## Facts

- Andrew Whalen worked for several years as a loan underwriter for a national bank.
- The bank classified underwriters as exempt “administrative” employees under the Fair Labor Standards Act (FLSA) and did not pay overtime.
- Whalen alleged he routinely worked more than 40 hours per week without overtime compensation.
- Underwriters evaluated mortgage applications by applying detailed, employer-provided written guidelines (a credit guide) specifying how to assess income, credit history, and other qualifying criteria for specific loan products.
- Underwriters were expected to approve loans that met the guidelines and, in limited circumstances, could approve exceptions or variances based on compensating factors; the parties disputed the frequency of such exceptions.
- The bank measured underwriter performance primarily by productivity (e.g., volume of actions per day) and offered incentives tied to output.
- On cross-motions for summary judgment, the district court ruled for the bank, holding the underwriter role was administratively exempt; Whalen appealed.

## Issues

1. Whether a mortgage underwriter who evaluates loan applications by applying detailed employer guidelines is employed in a bona fide administrative capacity and therefore exempt from FLSA overtime requirements.
2. Whether the underwriter’s work is properly characterized as administrative work related to management policies or general business operations, or as production work involving the bank’s core service of making loans.

## Decision

- The court of appeals reversed the grant of summary judgment to the bank and remanded.
- The court held the underwriter was not employed in a bona fide administrative capacity and therefore was not covered by the FLSA administrative exemption.
- The court characterized the underwriter’s primary duty as the production of loans, the bank’s core service, rather than work tied to management policies or general business operations.
- The court concluded that any discretion exercised (including limited exceptions) occurred within a guideline-driven production role, not an administrative role.

## Legal Principles

- The FLSA requires overtime pay for hours worked over 40 per week unless an exemption applies; the employer bears the burden of establishing an exemption.
- The administrative exemption applies only when an employee’s primary duty is office or non-manual work directly related to management policies or general business operations, not the day-to-day production of the employer’s goods or services.
- Under the administrative/production dichotomy, employees performing the employer’s core revenue-generating service are generally “production” employees even if their work is skilled and involves some judgment.
- Discretion constrained by detailed, predetermined guidelines may show application of established criteria rather than work that shapes or carries out general business operations.
- Internal indicators (such as productivity metrics and organizational treatment of a role as production-focused) may support classification of work as production rather than administrative.

## Conclusion

The court held that mortgage underwriters whose primary task is applying detailed credit guidelines to approve or deny individual loans perform production work central to the bank’s business, and thus are not exempt administrative employees under the FLSA for overtime purposes.


Davis v. J.P. Morgan Chase & Co., 587 F.3d 529 (2d Cir. 2009)