In the summer of 2019, the Department of Labor (“DOL”) made headlines when Secretary of Labor Alexander Acosta resigned. President Trump then nominated Eugene Scalia for the position, and Mr. Scalia was sworn in as Secretary of Labor on September 30. In recent months, the Senate also confirmed Cheryl Stanton as Administrator of the Wage and Hour Division.Even while the leadership changes at the Department made headlines, the regulatory agenda of the Agency has been moving forward. As we discussed here, DOL published a final overtime rule raising the salary threshold for the white collar exemptions from overtime and minimum wage under the Fair Labor Standards Act (“FLSA”). The new rule raises the threshold to $684 per week (or $35,568 per year for a full time worker).
DOL has also published a proposal to clarify and update several regulations that that relate to what may be excluded from the “regular rate of pay” for purposes of calculating overtime when employees work in excess of 40 hours per week. Additional proposed rules are reported to be on the horizon. In late July, 2019, DOL sent a proposed rule relating to tip-pooling to the White House Office of Management and Budget. In August, DOL added a proposal relating to the fluctuating workweek to its regulatory agenda, stating that it proposes to revise the fluctuating workweek regulations to grant employers greater flexibility to provide employees bonuses or other incentive-based pay consistent with the method. The Department has also issued a request for comments on proposed revisions to its FMLA certification form.
In addition to the formal regulations, DOL has also continued to issue multiple opinion letters throughout 2019. The practice of issuing formal Opinion Letters had been discontinued during the prior administration.[1] During calendar year 2018, the Department published 29 Opinion Letters, including several Opinion Letters that had been issued in mid-January, 2009 and later withdrawn. As of the end of August, 2019, the Department had issued 12 new Opinion Letters in 2019 under the Fair Labor Standards Act (“FLSA”).
Several of the FLSA Opinion Letters issued to date in 2019 have been employer-friendly. Some the most significant guidance from DOL for private sector employers thus far in 2019 cover the following issues:
- In March, DOL issued an opinion letter discussing whether an employer’s encouragement of employee participation in volunteer activities constituted “hours worked” under the FLSA. We previously discussed this Opinion Letter DOL concluded that the program in question was entirely voluntary, because the employer was not directing employees that they had to participate, or otherwise controlling the volunteer activities. DOL further concluded that the employer’s provision of incentive compensation for the group of employees who made the most impact over the year did not change its analysis, noting that the employees who do not participate did not appear to suffer adverse consequences.
- In April, DOL issued an opinion letter discussing whether service providers who provide their services through a virtual marketplace company were employees or independent contractors. The Department’s opinion concluded that the company’s workers, who provide services to consumers through the company’s virtual platform, are independent contractors. In issuing this guidance, DOL first defined a “virtual marketplace” as one that operates “on demand” or as part of what has widely been termed the “sharing economy.” As in the opinion letter relating to volunteer activities, DOL’s conclusion rested largely on its analysis of whether the company exerts control over the service providers, who are able to work when they want and pursue other external opportunities. In essence, the agency concluded that the workers are able to control their own profit/loss margin. Additionally, the Department of Labor noted that the most workers choose not to work full-time as they pursue other opportunities, or have other jobs outside the platform of the virtual marketplace company. In this respect, these workers are considered independent contractors and therefore are not subject to the FLSA’s minimum-wage or overtime-wage protections.
- In July, DOL issued an opinion letter discussing whether paralegals for a trade association are appropriately classified as exempt from overtime under the highly compensated employee exemption. The agency concluded that the exemption applied because the higher salary threshold (currently $100,000) was met, and the paralegals were engaged in non-manual work related to the general business operations of the trade association. The agency then discussed whether the paralegals “customarily and regularly” (more than occasionally) performed work that was exempt in nature, and concluded that they would be appropriately classified as exempt administrative employees under the highly compensated exemption.
- Also in July, DOL issued an opinion letter discussing whether time spent in a sleeper berth of a truck is compensable time under the FLSA. Prior DOL guidance had concluded that only up to 8 hours of sleeping time may be excluded from working time in a trip 24 hours or longer, and no sleeping time may be excluded for trips under 24 hours. In the July Opinion Letter, the agency concluded that the approach was overly burdensome for employers, and advised that it would now consider “sleeper berth time as non-working travel time, rather than on-duty sleeping time.”
Key Takeaways
In 2019, the Department of Labor has continued to advance its regulatory agenda, and to provide guidance through the use of Opinion Letters. Most of the regulatory actions and Opinion Letters are employer-friendly and provide greater clarity for employers.
This article was drafted by Helen Holden, an attorney in Spencer Fane’s Phoenix, Arizona office. For more information, please visit www.spencerfane.com.
[1] In general, Opinion Letters can be of assistance to employers in complying with the sometimes hard-to-understand regulations and authorities under the Fair Labor Standards Act. However, employers should use some caution in relying on these Opinion Letters, as the DOL’s pronouncements are subject to challenge in court. See, e.g., Cope v. Let’s Eat Out, Inc., 354 F. Supp. 3d 976, 986 (W.D. Mo. 2019).
