On April 12, 2018, the U.S. Department of Labor’s (DOL) Wage Hour Division released three opinion letters regarding the legality of certain arrangements under the Family and Medical Leave Act (FMLA), Fair Labor Standards Act (FLSA), and Title III of the Consumer Credit Protection Act (CCPA).
The first letter addresses a question commonly faced by employers—whether an employee is entitled to compensation for time spent traveling away from the employee’s home community.[i] Generally, the FLSA provides that employees are not entitled to compensation for travel time between their homes and work. However, this issue is more complex when an employee is required to travel away from his home community, such as in overnight travel. In these scenarios, such travel time is considered compensable worktime when it cuts across the employee’s regular workday. In particular, this opinion letter addresses the scenario where an employee does not have regular working hours. The letter first notes that most employees do have a regular workday, and that the employer should closely scrutinize an employee’s time records. In those rare scenarios when the employee truly does not have regular working hours, the employer has two options when considering whether travel time cuts across the employee’s normal workday. First, the employer may choose the average start and end times for the employee’s workdays. Accordingly, any travel time that cuts across these times would be compensable. Second, the employer may negotiate and agree to a reasonable amount of time or timeframe in which travel outside of employee’s home communities is compensable.
Most importantly, the letter states that the DOL will not find a violation of the FLSA if the employer uses either of these two methods to establish an employee’s normal working schedule and accordingly compensates the employee for travel during those hours. The letter also advises that compensable worktime generally does not include time spent commuting between home and work, even when the employee works at different job sites. Likewise, the letter states that use of a company vehicle, alone, will not make ordinary commute time compensable.
The next letter addresses whether a non-exempt employee’s 15-minute rest breaks—when covered under the FMLA because they are certified by a health care provider as necessary due to a serious health condition—are compensable under the FLSA.[ii] In this specific circumstance, several non-exempt employees had FMLA certifications from healthcare providers stating that they required a 15-minute rest break every hour due to a serious medical condition. As such, in an eight hour shift, each employee would only work six hours.
In determining whether the employer must pay the employee during these times, the opinion focuses primarily on who receives the benefit of these breaks. While noting that 20-minute rest breaks have previously been determined to be for the benefit of the employer and are therefore compensable, in this instance the rest break primarily benefits the employee and no compensation needs to be paid. The DOL reasoned that these 15-minute breaks are given solely to accommodate the employee’s health condition, and differ significantly from a typical 20-minute break given less frequently throughout the day to allow employees to reenergize. The opinion also notes that the FMLA itself does not contain language that requires these breaks to be compensated. Lastly, the opinion states that these employees must still receive as many compensable rest breaks as other employees. For example, if all employees receive two, compensated 15-minute breaks during an 8-hour shift, then employees who are taking hourly, 15-minute rest breaks for a serious health condition should be compensated for two of them.
The final letter addresses whether certain lump-sum payments are earnings for garnishment purposes under the Title III of the CCPA.[iii] The DOL noted that in determining whether a payment meets the definition of “earnings” under the CCPA, “the central inquiry . . . is whether the employer paid the amount in question for the employee’s services.” If so, the payment meets the definition of “earnings” under the CCPA and may be garnished.
According to the letter, the following types of payments qualify as earnings under the CCPA: commissions, discretionary and nondiscretionary bonuses, productivity or performance bonuses, profit sharing, referral or sign-on bonuses, moving or relocation incentive payments, attendance awards, safety awards, cash service awards, retroactive merit increases, payment for working during a holiday, termination pay, severance pay, workers’ compensation payments designed to replace wages, and back and front pay. However, the following types of payments are not earnings under the CCPA: reimbursements for medical expenses in workers’ compensation cases, compensatory or punitive damages, and buybacks of company shares. Thus, again, the determinative factor in deciding whether the payment falls under the CCPA’s definition of earnings is the compensatory nature of the payment (i.e., whether the payment is for the employee’s personal services).