Returning to its long-standing practice of issuing opinion letters (which had ceased in 2010), and after reissuing 17 previously withdrawn opinion letters on January 5, 2018, the Department of Labor (DOL) yesterday issued three new opinion letters offering helpful guidance to employers in determining compensable time under the Fair Labor Standards Act (FLSA) and evaluating whether lump sum payments to employees are considered "earnings" for garnishment purposes.
Determining whether travel time is compensable under the FLSA can be challenging for employers, because the question of whether travel time is working time (and, therefore, compensable) depends on the kind of travel involved and when it occurs. This determination becomes even more complicated when employees have no fixed daily schedule. In its most recent opinion letter on this topic, the DOL addresses three different scenarios involving technicians with no fixed work location and no fixed daily schedule: (1) an hourly employee traveling out of state by plane on a Sunday, attending a training class Monday through Friday, and returning home by plane Friday evening or Saturday; (2) an hourly employee traveling from home to office to pick up an itinerary and then traveling to a customer location in a company vehicle; and (3) an hourly employee driving from home to multiple customer locations throughout the day. Compensable work time generally does not include time spent commuting to or from work. However, each of the three scenarios addressed by this opinion letter involves travel time that is considered compensable work time.
As the DOL notes in Opinion Letter FLSA 2018-18, an employer must first determine an employee's "normal work hours" to determine whether travel falls within those hours. One method is to review the employee's time records during the past month to see if they reveal typical work hours. If not, the employer may use the average start and end times. If an employee truly has no normal work hours, the employer and employee may negotiate and agree to a reasonable amount of time for which travel away from the employee's home community is compensable. Thus, in scenario (1) described above, the time traveling to and from the training class is compensable when it falls within the normal work hours, even though travel may be on a Saturday or Sunday. The DOL also notes that travel between a hotel and a work site away from home normally is not compensable.
The DOL noted with respect to scenarios (2) and (3) that time spent commuting from home to work is normally not compensable, even when the employee's work location varies. However, time spent traveling between job sites during the work day is compensable. This includes travel from an office or meeting location where an employee may receive work instructions (such as an itinerary) to a job site. The DOL also noted that use of a company vehicle does not by itself make ordinary commuting time compensable, as long as the use of the vehicle is within the normal commuting area for the business and the use of the vehicle is subject to an agreement – written or otherwise – between the employer and employee.
Employee rest breaks up to 20 minutes generally are compensable because the DOL considers them to be primarily for the benefit of the employer. In Opinion Letter FLSA 2018-19, the DOL addresses the situation where an employee presents an FMLA certification from a health care provider stating that due to a serious health condition, the employee requires a 15-minute break every hour. The DOL notes that an employee is not entitled to take an unlimited number of personal breaks during the day and be compensated for them. In the circumstance where an employee requires eight 15-minute breaks per day solely due to the employee's health needs, the DOL concluded that the breaks were primarily for the benefit of the employee and were not compensable. However, the DOL noted that employees taking breaks for FMLA-protected reasons must be compensated for as many breaks as other co-workers. So, if an employer generally allows two 15-minute paid breaks per day, the employee in the example cited in the opinion letter would be paid for two breaks, and the remaining six breaks would be unpaid.
The DOL also issued a Non-Administrator letter clarifying whether certain lump-sum payments may be considered "earnings" under the Consumer Credit Protection Act. The characterization as "earnings" is important because the amount of an employee's pay which may be subject to wage garnishment is dependent upon how much of that pay is considered "earnings." Payments that are "earnings" are protected from garnishment to a certain extent, whereas payments that are not "earnings" are not. The letter noted that states consistently apply wage garnishment limitations to periodic payments (e.g., payment for hours worked received each pay period) but there is not a consistent application of the limitations to lump-sum payments.
Of the 18 specific examples of lump-sum payments presented in the letter, the DOL determined that all but one contained an "earnings" component and therefore would be – either entirely or partially – subject to the garnishment limitations. Notably, many common lump-sum payments such as bonuses, awards, retroactive salary increases, severance pay and termination payouts (including vacation payouts upon termination), were found to be "earnings" and therefore subject to the garnishment limitations. Employers always must exercise caution when making any deductions from an employee's paycheck, whether pursuant to garnishment proceedings or other paycheck deductions. Individual states may prohibit garnishment altogether or, alternatively, may provide stricter limits on garnishment than the federal law.
Of course, the DOL is careful to note that opinions expressed in opinion letters depend on the particular facts and circumstances raised in those letters. Nonetheless, these opinion letters provide valuable guidance for employers facing similar issues.