Supreme Court to Decide Department of Labor’s Freedom to Flip-Flop

On Monday, the Supreme Court accepted a petition for review two cases that may restrain administrative agencies, most notably the Department of Labor, in flip-flopping their interpretations of the law as control of those agencies passes between political parties.  The outcome of the case could hand employers a measure of certainty and stability as they try to interpret increasingly complex wage laws, or it could leave companies at the mercy of shifting political sands in designing policies and practices intended to last longer than one presidential administration.

The two cases stem from a lawsuit that the Mortgage Bankers Association filed to challenge the DOL’s reversal of its position on the overtime exempt status of mortgage loan officers.  In a 2006 opinion letter, the DOL opined that salaried mortgage loan officers met the FLSA’s administrative exemption because their primary duty was the administration of their employer’s financial services business (and not a form of sales), which included financial analysis that required the exercise of discretion and independent judgment regarding significant matters.  In April 2010, the DOL issued Administrator’s Interpretation 2010-1, which reversed the agency’s position, withdrew the 2006 opinion letter, and opined that mortgage loan officers generally were not subject to the administrative exemption because their primary duty was the sale of financial products.  The DOL’s 180-degree reversal on this issue was not based on any new law passed by Congress, any change in the governing FLSA regulations, or any apparent change in the duties of mortgage loan officers.  The Obama Administration simply preferred a more restrictive view on this issue than the Bush Administration had taken.  In the balance was the overtime eligibility of tens of thousands of workers and many millions of dollars in pending and threatened litigation.

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