United States: DOL Issues Six New Opinion Letters And Establishes A New Office Of Compliance Initiatives

The U.S. Department of Labor (DOL) has issued six new opinion letters addressing various matters under the federal Fair Labor Standards Act (FLSA) and Family and Medical Leave Act (FMLA). According to the DOL, the release of this guidance "demonstrates the agency's continued commitment to providing meaningful compliance assistance to help employees understand their rights and ensure that employers have the information they need to comply with federal labor laws." The DOL also announced the formation of an Office of Compliance Initiatives to strengthen employer compliance assistance.

FLSA Opinion Letters

Business-to-Business Sales Can be Considered "Retail" for Purposes of Exemption

The DOL has issued further guidance regarding whether a company constitutes a "retail or service establishment" under 29 U.S.C. § 207(i) ("Section 7(i) exemption"), such that its employees may be classified as exempt. Specifically, the DOL examined whether a company selling a technology platform to other businesses can be considered a "retail or service establishment," such that the Section 7(i) exemption applies to its sales employees.

The FLSA exempts from its overtime pay requirements certain employees of "retail or service establishment[s]." 29 U.S.C. § 207(i). The exemption applies to any employee for whom the following three requirements are satisfied:

  • The employee works at a retail or service establishment,
  • The employee's regular rate of pay exceeds one and one-half times the applicable minimum wage in the workweek in which he or she works overtime, and
  • More than half of the employee's earnings in a representative period consist of commissions.

Marking a significant departure from past guidance, the DOL concluded that employees of a company selling a technology platform to other businesses qualify for the Section 7(i) exemption, notwithstanding that the customers and end-users are predominantly commercial entities purchasing the platform. The DOL also highlighted the specific facts that the company's sales of its platform are retail sales, not wholesales sales, and the platform is not resold.

In light of this new opinion, many employers may want to determine whether any of their sales employees should be reclassified as exempt under Section 7(i).

Voluntary Participation in Wellness Activities is Noncompensable Time

The DOL issued a long-awaited opinion that an employee's time spent voluntarily participating in wellness activities, biometric screenings, and benefits fairs, regardless of whether the activities occur on-site or during regular working hours, is not compensable work because the activities are for the benefit of the employees, not the employers, and the time spent participating in such activities is "off duty."

Employers with wellness programs may benefit from a comparison of their wellness activities with that described in this new opinion letter.

Motion Picture Theater Exemption Applies to Food Service Staff Employed at Motion Picture Theaters

The FLSA exempts from its overtime requirements "any employee employed by an establishment which is a motion picture theater." 29 U.S.C. § 213(b)(27). According to the DOL's opinion letter, employees of food service operations that are "functionally integrated" with their theater operations are exempt from overtime. The DOL considered several factors in determining "functional integration," such as whether the food services and theater operations are incorporated as a "single unit,"1 and whether the same employees that provide food services also work as ushers and cashiers.

Graders for Private Nonprofits May be Classified as Volunteers Rather than Employees Going Forward

The DOL evaluated whether "member examination graders" (Graders) for private nonprofit organizations who travel either domestically or from abroad to the United States once a year for a one- to two-week period to grade a global credentialing examination may be classified as volunteers instead of short-term employees. Specifically, the DOL considered whether Graders may be reclassified as volunteers even where the organization pays for Graders' transportation, accommodations and meal expenses and previously received a flat fee for service.

The DOL concluded that nonprofit organization Graders may be reclassified as volunteers rather than employees, and need not pay any fees to Graders going forward, largely because Graders offer their services freely and for service-oriented reasons. Importantly, the DOL noted that a nonprofit organization could continue to pay for Graders' travel, lodging, meal and other expenses incidental to volunteering without negating their volunteer status.2

FMLA Opinion Letters

Organ Donation Surgery Can Qualify as Serious Health Condition Under FMLA

The DOL considered whether an employee who donates an organ can qualify for leave under the Family Medical Leave Act,3 even when the donor is in good health before the donation and chooses to donate the organ solely to improve someone else's health. Additionally, the DOL addressed whether an organ donor can use FMLA leave for post-operative treatment.

The DOL concluded that organ donation can qualify as a serious health condition under the FMLA because organ-donation surgery commonly requires overnight hospitalization, though that is not the only means for organ donation to qualify as a serious health condition.4

No-Fault Attendance Policies May Not Violate FMLA

The DOL addressed whether an employer's attendance policy violates the FMLA where the policy effectively freezes, throughout the duration of an employee's FMLA leave, the number of attendance points that the employee accrued prior to taking his or her leave.5 The DOL found that because an employee neither loses a benefit that accrued prior to taking the leave nor accrued any additional benefit to which he or she would not otherwise be entitled, the policy does not violate the FMLA, as long as employees on equivalent types of leave receive the same treatment. If the employer, however, counts equivalent types of leave as "active service" under the no-fault attendance policy—meaning the employer counts such leave toward the 12 months necessary to remove points—then the employer may be unlawfully discriminating against employees who take FMLA leave. 29 C.F.R. § 825.220(c) (requiring that employees who take FMLA leave accrue the same benefits as employees who take equivalent non-FMLA leave).

Office of Compliance Initiatives

So far this year, the DOL's Wage and Hour Division has issued or re-issued 26 opinion letters and 4 Field Assistance Bulletins on topics ranging from volunteers, unpaid interns, independent contractors, exemptions and more, providing much-needed clarity on many legal issues that have been unresolved for years. Secretary Acosta also recently recognized the importance of providing compliance assistance to employers with the announcement of a new Office of Compliance Initiatives (OCI) within the Office of the Assistant Secretary for Policy.

"President Trump's Administration is committed to protecting the American worker. Vigorous enforcement and compliance assistance go hand in hand," said Secretary Acosta in a news release, adding, "[t]he Office of Compliance Initiatives expands our efforts to promote full compliance with federal labor law."

New compliance assistance initiatives include the launch of the www.employer.gov website collecting resources to assist job creators in complying with federal laws. OCI's work will also include:

  • Facilitating and encouraging a culture that promotes compliance assistance within the Department;
  • Providing employers and workers with access to high-quality, up-to-date information about their obligations and rights under federal labor laws and regulations;
  • Assisting enforcement agencies in developing new strategies to use data for more impactful compliance and enforcement strategies;
  • Enhancing outreach to stakeholders for the Department's enforcement agencies; and
  • Assisting agencies to more effectively use online resources for delivering information and compliance assistance to the American people.

Enforcement of the FLSA, FMLA and other federal employment laws will not decrease, but the DOL is once again helping employers understand how to comply with federal pay, safety and benefit laws.

Footnotes

1. Several factors the DOL considered in evaluating whether operations are "functionally integrated" included whether operations are incorporated as a single unit, file taxes and maintain business records as a single unit, and order goods and pay invoices as single unit.

2. See WHD Opinion Letter FLSA2005-6NA, 2005 WL 5419042, at *1-2 (Aug. 26, 2005).

3. 29 U.S.C. § 2612(a)(1)(D); 29 C.F.R. § 825.112(a)(4).

4. Under the FMLA, a serious health condition involves either "inpatient care" or "continuing treatment." See 29 C.F.R. §§ 825.114, .115.

5. The FMLA prohibits employers from "interfering with, restraining, or denying" an employee's exercise of FMLA rights. 29 U.S.C. § 2615(a)(1); 29 C.F.R. § 825.220(a)(1). It also prohibits employers from "discriminating or retaliating against an employee... for having exercised or attempted to exercise FMLA rights." 29 C.F.R. § 825.220(c).

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Tammy McCutchen
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