Mortgage loan companies must pay final commissions and bonuses to separated MLOs earlier than usual when state law requires it. Call us today to determine whether your final wages, including commissions and bonuses, were paid on time.
When a mortgage loan officer (MLO) concludes their employment, certain state laws necessitate employers to promptly pay their earned wages, including commissions and bonuses, prior to the payday on which they would normally be paid.
For instance, in California, MLOs must be paid their final commissions and bonuses within 72 hours of separation at the latest (immediately if the employer discharges an MLO), provided that the calculations can be made (Cal. Lab. Code § 201(a)). Failure to do so may subject employers to liability for up to 30 days’ worth of wages (based on all wages, including commissions). (Cal. Lab. Code § 203(a)).
Similarly, in New Jersey, even if the exact amount of a commission or bonus cannot be determined upon an MLO’s departure, their employer must pay a reasonable estimate of the earned incentive wages on the subsequent regular payday until the accurate amount can be computed. (N.J.S.A. § 34:11-4.3). MLOs who experience delayed payment can seek liquidated damages equivalent to 200% of the late-paid amount. (N.J.S.A. § 34:11-4.10).
Despite the legal requirements for early payment of final commissions and bonuses, it is common in the mortgage loan industry to follow the same payment schedule applied during employment for separated MLOs.
Example (California Law): An MLO working for a company in California resigns without notice on June 24th. According to the commission plan, commissions earned in June are payable at the end of July. The company follows the commission plan instead of California law, which requires it to pay the MLO all earned wages by June 27th, 72 hours after separation. Due to the violation, the company owes the MLO a day’s worth of wages for every day (up to 30) from June 27th to the date it pays the wages. The company pays the MLO’s final wages on July 28th, and therefore the MLO is owed 30 days’ worth of wages, the maximum penalty. The MLO earned an average of $384.00 per day, inclusive of commissions. The company therefore owes the MLO a waiting time penalty of $11,520.00 ($384 per day x 30 days).
Example (New Jersey Law): An MLO working for a company in New Jersey is terminated on June 1st. According to the MLO’s commission plan, commissions earned in May are payable at the end of June. The next regular payday is June 14th. The company follows the commission plan instead of New Jersey law, which requires it to pay the MLO all due wages by June 14th, the next regular payday. The company pays the MLO’s final commissions totaling $5,000 at the end of June. Accordingly, the MLO may seek $10,000 in liquidated damages (200% of the late-paid wages) from the company under New Jersey law.
If you worked as a mortgage loan officer for a previous employer and would like to discuss whether they complied with state law requirements for the payment of your final commissions and bonuses, please contact us today or complete the form below to request a free and confidential consultation. If we determine that you have a valid claim and you choose to proceed, there will be no out-of-pocket costs or fees. Our firm handles cases on a fully contingent basis and will seek reimbursement for fees and costs only from the recovery obtained. If there is no recovery or judgment in your favor, Swartz Swidler, LLC will not seek any fees or costs from you.
Submit Your Information Below for a Free and Confidential Consultation. You may also call us at 856-685-7420 or email Justin Swidler, Esq.. (email@example.com).