Department of Labor Opinion Letters…They’re Back!

Department of Labor Opinion Letters…They’re Back! Kendra K. Kawai, Esq. Jennifer L. Gitter, Esq.

What are opinion letters and why should you care? • Prior to the Obama Administration, the Wage and Hour Division (“WHD”) of the Department of Labor issued several “opinion letters” each year related to its interpretation of, among other things, the Fair Labor Standards Act (“FLSA”) and the Family and Medical Leave Act (“FMLA”)

Reminder: • the Fair Labor Standards Act (“FLSA”)applies (with some exceptions) to employers (with at least two employees) whose annual dollar volume of sales or business done is at least $500,000 and to those employers whose employees perform work involved in interstate commerce, even if the employer does not meet the $500,000/year in business threshold • the FLSA provides the federal minimum wage, and overtime, recordkeeping, and youth employment standards • the Family Medical Leave Act (“FMLA”)applies (with some exceptions) to employers with at least 50 employees • the FMLA entitles eligible employees to 12 workweeks of leave in a 12-month period for certain qualifying events or serious health conditions

What are opinion letters and why should you care? • WHD opinion letters are “official written opinion[s] by the WHD of how a particular law that the WHD enforces applies in specific circumstances presented by an employer, employee, or other entity requesting the opinion.”1 • WHD opinion letters do not modify the statutes they interpret, nor are they regulations entitled to any level of deference by courts. • WHD opinion letters do clarify and explain how the WHD interprets the FLSA and FMLAand address factual situations not explicitly contemplated by the statutory text or regulations. • WHD opinion letters addressing fact-specific questions arising under the FLSA may be relied upon by employers pursuant to the Portal-to-Portal Act, 29 U.S.C. § 259, as a good faith defense to wage claims arising under the FLSA. 1 https://www.dol.gov/whd/opinion/opinion-request-1.htm

When can you rely on an WHD opinion letter? • The Portal-to-Portal Act does not apply to WHD FMLA opinion letters, but does apply to WHD FLSA opinion letters • An employer will not be subject to liability or punishment for or on account of failing to pay minimum wages or overtime compensation under the FLSA if the employer pleads and proves that the act or omission claimed of was in “good faith in conformity with and in reliance on any written administrative regulation, order, ruling, approval, or interpretation” of the WHD. 29 U.S.C. § 259(a). • Such a defense may not be relied upon, however, if the opinion letter by the WHD is modified or rescinded by the WHD, or by a reviewing court. • An employer will additionally not be able to raise good faith reliance on an opinion letter as a defense if the factual situation giving rise to the claim is unlike (even in potentially insignificant respects) the factual situation forming the basis of the opinion letter.

The rise, fall, and rise again of the opinion letter . . . • In 2010, the Obama Administration abandoned opinion letters in favor of Administrative Interpretations • Unlike opinion letters, Administrative Interpretations were broad statements of the administration’s position on various issues related to the FLSA and FMLA, and did not provide answers to employers’ or employees’ specific questions about how the FLSA and FMLA actually applied to the day-to-day operations of their business • On June 27, 2017, the Trump Administration announced that it would reinstate the WHD’s practice of issuing opinion letters in response to employers’ and employees’ questions

Notable Opinion Letters Issued Since June 27, 2017 • FLSA: • FLSA2018-01: On-Call Hours • FLSA2018-18: Travel Time • FLSA2018-19: Rest Breaks • FLSA2018-20: Wellness Activities • FLSA2018-22: Volunteers • FLSA2018-28: Overtime Rate • FMLA: • FMLA2018-1-A: No-Fault Attendance Policies • FMLA2018-2-A: Organ Donation

FLSA2018-01: On-Call Hours • Are on-call hours of ambulance personnel compensable? • “Whether time spent on call is compensable is determined by the particular factual context of each case.” • Relevant factors: • Is the employee required to remain on the employer’s premises, or just required to notify employer where her or she may be reached? • May the employee “use time effectively for [his or her] own purposes? • “Employees are considered able to use time effectively for their own purposes when they must carry a pager and are required to report to work within a reasonable time period, unless the restrictions are so burdensome and the call-backs so frequent as to prevent free use of their time.”

FLSA2018-01: On-Call Hours • But, “if calls are so frequent or the on-call time conditions so restrictive that the employee cannot effectively use on-call time for his or her own purposes, the on-call waiting time would be counted as hours worked.” • E.g., Andrews v. Town of Skiatook, 123 F.3d 1237 (10th Cir. 1997) (on call time during which call backs that occur 16 to 23 percent of the time and that require a response within five to ten minutes in a small town not compensable) • E.g., Renfro v. City of Emporia, 948 F.2d 1529 (10th Cir. 1991) (on call time during which three to five call backs occurred per shift, sometimes up to 13 per shift, is compensable) • Here, five-minute response time not significant hindrance given size of the town, and employees are not disciplined if they do not respond within five minutes. Call-backs are also relatively infrequent (3 per week on average). Employees can therefore us on-call time for personal purposes, and it is not compensable time under the FLSA.

FLSA2018-18: Travel Time (Scenario 1) • Scenario 1: An hourly technician travels by plan from home state to New Orleans on a Sunday for a training class beginning at 8:00 AM on Monday at the corporate office. The class generally lasts Monday through Friday, with travel home on Friday after class is over, or occasionally on Saturday when Friday flights are not available. • Normally, travel time is compensable if it cuts across a regular workday, but not if the travel time occurs outside of regular working hours when the employee is a passenger on an airplane, train, boat, bus, or automobile. But how do we determine whether and when travel time is compensable if there is no regular work day?

FLSA2018-18: Travel Time (Scenario 1) • According to the WHD, the employer must use one of various methods to ascertain an employee’s normal work hours for purposes of determining compensable travel time: • Review time records during the most recent month of regular employment to determine if the records reveal typical work hours • If there are no typical work hours, determine the average start and end times for the employee’s workdays • In rare cases in which employees truly have no normal work hours, negotiate and agree with the employee or the employee’s representative to a reasonable amount of time or timeframe in which travel outside of employees’ home communities is compensable

FLSA2018-18: Travel Time (Scenario 1) • Note that “if any employee is offered public transportation but requests permission to drive his [or her] car instead, the employer may count as hours worked either the time spent driving the car of the time he [or she] would have had to count as hours worked during working hours if the employee had used the public conveyance.” 29 CFR § 785.40. • When an employee is temporarily working at a fixed location, “the travel time from the hotel to the work site and back would be considered ordinary home-to-work travel, and, as such, need not be compensated.”

FLSA2018-18: Travel Time (Scenarios 2 and 3) • Scenario 2: An hourly technician travels from home to his or her home office to get a job itinerary and then travels to the customer location. The travel time from home to office varies depending on where the technician lives and can range from 15 minutes to 1 hour or more. All of this travel time is in an assigned company vehicle. • Scenario 3: Hourly technicians drive from home to multiple different customer locations on any given day.

FLSA2018-18: Travel Time (Scenarios 2 and 3) • While the employer need not compensate time spent commuting between work and home, even when an employee works at different job sites, travel between job sites after arriving at work is compensable. • The use of a company-provided vehicle “does not, alone, make an ordinary commute compensable,” so long as the use of the vehicle is within the normal commuting area and the use of the vehicle is subject to an agreement between the employee (or a representative of the employee) and the employer.

FLSA2018-19: Rest Breaks • Are 15-minute rest breaks ever hour that are necessary due to an employee’s FMLA certified serious health condition compensable, when an employee with an 8 hour shift will only perform 6 hours of work? • While rest breaks up to 20 minutes in length are ordinarily compensable, in limited circumstances, when short rest breaks primarily benefit the employee instead of the employer, they arenotcompensable. • When breaks are required solely due to the needs of an employee’s serious health condition and do not benefit the employer, the breaks may be unpaid. • However, if an employee has paid leave available, he or she may substitute that paid leave for FMLA leave. Employees who take FMLA-protected breaks must receive as many compensable breaks as their co-workers receive.

FLSA2018-20: Wellness Activities • Does the FLSA require an employer to compensate an employee for time spent on voluntary “wellness activities” that are not work related but could result in lower insurance premiums? • The relevant question is whether the time spent predominantly benefits the employer or the employee.

FLSA2018-20: Wellness Activities • Here, the employer receives no direct financial benefit as a result of employee participation, but activities do provide a potential direct financial benefit to employees who participate. • Employees are not required to perform job-related duties while participating in the wellness activities. • Voluntarily participating in biometric screenings, health education classes, taking a gym class, receiving health coaching, participating in Weight Watchers, engaging in a fitness activity, and attending a benefits fair are not compensable in this case. • But when might it be compensable?

FLSA2018-22: Volunteers • Are individuals who spend one to two weeks a year administering professional examinations out of a desire to “give back to the profession” and “give back” to the credentialing organization volunteers? Is their time compensable? • Ordinarily, an individual is not an employee if he or she volunteers without contemplation or receipt of compensation. • The volunteer must offer his or her services “freely without coercion or undue pressure,” direct or implied, from an employer.

FLSA2018-22: Volunteers • The WHD found the following factors relevant: • The majority of the Graders who previously received a flat fee would continue to serve as Graders for service-oriented reasons (giving back to the profession, etc.) without a fee. • The Graders are typically highly compensated executives who continue to receive their regular salaries from their primary employers. • The Graders travel from their home location to serve as Graders, and do sonly once per year for no more than two weeks. • The WHD concluded that because the Graders offered their services freely and without pressure or coercion, and their time spent administering examinations is not compensable. • Could the organization continue to pay for Graders’ travel, lodging, meals, and other expenses without negating the Graders’ volunteer status?

FLSA2018-28: Overtime Rate • Employer calculates regular rate by multiplying the employee’s time with clients by the hourly rate for such work, then divides the product by the employee’s total hours worked, which includes both client time and travel time. • The typical standard rate of pay is $10.00 per hour with a client including travel time. • If any employee works over 40 hours (total paid hours plus travel time) in a given workweek, they are paid time and a half for all time over 40 hours at a rate of $10.00. • Does this comply with the FLSA’s minimum wage requirements? What about the FLSA’s overtime requirements?

FLSA2018-28: Overtime Rate • The employer’s practice does comply with the FLSA’s minimum wage requirements. • While the employee’s average hourly pay rate may vary from week to week, so long as the employer ensures that hourly rate meets or exceeds the FLSA’s minimum wage requirement for all hours worked, there is no violation of the FLSA.

FLSA2018-28: Overtime Rate • The employer’s practice may not comply with the FLSA’s overtime requirements. • If the employer assumes a regular rate of pay of $10.00 per hour when calculating overtime due, then the employer will not pay all overtime due to employees whose actual rate of pay exceeds $10.00 per hour. • Neither an employee nor an employer may choose the regular rate of pay; it is an “actual fact” based on “mathematical computation.” • However, the compensation plan does comply with the FLSA’s overtime requirements for any employee who makes less than $10.00 per hour.

FMLA2018-1-A: No Fault Attendance Policies • Does a no fault attendance policy that may apply differently to those who take FMLA leave violate the FMLA? • The FMLA prohibits employers from “interfering with, restraining, or denying” an employee’s exercise of FMLA rights, and from discriminating or retaliating against an employee for exercising such rights. • Employers may not consider FMLA leave as a negative factor in employment actions, and an employee who takes FMLA leave is entitled to the same benefits that “an employee on leave without pay would otherwise be entitled to [receive].” • FMLA cannot be counted under no-fault attendance policies (i.e., an employee cannot accrue points for taking FMLA leave)

FMLA2018-1-A: No Fault Attendance Policies • But the FMLA does not “entitle an employee to superior benefits or positon simply because he or she took FMLA leave” • An employee may, but is not entitled to, accrue additional benefits or seniority during unpaid FMLA leave • “An employee is not entitled to additional benefits or payments that are contingent on achieving a specified goal that the employee was unable to achieve because he or she took FMLA leave.” • Instead, an employee’s entitlement to benefits (other than group health benefits) is “determined by the employer’s established policy for providing such benefits when the employee is on other forms of leave (paid or unpaid, as appropriate).”

FMLA2018-1-A: No Fault Attendance Policies • The WHD concluded that “[r]emoval of absenteeism points is a reward for working and therefore an employment benefit under the FMLA.” • Because the number of accrued points remains frozen during FMLA leave, the employee neither loses a benefit that accrued prior to taking the leave nor accrues any benefit to which he or she would not otherwise be entitled. • Such a practice does not violate the FMLA, so long as employees on equivalent types of leave receive the same treatment. • If the employer counted equivalent types of leave as “active service” (such that they count towards the 12-months necessary to remove points), the outcome may be different.

FMLA2018-2-A: Organ Donation • Can an employee who voluntarily donates an organ qualify for FMLA leave, even when the donor is in good health before the donation and chooses to donate the organ solely to improve someone else’s health? • Can an organ donor use FMLA leave for post-operative treatment? (this usually requires an overnight stay at a hospital) • A “serious health condition” is an “illness, injury, impairment, or physical or mental condition that involves” either “inpatient care in a hospital, hospice, or residential medical care facility” or “continuing treatment by a health care provider.” 29 USC § 2611(11). • “Inpatient care” is “an overnight stay at a hospital, hospice, or residential medical care facility, including any period of incapacity . . . or any subsequent treatment in connection with such in patient care.” 29 CFR § 825.114.

FMLA2018-2-A: Organ Donation • The WHD concluded that an organ donation “can qualify as an impairment or physical condition that is a serious health condition under the FMLA when it involves either “inpatient care” under § 825.114 or “continuing treatment” under § 825.115. • In other words, organ donation can qualify as a serious medical condition whenever it results in an overnight stay in a hospital.

Tips • Stay up to date on WHD opinion letters • They offer useful guidance on how the WHD interprets and enforces the FLSA and FMLA • However, if you intend to rely on a opinion letter in making a compensation decision that could implicate the FLSA, contact counsel to ensure the facts are similar enough that your reliance would provide a defense in the event of an investigation or litigation. • Remember that there is no defense of good faith reliance on a WHD opinion letter interpreting the FMLA • Review the FLSA Field Operations Handbook (FOH)

Questions? Kendra K. Kawai, Esq. kkk@torkildson.com Jennifer L. Gitter, Esq. jlg@torkildson.com

Department of Labor Opinion Letters…They’re Back!