Executive Summary: The U.S. Department of Labor (DOL) has announced that it will return to the practice of issuing Opinion Letters in response to inquiries from businesses regarding federal wage and hour issues, a practice abandoned under the prior administration. The DOL has also taken affirmative steps to seek additional public comment on the overtime rules proposed last year, the legality of which is currently being challenged in federal court. Both developments should be welcome news to employers, as they signal that the Department will likely provide more guidance to businesses with respect to compliance under the FLSA and that it may be taking steps towards revising the proposed overtime rules.
The Return of Opinion Letters: On June 27, 2017, the DOL stated it will return to the practice of permitting businesses and advocates to inquire about federal wage and hour issues. In 2010, the Department ceased issuing responses, known as Opinion Letters, to such inquiries, and replaced this process by issuing Administrative Interpretations, which contained general guidance on wage and hour issues. In comparison, Opinion Letters are written opinions by the DOL’s Wage and Hour Division, which provide an analysis of how the law would be applied to the specific situation posed by the employer or person requesting the response.
The DOL’s return to the issuance of Opinion Letters benefits employers in a couple of ways. First, it provides employers with a way to seek guidance on how to meet their statutory and regulatory requirements and gives them some assurance as to whether they are in compliance. Second, employers who receive an Opinion Letter can assert a good faith basis defense against liability under the FLSA. In fact, the law provides that an employer’s purported violation of the FLSA’s minimum wage and overtime requirements can be excused if the employer relied in good faith upon “any written administrative regulation, order, ruling, approval, or interpretation” by the Wage and Hour Division.
Overtime Regulations: Last year, the DOL published regulations amending the white collar exemption tests for executive, administrative and professional employees under the FLSA. Among other things, the regulations drastically increased the minimum salary required to be exempt from overtime and instituted an automatic updating mechanism increasing this threshold every three years. Detailed information regarding the new regulations can be found in our prior alerts (here and here). In November 2016, a federal court enjoined the implementation of the new regulations, and the case is currently pending in the U.S. Court of Appeals for the Fifth Circuit.
This week, the DOL sent a request for information on the overtime rules to the Office of Management and Budget (OMB). Once approved by the OMB, this request would ask the public to comment on a number of questions related to the overtime rules. While this request for information is outside of the normal rulemaking process and does not specifically affect the pending overtime rules under review by the Fifth Circuit, it does signal that the Department may soon take affirmative steps to roll back the overtime rules issued last year and replace them with more employer-friendly regulations.
As stated, currently litigation is pending in the Fifth Circuit regarding the validity of the new overtime regulations. However, repeated extensions with respect to briefing ensued, and the Department’s recent actions indicate that it may seek yet another extension to submit briefs, in order to permit it time to perhaps obtain public comment and revise the overtime regulations yet again, this time in a manner that less severely impacts employers.
Impact on Employers: The immediate impact of the DOL’s recent actions is that employers will now be permitted to seek Opinion Letters from the Department on specific wage and hour issues. This could assist employers in ensuring compliance, reducing any potential liability, and perhaps obtaining a good faith defense in any future actions. With respect to the overtime rules, employers still do not have to comply with the new overtime regulations as judicial review of the regulations is still pending. However, employers will want to keep informed as the Department takes further steps, perhaps to roll back or revise the overtime regulations.