An often overlooked free resource available to employers is the option to request for an opinion letter from a federal or state agency. An opinion letter is an official written opinion prepared by counsel for the respective agency on how the regulations and case law apply to a specific situation presented by the person or entity requesting the opinion. Typically, the agencies only require that the request for an opinion is not being requested to respond to an agency investigation or for any litigation that was initiated prior to making the request. The respective agency has discretion as to which requests it will respond to and how it will respond. Significantly, for employers, good faith reliance upon an agency’s opinion letters can provide a defense to potential claims of a violation of the laws enforced by the respective agency. In addition, all opinion letters are published on the agency’s respective website where there is often a search function with filters so you can narrow the results to your specific issue. Even if the specific circumstances of these letters do not apply to your company, they provide valuable guidance based on similar issues and can be a great tool for employers when handling certain situations that may arise in the future.
On August 28, 2018, the U.S. Department of Labor's Wage and Hour Division (WHD) issued six opinion letters addressing two issues under the Family and Medical Leave Act (“FMLA”) and four issues under the Fair Labor Standards Act (“FLSA”). The topics ranged from whether organ donors can qualify for the protections provided under the Family and Medical Leave Act (“FMLA”) to when volunteers have to be compensated under the Fair Labor Standards Act (“FLSA”) to the necessary circumstances for a movie theater to apply for overtime exemption under the FLSA. Below is a summary of the six issues where opinion letters were prepared and published by the WHD.
Whether Organ Donors Can Qualify for FMLA Leave.
The issue presented to the WHD concerned whether organ donation surgery can qualify as a “serious health condition” under the FMLA. A “serious health condition” is defined by either “inpatient care” or “continuing treatment.” “In-patient care” involves at a minimum an overnight stay at a hospital, and “continuing treatment” includes incapacity and treatment, chronic conditions, permanent or long term conditions, and conditions requiring multiple treatments. Relying on the facts presented to the WHD, and applying those facts to the regulations governing FMLA, the WHD opined that an employee who participates as an organ donor will more than likely stay overnight at a hospital so the in-patient care” requirement has been met. The WHD also stated that the organ donor’s post-surgery recovery would be sufficient to meet the “continuing treatment” requirement. Therefore, under this specific circumstance, the organ donor would qualify for FMLA.
To see FMLA2018-2-A, please click here.
Whether "No-Fault" Attendance Policies Violate the FMLA.
The issue presented to WHD inquired whether a company’s no fault attendance policy violated the FMLA. Under the policy, an employee accrues points for tardiness and absences, and will be automatically discharged if the employee accrues 18 points. The points stay on the employee’s record for 12 months of “active service.” The accrual freezes when an employee takes an extended leave under FMLA, workers’ compensation, or vacation. An employee who takes an extended leave will return to work with the same number of points the employee accrued prior to leave. The WHD opined that such a policy was enforceable under the FMLA because the removal of absenteeism points has been recognized as a reward for working and constitutes as an “employment benefit” under the FMLA. Therefore, if your company has an attendance policy under which employees accrue points for tardiness and absences, it may rollover those points for employees who take FMLA leave as long as the policy is applied the same to equivalent types of protected leave, e.g. worker’s compensation related leave. Thus, if the number of points remains frozen during protected FMLA leave, the employee neither loses a benefit that accrued prior to taking the leave nor accrues any additional benefit to which he or she would not otherwise be entitled and the employer has not interfered with the employee’s terms and conditions of employment.
To see FMLA2018-1-A, please click here.
Whether Under the FLSA, Employees are to be Compensated When Participating in Wellness Events.
The WHD was asked to provide an opinion as to whether the employer was required to compensate employees who voluntarily participate in biometric screenings, wellness activities, and benefits fairs. The employer described the participation as voluntary and the employer does not require the screening and it is not related to the employee’s job. The employee has pure autonomy on whether to participate. Relying on decisions by the U.S. Supreme Court and other federal courts regarding what constitutes compensable time, the WHD opined where the employer may be offering a service to its employees, so long as it is primarily for the benefit of the employee, this did not constitute compensable time. The WHD took it one step forward and also found that attending wellness events does not constitute off-duty time when the employer relieves the employee of all of its duties to participate. Thus, as a general rule, in order to be considered non-compensable time, the employee’s participation must be voluntary, the employee must be relieved of all work duties during that time, and the employee must be afforded enough time to attend the event to use it effectively for his or her own purpose.
To see FLSA2018-20, please click here.
Whether Food Operators at a Movie Theater Share the Theater’s Exemption from Paying Overtime.
The issue presented to the WHD is whether a food operator business inside a movie theater constitutes a “single establishment” thereby avoiding paying overtime under the exemption to movie theaters. The movie theater is described as providing in-theater dining where some locations have a full-service restaurant. The food service operations are not treated differently from the movie theater employees, and the food service and movie theater staff share in the duties, for example food servers may also serve as a theater usher. Based on the facts presented, the WHD determined that this exemption would apply to the food service operations within movie theaters as long as they operate as a single establishment under 29 C.F.R. § 779.305. To be considered a “single establishment,” the theater and dining for that location are functionally integrated as a single establishment primarily (more than 50 percent of the time) engaged in the business of showing motion pictures. It is the nature of the employer’s business, not the work performed by a particular employee that determines whether the exemption applies to the business as a single establishment. Factors to consider include whether there are separate entrances or other structural separation, whether they operate under different names, file separate taxes, maintain separate bank accounts, place orders separately, pay invoices separately, or separate employees’ time and payroll records. The exemption would also apply if there is an interchange of employees between the units. For example, the same employees that provide food services also work in the motion picture aspects of the business such as ushers and cashiers and have the same general manager. This application of the exemption is location specific, meaning that when a company has more than one location, some of those locations may qualify for the exemption, while others may not. See 29 C.F.R. § 779.303. In this circumstance, the WHD was satisfied that the movie theater and food service operations met the necessary criteria of “single establishment.”
To see FLSA2018-23, please click here.
Whether Volunteer Credentialing Examination Graders Are Employees Under the FLSA.
The issue presented involved graders who traveled for a one to two-week period to grade a global credentialing examination for a non-profit organization. Graders are selected from the organization and the Graders are motivated to serve due to the “professional achievement of being selected for this role;” “the opportunity to promote the highest standards of ethics, education, and professional excellence;” and to give back to the profession. The Graders tend to be the “most successful and highly compensated individuals in their professions.” The WHD issues its opinion by first making it clear that the FLSA recognizes the benefits of volunteering and allows people to freely volunteer time to religious, charitable, or other non-profit organizations. A volunteer offers services without contemplation or receipt of compensation. The U.S. Supreme Court has made it clear that the FLSA does not cover individuals who, “without promise or expectation of compensation, but solely for his personal purpose or pleasure, worked in activities carried on by other persons either for their pleasure or profit.” Tony and Susan Alamo Foundation v. Sec’y of Labor, 471 U.S. 290, 295 (1985) quoting Walling v. Portland Terminal Co., 330 U.S. 148, 152 (1947). Further, the fact that peer reviewers continue to receive their regular salaries from their primary employers does not jeopardize their volunteer status and convert them into employees of the Organization. Thus, the FLSA wage and overtime requirements and other employee protections do not apply to people who volunteer their time to act as credentialing examination graders as long as they offer their services freely (i.e. without economic coercion) and without the expectation of compensation for their services. According to the WHD’s recent Opinion Letter, this remains true even if the company or organization pays for the volunteers’ travel, lodging, meals, and other expenses incidental to volunteering without negating their volunteer status.
To see FLSA2018-22, please click here.
Whether Your “Retail or Service Establishment” Is Subjected to the FLSA Overtime Exemption.
The question presented to the WHD was whether sales representatives for a technology platform that supports online and retail merchants to accept credit card payments from customers’ mobile devices, online, or in person are exempt for overtime under the FLSA. The WHD concluded that in this situation, the technology company was a “retail or service establishment” for purposes of the overtime exemption. See 29 C.F.R. § 779.313. In reaching this conclusion, the WHD found that the technology company satisfied three requirements. First, the company engages in the making of sales or goods or services because the technology company sells its product, i.e. its platform, to a variety of purchasers; the product serves their customer’s everyday needs; it is not distributed further once sold; and it does not sell large quantities of the platform to any single customer. The fact that the business primarily sold its products to commercial entities did not change this conclusion. Second, at least 75 percent of its sales are retail sales, as opposed to wholesale. The WHD distinguished the company’s sales as retail because it does not sell large quantities of the platform to individual purchasers, but noted that ultimately, the distinction between a retail sale and a wholesale sale is one of fact that rests to the discretion of the courts. 29 C.F.R. § 779.325. Third, the company does not sell more than 25 percent of its sales of goods for resale since the technology payment platform could not be resold since they are designed for each specific merchant. 29 C.F.R. § 779.331.
To see FLSA2018-21, please click here.
The WHD opinion letters summarized above concern only the application of federal law. Many states have separate leave and wage and hour laws, and employers are advised to consult the applicable laws of the state(s) in which they operate in order to ensure full compliance.
Any employer or employee may request an opinion letter either from the WHD directly or anonymously through counsel. A request may be submitted by email to WHDopinionletters@dol.gov or by mail to U.S. Department of Labor Wage and Hour Division, Division of Regulations, Legislation, and Interpretation, 200 Constitution Ave., NW, Room S-3502, Washington, DC 20210.