Executive Summary: In a change from the prior administration, the U.S. Department of Labor (DOL) on Friday reinstated nearly 20 “opinion letters” previously published under the Bush administration, but withdrawn prior to implementation by the Obama administration. The U.S. DOL also issued field bulletins providing new guidance on enforcement positions. The reissued letters predominately focus on specific industries; however, three of opinions generally apply to all employers. Below is a brief summary of each opinion.
Generally Applicable to All Employees
FLSA 2018-9: The FLSA requires overtime be paid at one and one-half times an employee’s regular rate, which includes all remuneration for employment paid to the employee. The regular rate includes non-discretionary bonuses as a part of the employee’s regular rate. However, the regulations recognize certain exceptions to the regular rate calculation, such as travel expenses and discretionary bonuses. Thus, previous payments properly excluded from the regular rate may be excluded when calculating year end non-discretionary bonuses based on a predetermined percentage of an employee’s total straight time and overtime earnings for the year. Non-discretionary bonuses computed in this fashion increase the employee’s straight time and overtime earnings by the same percentage, and therefore include proper overtime premium compensation.
FLSA 2018-14: The regulations prohibit deductions from an exempt employee’s salary for personal absences that are less than one full day. Where an employee is absent for one or more full days, but does not have enough PTO to cover the entire absence, a deduction from the employee’s pay for any portion of the full-day absence not accounted for by PTO is permissible. If an employee is absent from a shift scheduled to be longer or shorter than his/her regular shift, a deduction equivalent to the number of hours missed is permissible.
FB – FLSA 2018-2: The previous six-factor test used to determine whether interns qualify as employees has been tossed. Instead, the DOL will utilize the “primary beneficiary” test, first established in Glatt v. Fox Searchlight Pictures, Inc. and subsequently adopted by numerous federal courts. The test includes a non-exhaustive list of seven factors and examines the economic reality of the intern-employer relationship. The emphasis is on flexibility to “holistically analyze internships on a case-by-case basis” rather than satisfaction of any independent criteria.
FLSA 2018-4: Addresses whether project superintendents employed by commercial construction companies meet the FLSA’s executive, professional, and administrative exemptions.
FLSA 2018-10: Where a majority of a project supervisor’s work is non-manual and directly related to the management or general business operations of the homebuilding company, including tasks such as budgeting, auditing, and quality control, s/he will be exempt under the administrative exemption.
FLSA 2018-17: Similar to FLSA 2018-10, a project supervisor may be exempt as a bona fide administrative employee, where the supervisor spends the majority of his/her time performing non-manual work directly related to the management or general business operations of the company and exercises discretion and independent judgment with respect to matters of significance.
FLSA 2018-1: Ambulance workers’ on-call hours are not compensable where number of call backs are infrequent and response time is not a significant hindrance to workers’ use of time for personal reasons.
FLSA 2018-5: Addresses calculation of regular rate for firefighters and alarm operators subject to a collective bargaining agreement, noting that facts of employment control over negotiated agreement under CBA.
FLSA 2018-7: For salaried nurse on-call for surgery over weekends (2:30 p.m. on Friday to 6:30 a.m. Monday), permissible to deduct from pay for absence for personal reasons based on hours missed.
FLSA 2018-12: Addresses whether several categories of employees based at headquarters of medical staffing firm supporting temporary medical professionals assigned to clients meet administrative exemption.
FLSA 2018-16: Addresses whether EMTs paid by a private for-profit company to provide services for a private non-profit volunteer fire company could continue to “volunteer” their services to the fire company during off hours on an unpaid basis.
FLSA 2018-8: Client service managers of insurance firm who advise and consult agency’s clients and have authority to recommend solutions to clients and execute insurance contracts and legally bind insurance firm exercised discretion and independent judgment as to matters of significance sufficient to satisfy administrative exemption.
FLSA 2018-13: Addresses whether several categories of employees at firm providing fraud and theft detection and investigation services to insurance industry meet administrative exemption.
Oil, Gas & Energy
FLSA 2018-11: Addresses inclusion of flat-rate “job bonuses” in regular rate for equipment operators of oilfield services company.
FLSA 2018-3: Civilian helicopter pilots are not exempt as bona fide executive, professional or administrative employees. However, the WHD takes the position of non-enforcement where pilots hold an FAA or Commercial certification, receive at least $455 per week in salary or compensation, and engage in a list of activities.
FB – FLSA 2018-1: DOL refuses to take the position that service advisers who are employed by nonmanufacturing establishments primarily engaged in the business of selling automobiles, trucks, or farm implements do not meet the overtime pay exemption under section 13(b)(10)(A).
FLSA 2018-6: Faculty members who spend a considerable amount of time coaching sports teams are considered to be contributing to the educational development of students and may qualify for the teacher exemption.
FLSA 2018-2: For sales/service technicians of plumbing repair and replacement services firm serving predominately residential customers, compensation plan based on commissions is permissible under 7(i) so long as regular rate exceeds one and one-half times minimum wage and more than half of pay is commissions.
FLSA 2018-15: Off-site coordinators of product demonstration company meet administrative exemption where they recruit and schedule product demonstrators, manage client relationships and resolve issues, and forecast staffing and client needs.
Employers’ Bottom Line:
Employers should review their wage and hour policies to ensure compliance with this new guidance. However, it is important to review the facts involved in the opinion letters before acting in conformity with the guidance as each opinion letter is extremely fact sensitive and individualized.