17 opinion letters that were previously withdrawn by the Obama Administration were reissued on January 5 by the Wage and Hour Division (WHD) of the U.S. Department of Labor (DOL). What are opinion letters and why do these particular letters signify so much? What’s the bottom line for employers?
The publication of opinion letters is a DOL practice that was eliminated under the Obama Administration. The letters are issued as a form of guidance that addresses questions submitted to the DOL pertaining to the Fair Labor Standards Act (FLSA) and provides important (and sometimes dissenting) commentary on the applications of the law as it pertains to employers and employees.
While these letters are referred to as “opinion letters,” they’re more than just suggestive. They’re influential. They’re administrator-issued policy statements that challenge the current interpretation of the FLSA and serve as a written ruling by the Wage and Hour Division for points of deliberation. An employer acting in reliance on these documents could be granted protection against liability.
17 Re-Issued Letters
The Obama Administration withdrew the 17 letters in question under the claim that the letters were never placed in the mail for delivery, making them unofficial (despite being signed by DOL officials during the last days of the Bush Administration). The Obama Administration then discontinued the longstanding practice of issuing opinion letters.
However, under U.S. Secretary of Labor Alexander Acosta, the practice has been reinstated, and the 17 the letters have been re-issued and renumbered FLSA2018-1 through FLSA 2018-17. The content of the letters provide important guidance on a number of specific issues under the FLSA, including the following:
- Application of section 13(a)(1)’s overtime exemption for executive and administrative employees. The letters clarify the exempt status of several specific occupations, including civilian helicopter pilots, client service managers of an insurance company, residential construction project supervisors, and consultants, clinical coordinators, and business development managers of a healthcare placement company.
- Inquiries about the salary basis test for exempt status, as defined in 29 C.F.R. § 541.602 (Letters FLSA2018-7 and FLSA2018-14).
- Whether certain bonuses/payments should be included in the regular rate for the purposes of calculating overtime.
- Whether certain on-call time qualifies as compensable working hours.
The bottom line for employers — although the reissued opinion letters do not overturn any laws or introduce new ones, the content has provided considerable new guidance for employers to scrutinize. If employers make changes within their own business in response to the guidance given in the letters, they could argue that the opinion letters serve as a written ruling for purposes of setting wage-hour policy, as stated in the Portal-to-Portal Act of 1947.
Employers must exercise care in relying on opinion letters to make decisive changes within their business structure. For instance, based on Opinion Letter FLSA2009-29, the owner of a construction business may interpret that as long as they pay their project supervisors a minimum of $455 per week, they are exempt from the FLSA’s minimum wage and overtime requirements, and are no longer eligible to earn overtime pay.
However, the owner would be wrong in assuming that, as Opinion Letter FLSA2018-10 states that project supervisors must still pass a duties test in addition to being paid the base salary. It’s important that all employers carefully read the opinion letters and consult with legal experts in order to proceed with a legally sound plan of action and avoid a costly wage-and-hour lawsuit.