Daily Labor Report®

Opinion Letters Clarify Labor Department Views on Pay, Leave (2)

Aug. 28, 2018, 2:12 PMUpdated: Aug. 28, 2018, 9:02 PM

The Labor Department’s latest batch of opinion letters tackles six questions about whether employer policies on compensation and unpaid medical leave comply with the law.

The letters, released Aug. 28 by the DOL’s Wage and Hour Division, provide clarity on how to compensate workers for time spent attending voluntary health-and-wellness activities, how to apply overtime exemptions for workers in movie theaters and retail, whether short-term employees can be considered volunteers, whether organ donors qualify for unpaid medical and family leave, and if an employer’s no-fault attendance policy violates the Family and Medical Leave Act.

The department’s approach to addressing wellness activities and Fair Labor Standards Act exemptions for retail workers in the technology industry reflects the DOL’s efforts to expand the law to cover industries that didn’t exist when the law was first created, Alfred Robinson, a management-side attorney with Ogletree Deakins in Washington, said.

“They are advancing the ball and giving guidance on new areas,” he said. “They’re trying to apply an 80-plus-year-old statute on evolving industries and practices.”

The release of the opinion letters also shows the division isn’t slowing down its approach to clarifying policy questions even though Cheryl Stanton’s nomination for administrator is still pending. Bryan Jarrett is the acting administrator and signed off on the letters.

An opinion letter is an explanation of how a particular law applies in specific circumstances presented by the person requesting the letter. Anyone can request an opinion letter. They’re highly coveted as they represent the government’s official interpretation on whether a compensation policy is in compliance. They can also be offered as a legal defense in some cases.

The Wage and Hour Division concealed the names of the requesting parties, as is usual, citing federal privacy law.

Letter Cites Encino Motorcars Precedent

One opinion letter requested clarification on the overtime exemptions for sales representatives. The employees sell a technology platform allowing online and retail merchants to accept credit card payments from customers using a mobile device, online, or in person.

The DOL said an employer isn’t required to pay those workers time and a half for overtime hours. It cited the U.S. Supreme Court’s recent decision in Encino Motorcars, LLC v. Navarro, in which the justices said overtime exemptions can be read broadly to cover various workers.

The Encino case involved car service advisers who sold service packages provided by technicians at Encino Motorcars LLC.

Robinson and Patricia Smith, senior counsel for the National Employment Law Project, noted that this is the first time the DOL had cited that case.

The Supreme Court in April ruled that the advisers fell within one of the categories of employee listed in the FLSA who aren’t entitled to time-and-a-half pay when they work more than 40 hours in a week. The high court reversed an earlier decision by the U.S. Court of Appeals for the Ninth Circuit, which had found in 2017 that the workers were eligible for overtime pay. The Supreme Court rejected decades-old employee-friendly guidance for how courts should consider whether an exemption to paying overtime applies.

Citing this case reflects a change in the DOL’s position from President Barack Obama’s administration, Smith said. She was the solicitor of labor during the Obama administration.

“That opinion to me was troubling,” Smith said.

Robinson said the DOL’s acceptance of Encino was “a fair reading of the exemption.” Moving forward, this opinion letter will help other companies clarify overtime exemptions in a similar situation, he said.

(Updated to include additional reporting.)

To contact the reporter on this story: Jaclyn Diaz in Washington at jdiaz@bloomberglaw.com

To contact the editor responsible for this story: Peggy Aulino at maulino@bloomberglaw.com

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