Department of Labor Issues First New Opinion Letters in Ten Years

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WAGE & HOUR ISSUES FIRST NEW OVERTIME OPINION LETTERS IN TEN YEARS

On April 12, the Department of Labor’s Wage & Hour Division (“WHD”) issued three new overtime opinion letters – the first such letters released by WHD in nearly ten years.  The new opinions follow WHD’s recent decision to resume publishing responses to employer requests for guidance in complying with the Fair Labor Standards Act (“FLSA”) and other statutes and regulations enforced by WHD.

The April 12 letters respond to employer inquiries regarding computation of workhours for employees who travel in connection with their employment, exclusion of FLSA-protected rest-breaks from compensable time, and classification of various payments to employees in determining “disposable earnings” subject to Consumer Credit Protection Act (“CCPA”) garnishment limitations.  Each letter clarifies the application of existing laws and regulations to specific factual scenarios while reaffirming traditional interpretations of the statutes in question.

FLSA2018-18:  Travel Time Subject to FLSA

Opinion Letter FLSA2018-18 provides guidance regarding the compensability of employee travel time under the FLSA.  The employees involved have no fixed work schedule and frequently travel overnight for occupational training and during daytime to remote work sites.  The employer questioned the extent to which the employees’ travel time should be counted as compensable hours-worked for wage and overtime calculations.

WHD begins by reaffirming the traditional rule that employee travel time, other than an ordinary commute to and from work, is compensable to the extent it occurs during the employee’s “regular workday.”  For employees who work traditional Monday through Friday, 9 to 5 schedules, time spent traveling during typical on-the-clock hours occurs during the “regular workday,” and is therefore compensable, while evening or weekend travel is not.  On the other hand, an employee who regularly works evenings and weekends, but not weekdays, must be paid for evening or weekend travel.

A complication arises, WHD notes, when an employee’s schedule is not consistent, and, therefore, the employee’s “regular workday” is not easily defined.  In that scenario, WHD advises employers to review the prior month’s work records to identify hourly patterns which effectively amount to a regular workday.  In the “rare case” in which no pattern emerges, WHD suggests employer and employee negotiate a reasonable timeframe to be deemed the employee’s regular workday, with travel during the agreed hours compensable.

Notably, WHD states that the suggested approaches are not the exclusive methods employers may adopt to determine the regular workday of an employee without a fixed schedule. However, if an employer reasonably uses the proposed methods, the employer will not violate the FLSA if it limits compensable travel time to the resulting “regular workday.”

Opinion Letter FLSA2108-18 concludes by reaffirming the traditional rules applicable to time spent commuting and traveling to and from work sites during the workday.  Though an employee’s ordinary commute is not compensable, once an employee has reported to work, “travel from job site to job site during the workday, must be counted as hours worked.”  For employees reporting directly to a remote job site, the travel time is compensable only to the extent that it goes beyond the employee’s ordinary commute and occurs during the regular workday.

FLSA2018-19:  Compensability of Medical Rest Breaks

Opinion Letter FLSA2018-19 addresses an employer inquiry as to whether regular rest breaks necessitated by an employee’s medical condition should be included in calculating the employee’s compensable time.  The employee in question was directed by a physician to take fifteen-minute breaks once per hour due to “continuing serious health conditions.”  WHD notes that the rest breaks are protected by the Family and Medical Leave Act (“FMLA”), which allows employees up to twelve workweeks of leave per year. FMLA leave can be taken “in periods of weeks, days, hours, or even less than an hour.” However, the FMLA expressly states that medical leave does not have to be paid, and WHD concludes that the prescribed rest breaks are not compensable as a result.

In reaching its conclusion, WHD cites the 1948 U.S. Supreme Court decision of Armour & Co. v. Wantock, in which the Court held that the compensability of an employee’s time depends upon “[w]hether [it] is spent predominantly for the employer’s benefit or for the employee’s.”  While periodic breaks of up to 20 minutes “promote the efficiency of the employee,” thereby benefiting the employer, the physician-prescribed rest breaks primarily benefit the employee.  However, the employee is free to apply paid vacation or sick time to the FMLA-protected breaks, and, to the extent that other employees receive regular paid rest breaks, the accommodated employee must receive at least an equal number of paid breaks.

CCPA2018-1NA:  CCPA Classification of Employee Payments

The third of WHD’s recent overtime opinion letters, No. CCPA2018-1NA, identifies the forms of payments to employees that constitute “earnings” under the CCPA, which limits the amount of an employee’s earnings that can be garnished for child support or other support obligations. In rendering its opinion, WHD sets forth three categories of payments to employees: (1) payments which qualify as earnings; (2) payments which partially qualify as earnings; and (3) payments which do not qualify as earnings.

The key factor in WHD’s analysis is the “compensatory nature of the payment.” That is, whether the compensation is paid as consideration for services rendered to the employer.  If a payment has a direct relation to services provided, the payment is “earnings.”  Regular wages, commissions, bonuses, profit-sharing, service awards, holiday pay, and severance pay, along with other similar payments, are identified by WHD as examples of earnings subject to CCPA garnishment limitations.

Payments partially qualify as earnings if a portion, but not all, of the payment is attributable to past or future wages.  WHD cites workers’ compensation and wrongful termination settlements as falling within this category.  A certain percentage of the payment may be intended to replace earned (or potentially earned) wages and is therefore “earnings.”  To the extent some of the payment is compensation for medical damages, pain and suffering, or punitive damages, that portion is not “earnings” for CCPA garnishment purposes.

The final category includes payments not intended to compensate the employee for services rendered and therefore not qualifying as “earnings.”  WHD cites a buyback of company stock as an example of this category.  The intent of the company in making a buyback is “to reduce the number of its shares on the open market,” and not to pay the employee for services rendered.  Consequently, a stock buy-back payment is not “earnings.”

By once again issuing overtime opinion letters to employers, WHD presents employers with an opportunity to obtain guidance in what can be a highly complex area of the law.  Employers can submit requests for opinion to WHD via regular mail or via email to WHDopinionletters@dol.gov.  Employers not wishing to disclose their identities may also submit inquiries to WHD through counsel.

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