Tag Archive for: Compliance

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May a Person Use the Name, Logo, or Symbol of a Bank in Marketing Material?

By Scott Birrenkott

Not if it is deceptive. More specifically, Wisconsin law provides, in summary, that no person may use the name, logo, or symbol of a bank, or such that is deceptively similar to that of a bank, in any marketing material provided to another person in a manner that a reasonable person may believe that the marketing material originated from the bank.

From time to time, potentially deceptive letters circulate among bank customers, causing frustration and confusion. WBA is aware that such deceptive letters have recently been circulating once more. These letters often take the form of mortgage relief offers, solicited by individuals unassociated with the bank. When these letters violate Wisconsin law, such as by misrepresenting their nature as being associated with a bank, WBA recommends reporting them to the Wisconsin Department of Financial Institutions (DFI). DFI has enforcement authority over such letters, including the ability to issue cease and desist orders, and penalties. For this reason, banks that encounter such letters are encouraged to contact WBA and DFI.

Banks should also be mindful of the customer service aspect of such letters. Even when reporting letters, and even if a letter is not deceptive, banks will likely still receive complaints from their customers. In such situations, banks might consider discussing with their customers how and when it will issue correspondence. This way, customers can easily identify what originates from the bank. Additionally, banks might consider discussing this matter with their customers at time of loan closing so they can be better prepared to identify these letters as not originating from the bank. By preparing customers ahead of time, banks can potentially curb some confusion and frustration resulting from these letters. To assist with this matter, WBA’s Mortgage Lending Committee has prepared a sample letter which can be used for these purposes.

Tangential to this matter, WBA has also become aware of many Wisconsin loan applicants receiving numerous unsolicited offers for credit and insurance after submitting a loan application. The volume of offers has greatly increased during the past couple years given the overall slowdown in mortgage loan activity due to rising interest rates and the low inventory of homes for sale. Customers become upset due to the number of offers received and because some believe the bank shared their nonpublic information. The WBA Mortgage Lending Committee has also created a customer awareness letter in this regard to alert loan
applicants upfront of the effect of prescreening under FCRA.

Both letters are available through WBA’s best practices library. If you need assistance accessing the WBA best practices library, or if you have any questions on this topic or other matters of compliance, contact WBA’s legal call program at 608-441-1200 or wbalegal@wisbank.com

Birrenkott is the WBA director – legal

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Contents Coverage for Purposes of Flood Insurance

By Scott Birrenkott

While there are no new requirements regarding flood insurance, examiners have been looking closely at portfolios for flood compliance lately. Specifically, WBA has become aware of some questions arising regarding contents coverage. This article will discuss what the flood rules require for purposes of insuring contents, as well as some important concepts to be aware of.

The requirement of “contents coverage” starts with the general requirement to purchase flood insurance for designated loans. That requirement being that a bank shall not make, increase, extend, or renew any designated loan unless the building or mobile home and any personal property securing the loan are covered by flood insurance for the term of the loan. “Personal property” in this context will be referred to as “contents” for the rest of this article. Meaning, a bank making a designated loan in a special flood hazard area (SFHA) must also ensure that any contents securing that loan are covered by flood insurance. The rule, in this context, leaves some unanswered questions. Fortunately, the agencies have provided clarification in the form of questions and answers.

In 2022, the agencies issued the revised Interagency Questions and Answers Regarding Flood Insurance (Q&As). The Q&As clarify that when a building and its contents both secure a loan, and the building is located in a SFHA in which flood insurance is available, flood insurance is required for the building and any contents securing the loan. They also clarify that if contents securing the loan are stored in a building which does not secure the loan, then flood insurance is not required on those contents, regardless of whether the building is in a SFHA. The agencies also clarify that both contents and the building will be considered to have a sufficient amount of flood insurance coverage for regulatory purposes so long as some reasonable amount of insurance is allocated to each category. The Q&As provide an example which is helpful in this regard:

Lender A makes a loan for $200,000 that is secured by a warehouse with an insurable value of $150,000 and inventory in the warehouse worth $100,000. The Act and Regulation require that flood insurance coverage be obtained for the lesser of the outstanding principal balance of the loan or the maximum amount of flood insurance that is available. The maximum amount of insurance that is available for both building and contents is $500,000 for each category. In this situation, Federal flood insurance requirements could be satisfied by placing $150,000 worth of flood insurance coverage on the warehouse, thus insuring it to its insurable value, and $50,000 worth of contents flood insurance coverage on the inventory, thus providing total coverage in the amount of the outstanding principal balance of the loan. Note that this holds true even though the inventory is worth $100,000.

It is important to note that when contents coverage is required, a bank must always assign a “reasonable amount” to the contents. This is true even if the building’s value meets or exceeds the minimum flood insurance required. For example, if the facts of the above example were changed so that the insurable value of the warehouse was $200,000, the bank couldn’t assign $200,000 to the warehouse alone and leave the contents uninsured. It would need to be divided in a reasonable amount among both the warehouse and the contents.

In the commercial and agricultural setting, it is common within the industry for banks to take a security interest in property which includes contents. Because of this, it’s important to be aware of the language within a bank’s security agreements, and what it covers, so that the bank is able to meet flood insurance requirements. If a bank does not wish to take contents as collateral to avoid flood insurance implications, it could consider disclaiming the collateral. In this case, the bank should also consider the implications of disclaiming collateral from a loan policy standpoint, understanding that such decisions have broader implications on the security of the loan beyond just flood insurance rules. The Q&As can be found here: https://www.fdic.gov/sites/default/files/2024-03/fil22020a.pdf

Birrenkott is the WBA director – legal

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How to Take and Perfect a Security Interest in a Mobile Home

By Scott Birrenkott

While there are no new requirements regarding the taking and perfecting of a security interest in a mobile home, WBA has received several questions recently regarding the steps for doing so. While taking and perfecting a security interest depends upon the facts of a particular loan, as well as a bank’s available documentation, there are some important general aspects to consider specific to mobile homes, which are presented in this article.

When it comes to perfecting a security interest on a mobile home (note that there is an important distinction when a mobile home becomes a “manufactured home” which is discussed more below), we have a few recommendations for what to consider. Typically, we recommend starting with whether the home is on land and whether it is affixed to that land. This is important because if the home is affixed to the land, the bank will need to file a fixture filing with the register of deeds office where the land is located.

Additionally, if the home is located on land not owned by the homeowner, for example a trailer park, the bank should consider obtaining a fixtures disclaimer signed by landowner. On the other hand, if the home is on land owned by the mobile home owner, the bank should consider filing a mortgage on that land as well.

For purposes of perfection, under Wisconsin law, a security interest in a “manufactured home” is perfected by notation on the certificate of title with the Department of Commerce (DOC) unless it is a fixture or intended to be affixed to land. Note that a “manufactured home” includes in its definition a mobile home that is greater than 45 feet in length. A mobile home that is 45 feet or less is considered a “recreational vehicle” and the Department of Transportation (DOT) retains responsibility for these vehicles.

The DOC may remove information pertaining to a security interest perfected in a manufactured home from its records when 20 years has elapsed after the original perfection. This is also true with regard to the DOT and information pertaining to a security interest in “recreational vehicles.” However, a secured interest in a manufactured home that is a
fixture or which the owner intends to permanently affix to land that the owner of the manufactured home owns is not necessarily perfected by a notation on the certificate of title, as there may be no such title. Instead, the creditor should file a fixtures filing on the manufactured home.

With respect to such a fixtures filing the Wisconsin Manufactured Home Certificate of Title must be completed for titled manufactured homes greater than 45 feet in length. To obtain a perfected security interest in the home, a lender must have its lien noted on the title of the home that is delivered to DOC.

Keeping in mind the distinction between a “manufactured home” versus mobile homes that might not meet that definition, the MV1- Wisconsin Title and License Plate Application must be completed for those mobile homes 45 feet in length or less which are titled. The perfection of a security interest in a mobile home is accomplished by a notation of the lien on the Certificate of Title that is delivered to DOT. For titled manufactured homes, the bank’s security interest is perfected as of the time of its creation if the delivery described (to either DOT or DOC) is completed within 10 days thereafter, otherwise, as of the time of such delivery.

Taking all of this together, and given the various complexities in the area of mobile homes, it has been our longstanding recommendation that lenders do all as applicable to perfect their security interest in manufactured homes. For example, have the bank’s lien noted on title either with DOC or DOT, and File UCC 1 and UCC 1A fixtures filing with Register of Deeds office where a mortgage would be filed on related real property noting that the fixtures filing is being filed in connection with a manufactured home transaction, and if applicable, a fixtures disclaimer.

Note: The above information is not intended to provide legal advice; rather, it is intended to provide general information about banking issues. Consult your institution’s attorney for specific legal advice or assistance.

 

Birrenkott is the WBA director – legal

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What BOI Resources Exist for Bank Customers?

By Scott Birrenkott

Earlier this year, we published an article discussing the various rulemakings undertaken by the Financial Crimes Enforcement Network (FinCEN) to implement the requirements of the Corporate Transparency Act (CTA). One of those requirements applies to companies that must report (reporting companies) beneficial ownership information (BOI). While this rule doesn’t place any requirements upon banks, many reporting companies have come to their banks with questions. FinCEN has created numerous resources which reporting companies may find helpful and banks can direct their customers toward when they have questions.

Most recently, FinCEN issued a notice to customers of financial institutions about the BOI reporting requirements. This notice should answer any remaining questions reporting companies might have. Should they still have questions, there are additional resources banks can refer them to. For example, FinCEN maintains numerous resources on its website. The website includes frequently updated FAQs, information subscriptions, access to the filing system and filing instructions, a brochure introduction to BOI reporting, BOI reference guide, and BOI videos.

One particularly helpful resource is FinCEN’s small entity compliance guide. This guide includes 57 pages of information for reporting companies. It includes sections outlining how to determine whether a company must report, how to identify who a beneficial owner is, the specific information which must be reported, and explicit instructions for when and how a BOI report must be filed.

Additionally, WBA has created resources for banks to further understand the differences between the rules, as well as customer-facing resources to better help banks work with reporting companies who might have questions. These resources can be found on the WBA website under the compliance section of the Best Practices Library.

Additional information regarding the CTA and specifics surrounding FinCEN’s rule are in the March/April 2024 edition of the Wisconsin Banker. If you have any questions, please contact WBA legal at wbalegal@wisbank.com or call us at 608-441-1200.

Birrenkott is the WBA director – legal

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Strategic Connections: Public Relations Strategy on the Growing Threat of Overdraft Fee Lawsuits Against Wisconsin’s Community Banks

By Kathleen Rolfs

Are Recent Social Media Ads Scams or Legitimate?
Small community banks across the nation are increasingly becoming targets of aggressive law firms seeking to initiate overdraft fee lawsuits. Utilizing sophisticated digital advertising tactics, these firms entice our customers to contact a law firm if they were charged overdraft fees, likely in exploration of the possibility of a class action lawsuit. While these ads are legitimate, they typically employ ambiguous terms like “investigation” which may lead your customers to come to you with questions as to their nature. This year alone, the Wisconsin Bankers Association (WBA) has reported that many community banks in Wisconsin have been subjected to such targeted campaigns. This issue not only creates challenges for banks’ marketing communications teams but also poses a significant public relations risk to Wisconsin consumers by potentially undermining trust in the banking system.

Why Is This an Increasing Problem?
According to data from Bankrate, roughly 91% of banking accounts are subject to overdraft fee structures, with this information disclosed to customers at account opening with transparent fee schedules. Recent increased media coverage on the topic has prompted some lawyers to prospect for new customers, hoping to find bank and credit union customers who may have charged their customers improperly. Some are prospecting through paid social media advertising campaigns that target consumers in the geographic area of a bank’s location. These ads are inexpensive and have a wide reach.

Should These Ads be Reported and Treated as Scams?
Some bankers incorrectly dismiss these aggressive solicitations as mere scams, viewing them as attempts by “bad actors” to obtain personal information from bank clients. However, it is best not to shrug off these ads targeting Wisconsin banks simply as scammers’ attempt to collect information. These craftily planned advertisements represent legitimate attempts to build relationships with our customers with the end goal being a possible lawsuit. WBA Director – Legal Scott Birrenkott recently shared that some Wisconsin banks have received information requests from law firms working with customers who have responded to their advertising.

If your bank is targeted by this type of ad — and if it hasn’t been yet, it likely will be — it is crucial to be prepared. Clear communication, customer education, and proactive networking can help mitigate the impact of these campaigns.

How to Handle a Campaign Targeting Your Customers
While the actual response of each individual bank will depend upon what is appropriate for your situation, and your customer base, here are some elements to consider:

1. Transparency: Ensure your employees understand your bank fee schedule. Communicate your bank’s policies and the rationale behind them. If appropriate, consider sharing the details of any ad campaigns targeting your bank with your staff to ensure that they are aware of it because they may be asked about it when they are out in the community and may receive inquiries from customers by phone and in-person visits. Alternatively, it might be best to ignore addressing the advertisements directly, and instead focus on an independent, yet proactive educational campaign focusing on how to learn more about your bank’s overdraft services.

2. Education: Educate your customers on overdraft fees and what they can do to avoid them. In addition to providing this education at account opening, create statement stuffers or flyers with information to insert into overdraft notices that include tips on how to avoid these unnecessary fees and links to internal and external resources.

3. Networking: Collaborate with other community banks and WBA to share best practices and strategies. If you happen to notice an ad targeting other banks, let them know, even if they are your competitor. Report campaigns impacting your bank to the WBA legal team as they are monitoring these ads and have been in communication with the Wisconsin Department of Financial Institutions, Wisconsin Department of Justice, and Wisconsin Department of Agriculture, Trade, and Consumer Protection regarding the potential misrepresentations these advertisements suggest regarding bank overdraft practices.

4. Check the Meta Ad Library: If you start seeing ads, check the ad library under Meta’s page transparency feature so that you can see the campaign beginning and end dates. It seems recently that the firms run the ads for a five-day run starting over the weekend, most likely to catch the bank off guard during the weekend.

With this issue being at the top of the CFPB’s agenda, it isn’t going away any time soon. It is incumbent upon us as community bankers to keep abreast of bank policy issues that are discussed in the media and to be prepared for the fallout. Awareness, education, and communication are key to ensure we effectively protect our reputation. And it’s always a good idea to let WBA know if you are targeted by these law firms so that they can continue to provide strategic resources to support us and advocate on our behalf.

Rolfs, vice president – chief marketing & communications at PremierBank in Fort Atkinson, is a member of the 2024–2025 WBA Marketing Committee.

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Executive Letter: Free WBA FDIC Part 328 Revised Rule Resources

By Rose Oswald Poels

For several months now, WBA legal staff have fielded questions regarding FDIC’s recently revised Part 328 rule as banks work to implement new requirements before the January 1, 2025, mandatory compliance date. The rule requires use of a new FDIC digital sign on digital deposit taking channels which includes websites and web-pages or mobile applications that offer the ability to make deposits electronically and provide access to deposits. Signage on bank ATMs may also be affected; and banks that offer non-deposit products must also, clearly and conspicuously, display a non-deposit sign in certain branch locations and also electronically if the bank’s website offers access to non-deposit products.

To assist with implementation, WBA has created a free FDIC Part 328 Rule Resource which includes a straightforward review of the rule (with implementation tips), a model plan for monitoring compliance with the rule, steps to consider for reviewing and testing compliance, and links to FDIC resources which includes past FDIC webinar presentations and a Frequently Asked Questions (FAQ) document. The WBA FDIC Part 328 Resource is found in the Compliance Best Practices section of the WBA Best Practices Library.

In addition, I have regular conference calls with senior staff at FDIC Chicago to share concerns of the membership. I have shared questions with FDIC regarding revised Part 328, some of which have not been answered yet in their resources. Several previously shared questions have been incorporated into FDIC presentations and FAQs. FDIC is hosting four webinars regarding requirements of Part 328, two of which have already been conducted. The presentation slide deck for both webinars may be found on FDIC’s Deposit Insurance Banker Webinar website. I expect FDIC to post dates for the remaining two webinars at the same site. The webinars are hosted via Teams Live Event at the link found at the site. There is no formal registration for the live event.

If you or your staff have outstanding Part 328-related questions or need the password for the protected WBA Best Practice Library, please contact WBA Legal at wbalegal@wisbank.com.

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Executive Letter: CFPB Wins Section 1071 Case. Plaintiffs Plan to Appeal. WBA Continues to Fight!

By Rose Oswald Poels

Federal Judge Randy Crane made his decision last week in the much-anticipated case Texas Bankers Association v. CFPB, S.D. Tex., Docket No. 7:23-cd-00144, 8/26/24, that CFPB did not violate the Administration Procedure Act (APA) when it finalized the small business data collection rule (Section 1071) last March. Section 1071 requires banks that make at least 100 small business loans a year to collect and report certain data about the small business borrower, application information, and loan terms. In his decision, Judge Crane wrote: “It may well be that the Final Rule proves ill-advised as a policy matter, but that possibility does not itself make the Final Rule unlawful under the APA.”

I am certainly disappointed with the decision. WBA, and the industry as whole, continue to be gravely concerned over the cost of implementing the rule and most importantly of the privacy concerns of our small business community borrowers. It is expected that the plaintiffs will appeal the decision.

As a result of the decision, WBA will continue our efforts on the federal level to persuade our congressional delegation of necessary changes. Last summer WBA worked to encourage our Wisconsin congressional delegation to pass Congressional Review Act (CRA) resolutions in both the U.S. House and Senate to disapprove the Section 1071 rule. Under the CRA, if Congress enacts a joint resolution of disapproval, a rule promulgated by an agency does not take effect. Unfortunately, President Biden vetoed the joint resolution of disapproval, and the Senate fell short in its vote with the necessary two-thirds vote to overturn the veto. But our fight continues.

WBA also plans to once again communicate industry concerns directly with CFPB staff in our upcoming fall Washington, D.C. Regulatory Trip where myself, and a dozen Wisconsin bankers, will meet directly with CFPB and other federal banking agencies to express specific regulatory concerns and advocate against excessive regulatory burden.

While WBA continues to fight implementation of Section 1071, CFPB continues to work towards implementation. CFPB previously issued an interim final rule to extend mandatory compliance dates given the court case mentioned above and has recently opened a beta platform for Section 1071 data collection.

Being mindful of the possibility of having to implement a rule as robust as Section 1071, WBA has provided Section 1071 training in past WBA Compliance Forums and through past webinars. Past toolkit materials will be reposted shortly to the WBA Compliance Resources page given the recent court decision. Additionally, WBA will be hosting a Section 1071 workshop, Friday, October 18 in a hybrid format. To further assist with implementing the rule as cost effectively as possible, WBA will continue to create other educational Section 1071 resources.

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Executive Letter: Retention of PPP Loan Records is Now 10 Years

By Rose Oswald Poels

In an interim final rule published in the Federal Register this past Friday, August 23, SBA announced it has lengthened the required records retention for lenders that made loans under the Paycheck Protection Program (PPP) to ten years from the date of final disposition of each individual PPP loan. The interim final rule was issued without advance notice or public comment. The rule is effective August 22, 2024.

SBA stated that the interim final rule was necessary to harmonize PPP lender records retention requirements with subsequent legislation extending the statute of limitations for criminal charges and civil enforcement actions for alleged PPP borrower fraud to ten years after the offense. In particular, the Bank Fraud Enforcement Harmonization Act was signed into law in August 2022 which amended section 7(a) of the Small Business Act to provide, for both First Draw PPP Loans and Second Draw PPP Loans, that notwithstanding any other provision of law, any criminal charge or civil enforcement action alleging that a borrower engaged in fraud with respect to a PPP loan guaranteed by SBA shall be filed not later than 10 years after the offense was committed.

SBA further provided that the majority of lenders that participated in PPP are federally-regulated lenders having participated under existing SBA Form 750 (Loan Guaranty Agreement (Deferred Participation)) or by signing Form 3506 (CARES Act Section 1102 Lender Agreement). Under the Consolidated Forgiveness and Loan Review Interim Final Rule, federally-regulated lenders that participated in the PPP Program are currently required to retain their PPP loan records in accordance with the records retention requirements imposed by their federal financial institution regulator. SBA has determined that there do not appear to be any consistent or specific time requirements imposed by federal financial institution regulators that are applicable to PPP records retention as a whole. Instead, federally-regulated PPP lenders may implement and follow general internal records retention policies that are acceptable to their regulators. SBA believes it is likely that many of these general internal records retention policies allow for periodic destruction of certain records after a loan is paid in full, which for PPP would include payment in full through forgiveness or otherwise. SBA has extended the record retention period to allow law enforcement to continue to investigate fraud cases.

The interim final rule applies to all PPP lender loan records. This includes PPP loan applications that were withdrawn, approved, denied, or cancelled, and all other PPP lender loan records for PPP loans with an outstanding balance, PPP loans that have been forgiven, and PPP loans that are in repayment or have been paid in full by the borrower as of the effective date of the interim rule. To the extent that a federally-regulated PPP lender destroyed any PPP loan records before the effective date of the interim final rule in accordance with a general internal records retention policy that was acceptable to the PPP lender’s federal regulator, SBA will not enforce compliance by that federally-regulated PPP lender with respect to the PPP loan records that were destroyed before the effective date of this rule.

The extended records retention requirements apply equally to federally-regulated lenders (including lenders that executed an SBA Form 3506) and SBA Supervised Lenders (including lenders that executed an SBA Form 3507).

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Preparing for the Future of Compliance

By Jeff Schmid, CRCM

Jeff Schmid

It has been five years since FIPCO started the ShareFI services, and things have come a long way in compliance management. No sooner did our Shared Compliance Officer and consulting services get started, than we were met with a pandemic and a new way of managing regulatory compliance as we knew it. While community banks were adjusting to remote work and electronic delivery of loan and deposit forms, the volume of transactions continued to soar, new regulatory interpretations were delivered, and the industry was faced with large scale changes, some of which happened overnight. Back then, things really took a toll on bankers, and compliance professionals were no exception. So, it was no wonder that when things began to return to normalcy, we began to see attrition in compliance officers and compliance staff. This dynamic shift in staffing has hit compliance management even harder than most banking positions due to the limited number of staff assigned to this role.

While larger banks need and can afford an entire compliance team, most small community banks rely on just one or two individuals to carry the regulatory burden. It is not like a bank can just hire anyone off the street these days. They need to acquire and retain professionals who require continuous education, an analytical mind set, and a great degree of diplomacy. Certainly, they are specialists in their field and today they are even harder to come by.

Over the last five years, our ShareFI team has experienced both the highs and lows of compliance management with our clients. Whether it was collaborating with community banks on regulatory orders, filling gaps in compliance staffing, assisting with compliance examinations, or simply providing remote support services, one thing for certain is the need to plan for the future of your compliance program. And it all starts with staffing. Even examiners are now asking the question “what succession plan does the bank have for compliance management?” This is because they have recently rolled out their own succession plan with a new batch of compliance examiners.

Planning for your future compliance officer and compliance staff should be happening now or at least five years before any planned exodus. As mentioned earlier, these compliance professionals are specialists in their field and the education alone takes many years to absorb all the nuances of regulations. Not to mention, a good succession plan includes handholding through the next examination, while your current staff is still on board. Management should be looking internally for potential candidates who are seeking to advance their banking career and desire to play a larger role in the overall business strategy of the bank. And do not forget, your Wisconsin Bankers Association has numerous training and networking opportunities to help you mentor these candidates.

Five years ago, FIPCO had a vision to anticipate the future of compliance management (we just never envisioned a pandemic). Through our Shared Compliance Officer roles, we have been successful in delivering value-added solutions, including filing the gaps and helping bank management develop future compliance officers. While an outsourced, shared solution may be a good fit for your organization, not all banks are alike and having a future compliance officer candidate identified now may prove to be a brighter future for your compliance program. For more information on our shared services, to help your bank plan for compliance succession management, or to learn more about client success stories, please contact me at jschmid@fipcom.com

Schmid is director of compliance and management services at ShareFI. FIPCO is a subsidiary of WBA and a WBA Gold Associate Member.

 

 

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Executive Letter: Reminder of July 1 Effective Date of DOL New Salary Levels — Pending Court Injunction

By Rose Oswald Poels

As reported in the “Regulatory Spotlight” section of the May 2024 WBA Compliance Journal, the Department of Labor (DOL) issued a final rule to revise the regulations issued under the Fair Labor Standards Act (FLSA) to implement the exemptions from minimum wage and overtime pay requirements for executive, administrative, professional, outside sales, and computer employees. Significant revisions include increasing the standard salary level, increasing the highly compensated employee (HCE) total annual compensation threshold, and adding to the regulations a mechanism that will allow for the timely and efficient updating of the salary and compensation thresholds.

The final rule revises the salary thresholds for the exemption under FLSA referred to as the “white collar” exemption. This exemption is comprised of a salary threshold and a “duties test.” The final rule did not change the current duties test. Under the final rule, as of July 1, 2024, the salary threshold to consider an employee exempt from FLSA overtime rules is raised to $844 weekly, up from $684/week. The weekly salary level will increase again to $1,128 weekly on January 1, 2025.

The final rule also revises the total annual compensation threshold for the HCE exemption. As of July 1, 2024, the annual compensation threshold requirement for the HCE exemption increases to $132,964 annually, up from $107,432/year. The annual compensation threshold under the HCE exemption will increase to $151,164 annually on January 1, 2025.

The final rule provides that future increases will occur for both exemptions every three years, beginning January 1, 2027.

Several lawsuits have been filed against DOL regarding the final rule, including one by the Texas Attorney General who with the filing requested the court to grant an injunction to stay the implementation of the final rule until the court decides the merits of the case. A hearing on the motion is anticipated for late June.

As there has been no court injunction yet to stay the effective date of the final rule, banks need to prepare to implement the adjustments effective July 1. Banks should have identified those employees impacted by the final rule and should consider whether to have those exempt employees who fall below the new salary thresholds reclassified as non-exempt or increase the employee’s salary. WBA will continue to monitor the court case actions and alert the membership of any injunction. Without an injunction, the DOL final rule remains effective July 1, 2024.

The DOL final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2024-04-26/pdf/2024-08038.pdf

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608-441-1200

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Madison, WI 53718

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