Huntington Bancshares Defeats Overtime Action

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By Lawrence E. Dubé

March 2 — A divided U.S. Court of Appeals for the Sixth Circuit March 2 held that residential loan underwriters employed by Huntington Bancshares Inc. are administrative employees who are not eligible for overtime compensation under the Fair Labor Standards Act.

The decision rejects the argument that underwriters perform a “production” function and stresses their importance in assisting an employer in critical judgments about customer credit and investment risk.

In determining whether Huntington should approve home loans, underwriters use discretion and independent judgment to assist in “running and servicing” the bank, Judge Richard F. Suhrheinrich wrote for the court. The Sixth Circuit affirmed a lower court's rejection of a collective overtime action brought on behalf of the underwriters.

Judge Danny J. Boggs joined in the court's opinion, but Judge Helene N. White dissented. White said there were questions about the independent judgment of the underwriters that made summary judgment in their case inappropriate.

Loan Underwriters Sought Overtime Pay

According to the decision, former employees Gregory Lutz and Dorothy Becker filed an FLSA action on behalf of the Ohio-based bank's underwriters.

The U.S. District Court for the Southern District of Ohio certified a class of underwriters who worked with residential loan products, but it later granted summary judgment to the bank. That court concluded the underwriters were overtime-exempt employees under the FLSA, 29 U.S.C. § 213(a)(1), and Labor Department Regulation, 29 C.F.R. § 541.200(a).

The employees appealed, but the Sixth Circuit affirmed the lower court ruling.

Central Role in Loan Reviews, Approvals

Suhrheinrich said Huntington's underwriters review the loan files of residential applicants and consult guidelines that “span thousands of pages.”

The written materials include manuals, policies and procedures, but the court said underwriters have discretion to “take actions beyond the Guidelines.”

Huntington underwriters can rely on their personal experience or judgment in making risk assessments about loan applications, and they have the authority to recommend that customers consider alternative loan products when they don't qualify for the loans they originally sought.

Court Finds Administrative Duties

Section 207(a)(1) of the FLSA generally requires payment of overtime to employees who work more than 40 hours in a week, but overtime protection does not extend to an “administrative” employee who is:

(1) Compensated on a salary or fee basis at a rate of not less than $455 per week;

(2) Whose primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and

(3) Whose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.


Suhrheinrich said the Ohio underwriters met the duties requirements of the administrative exemption “because they assist in the running and servicing of the Bank’s business by making decisions about when Huntington should take on certain kinds of credit risk, something that is ancillary to the Bank’s principal production activity of selling loans.”

Like claims investigators and insurance adjusters who have been found exempt in other Sixth Circuit decisions, the Huntington employees don't generate business or sell products but assist their employer in its business by evaluating the risk presented by loan applications, Suhrheinrich said.

Role Not One of ‘Production.'

The court rejected the argument the underwriters are “production” employees who were entitled to the overtime protections of the federal wage and hour law.

“In this circuit,” he said, “the focus is on whether an employee helps run or service a business—not whether that employee's duties merely touch on a production activity.”

The appeals court acknowledged that the underwriters worked under detailed written guidelines, but it said they “did not establish strict requirements that eliminated a writer's ability to exercise discretion and independent judgment.”

Dissent Calls Summary Judgment Unwarranted

Dissenting, White said the underwriters “make no holistic decisions” about loan applications. Instead, they function as “links in a chain” of loan reviews and approvals, she wrote.

Finding that “analyzing credit information against a manual” is not the type of “analysis” that supports a finding of exempt status, White said she would remand the case for further proceedings.

Tracy S. Pyles of Littler Mendelson P.C., in Columbus, Ohio, argued for Huntington Bancshares. Michael J. Lingle of Thomas & Solomon LLP in Rochester, N.Y., argued for the employees.

To contact the reporter on this story: Lawrence E. Dubé in Washington at

To contact the editor responsible for this story: Susan J. McGolrick at

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