Dickinson, Mackaman, Tyler & Hagen, P.C.

Welcome Back, Wage and Hour Opinion Letters

Mike Staebell, Dickinson Law Firm, Des Moines Iowa, Iowa Wage & Hour Watch, Iowa Labor and Employment Law, Iowa Employer Law

Posted on 05/31/2018 at 11:34 AM by Mike Staebell

For decades, the U.S Department of Labor’s Wage and Hour Division’s (WHD) opinion letters were welcomed by employers who sought guidance in applying the provisions of the Fair Labor Standards Act (FLSA) and Family and Medical Leave Act (FLMA).  WHD’s responses to fact-specific employer questions regarding murky aspects of those and other statutes aided employer efforts to comply.  And because WHD made the letters public (but kept the names of employers confidential), all employers (and employees) benefitted, not just those who had asked the questions.  For unknown reasons, in 2009 the Obama WHD discontinued opinion letters, instead publishing ‘administrator interpretations’, at a far less frequent rate, which were general guidance on matters of WHD’s own choosing and did not respond to specific questions. 

 In June 2017, Secretary of Labor Alex Acosta announced that WHD would resume the practice of publishing opinion letters, as in pre-2009 times.  The first of them were released in January of 2018, when WHD reissued 17 Bush-era opinion letters that had been rescinded in the early days of the Obama administration.  (Does that sound familiar?)  

On April 12, 2018, WHD issued three brand-new letters addressing questions posed by employers. The letters are identified by Act, and numbered by year and order of issuance.

Here is a quick summary of the three new opinions:

Compensability of travel time –  FLSA2018-18  

Whether travel time is compensable for non-exempt employees has long been a confusing aspect of FLSA compliance for employers.  At every FLSA presentation I do, questions on travel time predominate.  FLSA2018-18 addresses an issue that crops up more than one may think: how should employers identify “normal working hours” for an employee with such an irregular pattern of working  that there is no “normal” work schedule?  (As a reminder, 29 CFR § 785.39 provides that where an employee is required to travel and the travel keeps the employee from home overnight, all time spent traveling during “during normal working hours” is compensable under the FLSA regardless of whether or not it takes place on a regular working day).

This guidance provides two different methods for determining the employee’s normal working hours: (1) review the employee’s time records during the most recent month of regular employment and use the average start/end times during that time period; or (2) negotiate with the employee and agree as to what constitutes the employee’s normal work hours.   The letter states these are “not an exhaustive list of the permissible methods for determining an employee’s normal start times or end times under 29 C.F.R. § 785.39.”  Apparently there are more methods, but WHD does not tell us what they are in this opinion letter.  Moreover, 29 C.F.R. § 785.39 lists no options other than an example of an employee who generally works from 9am to 5pm.

Unfortunately, this is not the only confusion this opinion letter might cause.  A reader not familiar with the FLSA’s tortuous travel time principles might misapply this guidance, due to its lack of explanation of the travel time regulations and the facts that are relevant under different sets of circumstances.

To address this confusion, Wage and Hour Watch will soon follow up with a blog that will explain in detail the proper application of FLSA hours-worked principles in relation to travel time.

Compensability of frequent rest breaks due to health conditions – FLSA2018-19  

Interestingly, rest or coffee breaks are not required by the FLSA.  However, when an employer provides rest breaks of up to 20 minutes in length, the FLSA requires that such breaks be included in compensable time because such short breaks primarily benefit the employer by keeping employees rested and thereby more productive.  In some cases, courts have held that shorter breaks, given as an accommodation that primarily benefits the employee, need not be compensated.  The nursing mother’s provisions of the FLSA (implemented in 2010) provide an example.  That law states that time spent expressing breast milk at work is primarily for the benefit of the employee, and need not be compensated, regardless of the length of the break.  Using that same logic, Opinion Letter FLSA2018-19 states that an employee is not due compensation for his or her rest breaks when those breaks result from FMLA-qualifying factors.  The letter adds that employees who take FMLA-protected breaks must still receive as many compensable rest breaks as their coworkers.  If the employee’s coworkers receive two paid 15-minute breaks during an eight-hour shift, the employee is entitled to his or her FMLA-mandated number of breaks, with two paid and the remainder unpaid.

This opinion letter does not address how short breaks should be treated for employees who have disabilities or serious health conditions but who are not eligible for FMLA leave.  So again, there are some unanswered questions that may leave employers wondering how to proceed.

Garnishment of wages CCPA2018-20NA

This letter writer asked for an opinion from the WHD regarding whether 18 specific lump-sum payments from employers to employees are earnings for garnishment purposes under Title III of the Consumer Credit Protection Act (CCPA).

Note that the numbering is different for this letter because it concerns a different statute (CCPA vs FLSA), and was not signed by the WHD Administrator, signified by the ‘NA’ in this letter’s citation.   Non-administrator letters were in place long before the interruption of the program in 2009, and carry the same weight as administrator letters.

This opinion states that the key factor in assessing whether lump-sum payments are earnings and subject to CCPA garnishment provisions is whether the amounts are paid by the employer in exchange for personal services.  If the lump-sum payment is made in exchange for personal services rendered by the employee, it will be subject to the CCPA’s garnishment limitations - see WHD Fact Sheet #30: The Federal Wage Garnishment Law - CCPA.  Lump-sum payments that are unrelated to personal services rendered by employees are not earnings under the CCPA.

It is WHD’s opinion that of the categories of payments the letter writer describes, the following lump-sum payments are earnings under the CCPA:

• Commissions

• Discretionary and nondiscretionary bonuses

• Productivity or performance bonuses

• Profit sharing

• Referral and sign-on bonuses

• Moving or relocation incentive payments

• Attendance, safety, and cash service awards

• Retroactive merit increases

• Payment for working during a holiday

• Workers’ compensation payments for wage replacement

• Termination pay (e.g., payment of last wages, as well as any outstanding accrued

    benefits, such as accrued but unused vacation or PTO)

• Severance pay

• Back and front pay payments from insurance settlements

The opinion adds that the following lump-sum payments are not earnings under the CCPA:

• Workers’ compensation payments for medical reimbursements

• Wrongful termination insurance for compensatory or punitive damages

• Buybacks of company shares

While the opinion letter uses the phrase “insurance settlements,” it is suggested that the source of the payment – i.e., “insurance” – is not as critical as the characterization of the payments as settlements.  If all or a portion of the total payment is characterized as being for wages, whether front pay or back pay, that portion of the payment would be earnings subject to the CCPA.

Employers, attorneys, human resource professionals and even employees should be appreciative of the return of the Wage and Hour opinion letter.   Interested parties again have a resource that sheds light on vague or confusing provisions of the FLSA, FMLA, and other statutes enforced by WHD.  And as a bonus, opinion letters, if used properly as a resource for company policies, can be utilized as a good faith defense should a firm find itself under investigation by WHD, or the subject of a private lawsuit.  

The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed. 

- Mike Staebell

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