I recently successfully represented a mortgage loan officer who was instructed to only record 40 hours per week by his employer but was working additional time off the clock. The Supreme Court has ruled that loan officers are non-exempt employees who are eligible for overtime. Typically, mortgage loan officers or loan originators are paid a base hourly rate, plus commissions. The question then becomes, how is overtime pay calculated? Is it based on the hourly rate, commissions, or both? The answer is both.
“The general overtime pay standard in section 7(a) requires that overtime must be compensated at a rate not less than one and one-half times the regular rate at which the employee is actually employed.” 29 C.F.R. § 778.107. “The regular hourly rate of pay of an employee is determined by dividing his total remuneration for employment in any workweek by the total number of hours actually worked by him in that workweek for which such compensation was paid.” 29 C.F.R. § 778.109. The regulations further provide:
Commissions (whether based on a percentage of total sales or of sales in excess of a specified amount, or on some other formula) are payments for hours worked and must be included in the regular rate. This is true regardless of whether the commission is the sole source of the employee’s compensation or is paid in addition to a guaranteed salary or hourly rate, or on some other basis, and regardless of the method, frequency, or regularity of computing, allocating and paying the commission.
29 C.F.R. § 778.117.
For example, if a mortgage loan officer worked 50 hours per week but only recorded 40 hours, was paid $10 per hour for those 40 hours ($400), and earned $500 in commission during that week, his/her regular rate of pay is $900 ($400 +$500) divided by 50 hours, or $18/hr. For every hour worked over 40 during the week, the overtime rate is one and one-half times $18 per hour, or $27 per hour. The total overtime pay due in that example is 10 hours x $27 = $270. Calculating overtime correctly makes a big difference in the value of an FLSA claim.
If you are being asked to work off the clock, or you think your employer is not calculating your overtime correctly, contact Zenner Law, PLLC.