The U.S. Department of Labor announced today that it will reinstate the Department’s long-standing practice of issuing opinion letters to employers and employees regarding application of the Fair Labor Standards Act. The Obama Administration eliminated opinion letters in favor of broader “Administrator Interpretations,” but those were few and far between. “The letters were a division practice for more than 70 years until being stopped and replaced by general guidance in 2010,” the DOL release said. Opinion letters address specific, and often nuanced questions, regarding application of the FLSA and its implementing regulations. They provide guidance to employers, who, under the FLSA can rely on the guidance in structuring operations and compensation. And if the employer relies on the opinion letter, even if a court later decides the DOL opinion letter does not accurately apply the law, the employer may be able to avoid liability under the “good faith” defense established by the FLSA. “Reinstating opinion letters will benefit employees and employers as they provide a means by which both can develop a clearer understanding of the Fair Labor Standards Act and other statutes,” said Secretary Acosta. At the beginning of the Obama administration, the DOL withdrew, for further consideration, several opinion letters that had been prepared by the Bush Administration, but not mailed prior to inauguration. During the following eight years of the Obama Administration, however, the DOL did not take any further action with respect to those opinion letters. It is possible that some of these opinion letters may be reinstated.
U.S. Secretary of Labor Alexander Acosta announced on June 7, 2017, the immediate withdrawal of two Wage and Hour Division Administrator’s Interpretations (“AIs”) on joint employment and independent contractor status issued by the Obama administration.
Administrator’s Interpretation No. 2016-01, issued in January 2016, addressed joint employment under the Fair Labor Standards Act (“FLSA”) and Migrant and Seasonal Agricultural Worker Protection Act (“MSPA”) and Administrator’s Interpretation No. 2015-1, issued in July 2015, addressed the definition of independent contractors under the FLSA. The AI regarding joint employment was viewed as an attempt to expand the definition of joint employment and the AI defining independent contractor status as narrowing those classified as independent contractors.
DOL made clear that removal of the two AIs “does not change the legal responsibilities of employers under the Fair Labor Standards Act or Migrant Seasonal Agricultural Worker Protection Act, as reflected in the Department’s long-standing regulations and case law.” But the withdrawal of these two AIs likely signals a policy shift in how DOL will interpret and seek to enforce matters relating to joint employment and independent contractor.
Acosta also signaled during his confirmation hearing that he may re-implement the agency’s practice of issuing opinion letters and, if this practice is reinstated, it is possible DOL may issue opinion letters further addressing joint employment and independent contractor issues.
Noel Tripp authors “Wage-and-Hour Audits: The Time (As Always) Is Now,” published by International Risk Management Institute.
The New York State Department of Labor (NYSDOL) has appealed the Industrial Board of Appeals decision that invalidated and revoked final regulations issued by the NYSDOL which would have significantly restricted the use of payroll debit cards and imposed new disclosure and consent requirements for direct deposit. The regulations (12 NYCRR §192) were to become effective on March 7, 2017, had the Industrial Board of Appeals not invalidated them. Further discussion regarding the proposed rules can be found here.
Georgia’s governor recently signed into law a measure protecting Georgia employers from those pesky local laws seeking to regulate wages and hours. The State already prohibits localities from enacting more favorable minimum wage and overtime laws than State law, but now Georgia’s tradition of promoting an employer-friendly environment, particularly for retail businesses and restaurants, has preemptively barred local wage laws regulating how employers schedule employees. The law is aimed at preventing local laws that, for example, require compensation for on-call employees whose shifts are canceled on short notice. Learn more here.
The Fifth Circuit granted the government’s request for additional time to file its final reply brief in the pending appeal of a nationwide injunction issued by a Texas District Court Judge, blocking the DOL’s controversial overtime rule raising the required salary level for the white collar exemptions. The final reply brief will not be filed until June 30, 2017, with oral argument likely scheduled sometime in the summer, unless additional requests for an extension are made. The final brief was due on May 1, 2017, but the government requested an additional 60 days so the new administration could evaluate the case. The government, prior to the election, had asked for expedited briefing, but now has made three requests to delay a ruling so the Trump administration can weigh in. The additional 60 days will provide Alexander Acosta, who is expected to be confirmed as Secretary of Labor, time to determine what position he will take on the Obama overtime rule. It will be one of the first major decisions the new Secretary of Labor will need to make.
The government has asked for another delay in submitting its final brief to the Fifth Circuit Court of Appeals regarding the DOL’s Final overtime rule, which raised the salary level for the white collar exemptions from $23,660 to $47,476. The final reply brief was scheduled to be filed on May 1, 2017, after two earlier requests for an extension. Now the government has asked for an additional 60 days, until June 30, 2017, to file the reply brief. The motion notes the request is necessary “to allow incoming leadership personnel adequate time to consider the issues” and explains that the Secretary of Labor has yet to be confirmed. It is expected the Fifth Circuit will grant the request, which was unopposed. A vote on the Secretary of Labor nominee, Alexander Acosta, may be scheduled next week. Once the Secretary is confirmed, the government will need to stake out its position regarding the Final Rule. Please watch for developments here.
An online ticket broker that sells tickets to concerts, sporting events, and the theater qualifies as a “retail or service establishment” under Section 207(i) of the Fair Labor Standards Act (“FLSA”), Judge John Lee of the United States District Court for the Northern District of Illinois held. Blahnik v. Box Office Ticket Sales, LLC, 2017 U.S. Dist. LEXIS 45158 (N.D. Ill. Mar. 28, 2017).
Plaintiffs were sales representatives employed by Box Office Ticket Sales, LLC (“BOTS”) who alleged they were denied overtime pay. BOTS and the other defendants argued that the plaintiffs were not entitled to additional overtime wages under the FLSA since they qualified as commissioned employees of retail or service establishment under 29 U.S.C. § 207(i) of the FLSA. For Section 207(i) to apply, three requirements must be met: (1) the employee must be employed by “a retail or service establishment;” (2) the employee’s regular rate of pay must exceed one and one half times the minimum wage; and (3) more than half of the employee’s compensation must come from commissions on goods or services sold. 29 U.S.C. § 207(i). The only requirement at issue in Blahnik was the first requirement.
The court granted BOTS motion for summary judgment and held it qualified as a “retail or service establishment,” and in so doing, expressly addressed and rejected a regulation issued by the United Stated Department of Labor (“DOL”). The DOL regulation purportedly identifies establishments lacking a retail concept, 29 C.F.R. § 778.317, and lists travel agencies as one of the establishments lacking a retail concept. Plaintiffs had argued that because BOTS was akin to a travel agency, the regulation precluded application of Section 207(i) to BOTS. But Judge Lee rejected the plaintiff’s reliance on the DOL regulation, noting that the Seventh Circuit Court of Appeals had previously found the list in the regulation to be “an incomplete, arbitrary, and essentially mindless catalog.” Other courts have also ignored the list, finding it arbitrary.
The court found BOTS acted as a retailer in selling tickets to customers (not a wholesaler) and thus qualified as a retail establishment notwithstanding the list of establishments in the DOL regulation.
This decision highlights that § 207(i) can apply to online retailers—a method of selling that did not exist when 7(i) was enacted. It remains important, as always, to confirm compliance with state law before implementing any wage-and-hour practice, whether relating to commission salespersons or otherwise.