davis and the DOL's Administrator's Interpretation are arguably inconsistent with DOL regulations, prior DOL opinion letters, and other court decisions, and focus heavily on the outdated "administrative/production" dichotomy to support their conclusions. This Littler Report examines the DOL's administrative exemption regulations, including those relating to the financial services industry, the origins and application of the administrative/production dichotomy in various contexts, prior DOL opinion letters and pre-Davis cases, providing a substantive critique of the Davis decision and the DOL's Administrative Interpretation as well as an analysis of their potential impact.

To read the Littler Report, please click here.