DOL Releases Two New Proposed Rules and Six Opinion Letters
Following the U.S. Department of Labor (DOL)’s Wage and Hour Division (WHD)’s release of the Fair Labor Standards Act (FLSA) overtime proposal, the agency has continued to march ahead with its regulatory agenda, issuing six new opinion letters and two proposed rules within the last three weeks.
WHD issued new opinion letters on March 14 and April 2 that address compliance issues related to the Family and Medical Leave Act (FMLA) and the FLSA, including one letter specific to higher education and another dealing with tracking hours for those who live on the worksite.
As WHD states, “an opinion letter is an official, written opinion by the Wage and Hour Division of how a particular law applies in specific circumstances presented by an employer, employee or other entity requesting the opinion.”
The three opinion letters issued on March 14 are:
- FMLA2019-1-A: Provides an opinion on the obligation to designate FMLA-qualifying leave and prohibition on expanding FMLA leave.
- FLSA2019-1: Clarifies FLSA wage and recordkeeping requirements for residential janitors and the “good faith” defense.
- FLSA2019-2: Addresses FLSA compliance related to the compensability of time spent participating in an employer-sponsored community-service program.
The three opinion letters issued on April 2 are:
- FLSA2019-3: Addresses whether a youth residential care facility may implement an “8 and 80” overtime pay system.
- FLSA2019-4: Addresses the application of the teacher exemption to nutritional outreach instructors employed by a public university.
- FLSA2019-5: Addresses the application of the agricultural exemption to the freezing, cutting, packing, storing and/or transportation of a farm’s own fruit, vegetable or meat products.
Since the issuance of opinion letters — a longstanding practice of DOL before it was eliminated during the Obama administration and replaced with broader “Administrator Interpretations” — was reinstated in June 2017, WHD has issued over 30 new letters and created a search function to allow the regulated community to search existing letters based on a variety of parameters.
In addition to WHD’s work on opinion letters, it has also been moving aggressively to update regulations that have not been revised for several decades and thus have not kept pace with changes in the workforce and the evolution of compensation practices. These proposals include:
On March, 28, WHD issued a proposed rule “to clarify and update the regulations governing regular-rate requirements for the first time in more than 50 years.” The FLSA, which was enacted in 1938, requires employers to pay their employees at least a minimum hourly wage, which is set by the statute, and an “overtime” rate of one and one-half times the employee’s regular hourly wage for every hour the employee works over 40 hours in a given week. The regular-rate requirements set forth the forms of payment employers include and exclude when determining a worker’s overtime rates.
As compensation practices have changed significantly in the 50 years since DOL last revised the regular-rate regulations, it may be unclear to some employers as to whether newer employer-provided benefits such as fitness classes or weight-loss programs must be included in the calculation of an employee’s regular rate of pay.
To clarify, WHD’s proposal confirms that employers may exclude the following from an employee’s regular rate of pay:
- The cost of providing wellness programs, on-site specialist treatment, gym access and fitness classes, and employee discounts on retail goods and services;
- Payments for unused paid leave, including paid sick leave;
- Reimbursed expenses, even if not incurred “solely” for the employer’s benefit;
- Reimbursed travel expenses that do not exceed the maximum travel reimbursement permitted under the Federal Travel Regulation System regulations and that satisfy other regulatory requirements;
- Discretionary bonuses;
- Benefit plans, including accident, unemployment and legal services; and
- Tuition programs, such as reimbursement programs or repayment of educational debt.
DOL states that the purpose behind updating the regular rate is to “promote compliance with the FLSA; provide appropriate and updated guidance in an area of evolving law and practice; and encourage employers to provide additional and innovative benefits to workers without fear of costly litigation.”
CUPA-HR plans to submit comments on the proposal.
On April 1, WHD announced a proposed rule to clarify joint-employment liability under the FLSA. Under the FLSA, it is a longstanding principle that a worker can be jointly employed by two or more employers who are both responsible, simultaneously, for the employee’s wages. Whether an employee has more than one employer is important in determining employees’ rights and employers’ obligations under the law.
While the WHD proposal is the first revision to the joint employer regulation since 1958, in 2016, the WHD under President Obama issued sub-regulatory guidance, in the form of an administrator’s interpretation (AI) on the issue of joint employment, which took an expansive view of who is an employee under the FLSA. That guidance was rescinded in 2017 by Secretary of Labor Alexander Acosta.
DOL’s new proposal, unlike the 2016 AI, undertakes formal rulemaking, and therefore would have the force of law were it to become effective to establish a clear, four-factor test to consider whether the potential joint employer actually exercises the power to:
- Hire or fire the employee;
- Supervise and control the employee’s work schedules or conditions of employment;
- Determine the employee’s rate and method of payment; and
- Maintain the employee’s employment records.
The proposal also provides real-life examples of situations where DOL would or would not assert a joint-employment relationship were this proposal to become effective and also defines factors it deems not relevant to a joint-employer relationship.
Once the proposal is published in the Federal Register, the public will have 60 days to submit comments.
- Notice of Proposed Rulemaking: Regular Rate Under the Fair Labor Standards Act
- Overtime Pay Website
- Fact Sheet: Notice of Proposed Rulemaking to Update the Regulations Governing the Regular Rate Under the FLSA
- FAQs About the Proposed Regular-Rate Rule
- Press Release: DOL Issues Proposal to Update the FLSA’s Regular-Rate Regulations
- Notice of Proposed Rulemaking: Joint-Employer Status Under the FLSA
- Fact Sheet: Notice of Proposed Rulemaking to Update the Regulations Governing Joint-Employer Status Under the FLSA
- Frequently Asked Questions About the Joint-Employer Proposed Rule
- Examples Clarifying Joint-Employment Status
- Press Release: DOL Issues Proposal to Update the FLSA’s Joint-Employer Regulations