US Circuit Court of Appeals handed down the decision Wednesday, overturning a lower court ruling, according to a report by Business Insurance
The case involved underwriter Gina McKeen-Chaplin, who worked for California-based Provident Savings Bank FSB in 2012. McKeen filed a putative class-action suit asking the court to rule that mortgage underwriters are entitled to overtime under the Fair Labor Standards Act.
The US District Court in Sacramento dismissed the case, but a three-judge panel at the appeals court unanimously overturned the dismissal, according to Business Insurance
According to the appeals court’s ruling, underwriters are entitled to overtime because employees are only exempt from overtime if their primary duties are “related to the management or general business operations of the employer.” The 9th
Circuit agreed with a 2009 ruling by the 2nd
Circuit Court that underwriters do work that “falls under the category of production rather than administrative work.”
“Provident’s mortgage underwriters do not decide if Provident should take on risk, but instead assess whether, given the guidelines provided to them from above, the particular loan at issue falls within the range of risk Provident has determined it is willing to take,” the 9th
Circuit ruled. “Assessing a loan’s riskiness according to relevant guidelines is quite distinct from assessing or determining Provident’s business interests. Mortgage underwriters are told what is in Provident’s best interest, and then asked to ensure the product being sold fits within the criteria set by others.”
The appeals court remanded the case and issued instructions to enter summary judgment in favor of McKeen-Chapin, Business Insurance
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A federal court has held that mortgage underwriters are entitled to overtime.