Mortgage Lenders: Are You Ready for the Coming Wage and Overtime Changes?

January 1 brings a wave of minimum wage and salary increases across many states and localities. For mortgage companies, the changes involve more than bumping a few hourly rates.

If you run a multi-state mortgage operation, your wage-and-hour risk is about to get more complicated.

The Patchwork Problem: Multi-State Compliance Is Getting Messier

The federal minimum wage remains $7.25.  But many states and localities are higher, and several adjust requirements annually. Depending on where your people sit, you may be dealing with:

• Automatic increases tied to CPI

• Different effective dates (many on Jan. 1, but not all)

• Local minimums that exceed state law, sometimes by a wide margin

For mortgage lenders and servicers with branch networks, remote teams, and distributed ops centers, this patchwork creates real compliance exposure. Miss a single jurisdiction and you could be looking at back wages, penalties, and plaintiff attorneys’ fees.

What’s Changing in 2026 – At a Glance

A number of states and cities will implement minimum wage increases. A few examples highlight the spread:

• California – $16.90 (but see, e.g., Mountain View $19.70, San Jose $18.45)

• Washington – $17.13 (Seattle $21.30, Tukwila $21.65)

• Colorado – $15.16 (Denver $19.29)

• New York – $16.00 (NYC $17.00)

Remote/hybrid work adds another layer.  Your Colorado-based processor working in Denver? That employee is covered by Denver’s specific $19.29 rate.

And it is not just hourly wages. Some exemption salary minimums are climbing too. For example:

• California – $70,304

• Washington – $80,168

• Colorado – $57,784

• NYC – $66,300

For mortgage companies, that means your “exempt” staff (e.g., some operations leaders, branch managers, compliance professionals, or even LOs) will not qualify if their pay does not meet the new thresholds. Misalignment can trigger:

• Reclassification to non-exempt

• Overtime obligations

• Timekeeping and meal/rest break implications under state law

• Various other issues

Additional 2026 updates may layer on top of these changes.

Year-End Action Plan for Mortgage Executives

Before the first 2026 payroll hits, leadership teams should be driving a coordinated plan across HR, Legal, Payroll, and Operations:

• Map Where Your People Actually Work
  Identify employee locations (including remote workers) and confirm the applicable state and local requirements for each.

• Test Exempt Salary Thresholds
  Compare exempt pay levels to state-specific floors and flag roles at risk – a historic blind spot for many companies.

• Scrub LO Compensation Structures
  Verify that loan officer compensation aligns with both federal and state rules for exempt and non-exempt positions, including minimum salary and overtime where required.

• Update Payroll and HRIS Before the First 2026 Pay Period
  Ensure systems are updated so changes are reflected from the first paycheck of the year, not after a complaint or audit.

• Document Classification and Pay Decisions
  Create a clear paper trail for how classifications and pay levels were set or adjusted, critical if challenged by regulators or plaintiffs.

Bottom Line for Mortgage Lenders

These changes are not just an HR issue. For mortgage companies, wage and exemption shifts can impact:

• Branch profitability

• LO recruiting and retention

• Operational risk and regulatory/litigation exposure

Missing local wage law or exemption requirements can be an expensive way to learn your structure is outdated. Review LO compensation, revisit classifications, and tighten your multi-state compliance playbook in advance.

Want to learn more about LO compensation, wage-and-hour risk, or multi-state compliance strategies?  Contact troy@garrishorn.com.