When Auto Ref Level is enabled, enabling or disabling Loudness does not affect when the reference level is switched.

The highest Low Vol Ref is -20 dB which corresponds to -2 dB attenuation at -5 dBu reference level and -5 dB attenuation at Lo-Power.
This can lead to overloading, as for these attenuations, the bass and treble boosts can boost the signal level such that it is excess of the DAC chip's input capabilities. 

Thus, with Auto Ref Level enabled, enabling Loudness can lead to overloading, if Low Vol Ref is less than 20 dB below the lowest reference level, i.e. if Low Vol Ref is above -38 dB for Line Out and/or above -35 dB for Phones.

However, the manual states on p. 14: "[...] Loudness works best in Auto Ref Level mode due to the seamless dBr scale of the volume control."

If my device is functioning as intended, this seems to be false and the best case would be to manually set the Reference Level as the highest required by any of the user's applications. The latter is the case, since both the seamless volume attenuation scale would be preserved and the overloading avoided, since the increased noise is likely less objectionable than the increased distortion caused by overloading.

The device is the DAC, USB Firmware is revision 25, DSP Firmware is revision 23 and USB Fallback is revision 10.