Sixth Circuit Upholds Quicken Loans’ Mortgage Bankers’ Administrative Exempt Status

On October 25th, just two weeks after hearing oral arguments, the Sixth Circuit Court of Appeals in Ryan v. Quicken Loans upheld the jury verdict in which the jury, after a five week trial, held that Quicken Loans’ mortgage bankers fell within the administrative exemption to overtime under the Fair Labor Standards Act.  While so holding, the Court recognized that in some cases — such as the instant case — the issue of whether employees are exempt can be a factual question for a jury to decide.  Applying the elements of the administrative exemption under 29 CFR 541.200(a), the Court concluded that there was “ample evidence” for the jury to conclude that a) the employees’ primary duties were administrative in nature, as opposed to sales in nature, and b) the employees exercised the requisite independent judgment and discretion to qualify for the exemption.

While this case essentially boiled down to whether the high threshold for overturning a jury verdict was met (and it wasn’t) — which may account for how quickly it was decided post-argument, it also sheds light on the reality that cases of this kind may entail substantial factual issues.   If a case cannot be resolved at the summary judgment stage, that reality may also help establish that the case is also not appropriate for collective action certification.  Employers may welcome this outcome.

It is possible that this holding may have limited value, though.  After the case commenced, Quicken Loans converted the employees at issue to non-exempt status.   As a result, its damages exposure was somewhat limited.  Further, after the case was filed, the Wage and Hour Division issued its first “Administrator Interpretation” which essentially concluded that mortgage loan originators and similar employees are generally not entitled to be treated as administratively exempt under the FLSA since a) their jobs are primarily sales related, and b) the exemption cannot apply if their judgment and discretion is applied while assisting individuals in making decisions about their personal finances, as opposed to their business interests.  This Administrator Interpretation was not a major part of this litigation.  It is not yet known if this Interpretation is a distinction which will make a difference in future litigation, but it surely will be factor needing to be addressed by the courts.

To be sure, this decision should give banks some comfort in that it may be  easier, at least to some degree, for these employees to fall within the administrative exemption, particularly if the outside sales exemption is not applicable.  That said, the analysis will be extremely fact dependent and employers will still face an uphill fight on this front due to the Department of Labor’s hostility to the application of this exemption to these employees.  Further, it must be appreciated that the testimony of many of the witnesses in this case was key to the jury’s verdict in that many witnesses refused to concede that their jobs were not primarily for the making of sales.  Well written job descriptions, making sure that these employees perform real administrative responsibilities, and good testimony will be important in order for other banks to have a chance to obtain similar outcomes.

Robert A. Boonin, Butzel Long


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