Co-authored by Richard Alfred and Rebecca Bromet

On December 9, 2010, the Department of Labor filed an amicus brief  in the longstanding case of Henry v. Quicken Loans, Inc., Case No. 2:04-cv-40346-SJM-MJH (E.D. Mich.), which addressed, among other things, whether Administrative Interpretation (“AI”) 2010-1 applies retroactively. 

Since May 2004, the parties in Henry have been litigating the exempt status of Quicken’s mortgage loan officers (“MLOs”).  This case highlights the issues faced by parties and courts in the prevalent MLO exempt status litigation, especially in dealing with the changing winds at the DOL. 

On September 8, 2006, the DOL issued Opinion Letter FLSA 2006-31, which concluded that under the revised 2004 FLSA regulations, MLOs qualified for the administrative exemption.  Subsequently, the Henry Court granted summary judgment to Defendant Quicken, ruling Quicken was entitled to assert the “good faith defense” under 29 U.S.C. § 259 because of its reliance on FLSA 2006-31.  This ruling meant that even if Quicken misclassified its MLOs, it faced no liability for that misclassification for the period on or after September 8, 2006. 

Then, on March 24, 2010, the DOL reversed its opinion on the exempt status of MLOs in AI 2010-1 and withdrew Opinion Letter 2006-31.  In response to AI 2010-1, the Henry Court asked the parties to submit briefs discussing what impact, if any, the AI had on the case.  In September 2010, the Court asked the DOL to intervene and file an amicus brief. 

In its brief and at oral argument, the DOL explained its position that AI 2010-1 applied only prospectively and that FLSA 2006-31 controlled during the period between September 8, 2006 and March 23, 2010.  Because AI 2010-1 “unambiguously represents a substantive change in the [DOL’s] interpretation of its administrative exemption regulations,” according to the DOL amicus brief, it applies only prospectively. 

At oral argument, the Court explained to the DOL that it had already granted summary judgment to the Defendant on the issue of its good faith reliance on FLSA 2006-31.  The DOL recognized that an employer might have misclassified its MLOs under the interpretation of the administrative exemption explained in AI 2010-1, but nonetheless escape liability for the period before it issued AI 2010-1 by establishing it relied in good faith on withdrawn Opinion Letter FLSA 2006-31. 

After the DOL amicus brief and oral argument, on December 30, 2010, the Plaintiffs moved for reconsideration of the Court’s previous rulings on summary judgment on several issues, including the issue of Quicken’s good faith reliance on Henry v. Quicken Loans, Inc.  The Defendants brief is due on January 18, 2011, and the Plaintiff’s reply is due on January 25, 2011.  The case is on Judge Stephen K. Murphy, III’s, trial calendar for February 2011.