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Loan Officers, Home Mortgage Consultants, External Home Loan Consultants, Account Managers, Account Executives, Retail Mortgage Account Executives, and bank officers holding similar job titles engaged to sell financial products in the lending industry are often subject to improper overtime and expense reimbursement practices and policies.
For example, Loan Officers paid strictly on a non-guaranteed commission basis and working predominately at branches, call centers, home offices, or on-site at construction developments are generally entitled to overtime pay. The amount owed is calculated by taking total commissions, dividing by the number of hours worked, and taking half that amount times the number of overtime hours. Example using 10 hours of overtime (50-hour week): 15 loans x $150 per loan = $2,250 / 50 hours = $40.00 / .5 = $20.00 per overtime hour x 10 hours = $200 owed to the employee.
Commission guarantees or draws which do not cover the minimum requirements of $455 per week qualify employees for overtime pay, and pay totaling less than $7.50 per hour in a given week qualifies employees for minimum wage payments.
Loan Consultants who perform outside sales work are owed overtime if they spend less than 50% of their time engaged in actual outside sales and related activity. Outside sales does not include sales made by mail, telephone or the Internet unless such contact is used merely as an adjunct to in-person sales visits with clients. Thus, any fixed site, whether home or office, used by a salesperson as a headquarters or for telephonic solicitation of sales is considered one of the employer’s places of business, even though the employer is not in any formal sense the owner or tenant of the property and does not constitute time engaged in outside sales. Sales that originate by telephone generally do not qualify as outside sales.
The nature of business in the lending industry is such that loan officers often incur expenses for automotive, cell phone, and marketing costs in performing their job duties securing loans for their employers. Yet commissioned bank home loan sales employees and others in both retail and wholesale groups are often not permitted as part of their compensation package to submit expense reports though they pay out hundreds of dollars per month in expenses generating business for the lender.
Generally, in California, employees must be reimbursed for all expenses incurred in connection with their work. This cannot be altered by contract; that is, the employer cannot require employees to agree to pay for expenses incurred in discharging job duties and cannot put a weekly or monthly “cap” or dollar limit on expenses and refuse to pay reasonable and necessary expenses above the limit. Employees are entitled to recover un-reimbursed expenses dating back up to four years, with interest.
Some examples of covered expenses include:
- training costs
- seminar costs
- telephone charges
- mailing costs
- office supplies
- cell phone
- business development
- business lunches
- office equipment
- wages of the support staff
- costs associated with transaction errors
- costs to settle disputes with customers
- other necessary business-related costs or expenses that resulted from your employment
Loan officers often are illegally required to pay portions of their commissions to Production Assistants or Associates. Employers may not deduct any sums from an employee’s wages to pay salaries, bonuses, or wages of other employees. Also, companies are not permitted to make deductions from commissions or other wages to pay for uncollected third-party fees (appraisal fees, credit reports, etc.), transaction lock rate shortages or differentials, negative pricing exceptions, or loan lock rate extension fees. Employees are entitled to recover improper deductions dating back up to four years, with interest.