17 DOL Opinion Letters from the George W. Bush Administration Resurface

By SHLC on January 25, 2018 in Legal Update

On January 5, 2018, the U.S. Department of Labor (“DOL”) formally issued 17 Opinion Letters that reproduce verbatim the text of letters that were signed by the administrator of the Wage and Hour Division approximately nine years ago near the end of the George W. Bush Administration but never issued. An Official of the DOL explained that the letters had been signed, placed in a box of outgoing mail, and then locked in a room that was inaccessible during the final days of the Bush Administration. While the Obama Administration acknowledged the existence of the letters, it did not formally issue any of them.

An Opinion Letter is an official opinion of the DOL’s Wage and Hour Division regarding how a particular law applies in a fact specific circumstance. Courts often follow the guidance of DOL Opinion Letters and in turn the Letters provide employers and employees with insight on how to comply with the Fair Labor Standards Act (“FLSA”). Accordingly, Opinion Letters also provide a potential good faith reliance defense to employers for actions that may be deemed a violation.  The DOL only recently announced that it would return to the practice of issuing Opinion Letters on June 27, 2017 (as opposed to the general “Administrative Interpretations” provided between the years of 2010 and 2016).

Employers are advised to review the revived Opinion Letters that can be found here.  In particular, two of the topics addressed (Working Time & Regular Rate of Pay), discussed below, are of significant interest to both California and Nevada Employers.

Working Time

Letter No. FLSA2018-1 addresses the prevalent question of whether or not an employee is entitled to pay for being “on-call” under the federal Fair Labor Standards Act (FLSA). The letter analyzes the question for on-call ambulance personnel in a very small city with a population of approximately 4,000 people.  The opinion focuses on whether or not being on-call hinders an employee’s ability to use the time for his or her benefit. Multiple factors are considered in the opinion such as where an employee must wait during the on-call hours, the response time required, actions taken if an employee fails to respond, and the number of call-backs enforced. In the specific circumstance discussed, the ambulance personnel were not required to remain at or around the ambulance garage but were required to carry a pager and employees understood that if they were called they should arrive at the ambulance garage within five minutes of being paged. The DOL found “the five-minute response time is not a significant hindrance in this particular situation because travel within city limits here takes only a few minutes and, significantly, the county does not discipline employees who fail to respond within five minutes — it can take up to eight minutes for employees to respond.”

Employers are reminded that it may be necessary to compensate employees when the employer controls a non-exempt employee’s time. The letter states that the issue is determined by the particular factual context of each case. The Opinion Letter’s outcome could be different if the response time of five minutes was enforced in a larger city. Other factors could also change the analysis and require employees to be paid for on-call time.

It is important to note that the analysis of whether on-call time must be compensated may be different under state law in both California and Nevada. Employers are subject to both state and federal law and it is therefore imperative that employers have their on-call policies examined for compliance with both federal and state law by a competent attorney in their state. Likewise, exercising any type of control during an employee’s meal or rest periods might also result in non-compliant meal or rest periods under California state law, for example.

Regular Rate of Pay (“RROP”)

An employee’s RROP is used to determine overtime compensation under federal law and under both California and Nevada state law. The RROP calculation method is based on the FLSA. Contrary to what most employers believe, overtime is not 1.5 times the employee’s straight time pay.  Rather, overtime is 1.5 times an employee’s RROP (California law also requires employers to pay double time for some overtime hours). The FLSA describes payments that must be included in the RROP and failing to include compensation in the RROP can result in underpayments of overtime and associated penalties. Letters Nos. FLSA2018-5 and FLSA2018-11 review sample employer’s calculations of the RROP and overtime. The Letters state that some bonuses must be incorporated into an employee’s RROP and therefore employers may be required to retroactively recalculate the overtime paid to employees.  As an example, a non-discretionary bonus that is paid quarterly would require a retroactive recalculation. For California employers, the DLSE Enforcement Manual has a more thorough discussion of RROP which can be found here.

SHLC Attorneys Brett Sutton and Jared Hague will discuss the revived Opinion Letters along with many other wage and hour issues for Nevada employers during the next live SHLC Nevada webinar on Wednesday, February 7,2018 with special guest speaker Nevada Labor Commissioner Shannon Chambers.  The Opinion Letters will also be discussed during SHLC’s comprehensive, live half-day seminar: Wage and Hour Law for California Employers on March 7, 2018. For more information and registration for these events, visit: www.suttonhague.com/events.