Gina McKeen-chaplin v. Provident Savings Bank
2017 U.S. App. LEXIS 11950
| 9th Cir. | 2017Background
- Provident Savings Bank sells mortgage loans and resells funded loans on the secondary market; mortgage underwriters review loan files, verify borrower information, apply automated-system results to Provident and investor guidelines, and decide whether loans meet those guidelines.
- Underwriters may impose conditions, suggest alternate loan products (counteroffers), or request exceptions, but they work within Provident-established guidelines and must seek permission to deviate.
- After underwriting approval, other Provident departments complete funding and sell loans; separate quality-control and audit functions (outside QC, loan servicing QC, internal audit) also recheck samples of loans.
- Plaintiffs (Gina McKeen-Chaplin and a class of underwriters) sued for unpaid overtime under the FLSA; the district court initially denied summary judgment but later granted summary judgment to Provident, concluding underwriters fit the administrative exemption.
- The Ninth Circuit reviews de novo whether employees fall within the FLSA administrative exemption and gives deference to DOL regulations; the Court reverses and holds underwriters are non-exempt (entitled to overtime).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether mortgage underwriters qualify for the FLSA administrative exemption | Underwriters perform production work and thus are non-exempt; they implement guidelines and do not run the business | Underwriters perform administrative work (quality control/servicing the business) and exercise discretion, so they are exempt | Reversed: underwriters are production-side employees, not administratively exempt; entitled to overtime |
| Whether district court correctly relied on "quality control" to find exemption | QC processes are performed by other departments and outside vendors; underwriters do not set policy | Provident argued underwriting is a QC function tied to management/general business operations | Reversed: record shows QC largely performed elsewhere; district court erred legally in treating underwriting as management-related QC |
Key Cases Cited
- Bothell v. Phase Metrics, Inc., 299 F.3d 1120 (9th Cir. 2002) (adopts DOL short duties test and explains administrative-production dichotomy)
- Davis v. J.P. Morgan Chase & Co., 587 F.3d 529 (2d Cir. 2009) (holds mortgage underwriters are production employees, not administratively exempt)
- Lutz v. Huntington Bancshares, Inc., 815 F.3d 988 (6th Cir. 2016) (concludes mortgage underwriters can be administratively exempt for servicing the bank’s business)
- In re Farmers Ins. Exch., 481 F.3d 1119 (9th Cir. 2007) (analyzes claims adjusters and DOL guidance to assess administrative exemption)
- Bratt v. County of Los Angeles, 912 F.2d 1066 (9th Cir. 1990) (discusses standard of review for exemption determinations)
- Overnight Motor Transp. Co. v. Missel, 316 U.S. 572 (1942) (describes FLSA’s overtime purpose to limit excessive workweeks)