Forget about asking the U.S. Department of Labor’s Wage and Hour Division for an opinion letter about fact-specific applications of the Fair Labor Standards Act (FLSA). They’ve decided to stop doing that.
The FLSA, you may recall, is the law that requires employers to pay one and one-half times the regular rate of pay to non-exempt employees for all hours worked in excess of 40 hours per workweek. Some narrow exemptions exist; for example, for bona fide executive, administrative, or professional jobs. Unpaid overtime can therefore be a huge wage-and-hour trap for those who misclassify their workers.
Today’s workplace is more complex than the brick-and-mortar factories that dotted the landscape of yesteryear. Those factories, with their bells or whistles, clearly marked the beginning and end of each work day. The distinction between manual labor and executive positions was also more readily identifiable in a production or agricultural setting than in today’s offices populated by knowledge workers.
As a result, figuring out who is exempt and who is not exempt is more complicated than ever before. That is exactly why those opinion letters were so valuable. They provided fact-specific guidance that helped employers apply the law properly. Once issued and followed, those opinion letters also provided employers with the security blanket of a good faith defense.
So what happened?
Well, on March 24 the Department of Labor announced that it was going to stop issuing opinion letters. No more. It’s that simple. And that’s disturbing.
What employers should be aware of is that the announcement was made in connection with the Administration’s first interpretation of the FLSA, an interpretation that reverses a 2006 opinion letter about whether a mortgage loan officer position is exempt or non-exempt.
The difference of opinion turned on whether the mortgage loan officer’s sales responsibilities were their primary duties, or not. The old letter accepted the employer’s characterization of the job as being less than 50 percent sales oriented, while the current interpretation finds otherwise. It favored the employee. It favored overtime eligibility. It has now turned things upside down for the mortgage industry.
What this means for you and your business, even if you are not in the mortgage lending business, is that you may want to reevaluate your existing employee classifications. Relying on the old “this is the way we’ve always done it” philosophy could backfire.
As I previously reported, the current administration has already ushered in new, more employee-friendly interpretations of existing laws. So if you’ve taken an aggressive stance on exempt employee classifications, don’t be surprised if today’s Department of Labor doesn’t share your point of view.
Statutory and regulatory interpretation always has certain gray areas that can be argued either way. Unfortunately, being on the short end of that argument could make your business vulnerable to lawsuits for back wages and other unpleasant expenses. Yet with some planning, the wage and hour trap is one you can avoid. Check with your lawyer for a closer read of how these changes can impact your business.