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New DOL opinion letters offer employers guidance

Anthony L. DeProspo Jr.

Anthony L. DeProspo Jr.

After nearly a 10-year hiatus, the U.S. Department of Labor’s Wage and Hour Division recently issued three formal opinion letters, setting forth its views on various wage-and-hour issues addressed to the WHD by interested parties.

Opinion letters represent official WHD policy and are provided to help employers, employees and other members of the public understand their rights and responsibilities under the law.

The Obama administration officially abandoned WHD opinion letters in 2010, but Secretary of Labor Alexander Acosta recently restored the practice of issuing these guidance documents.

The three recently released opinion letters address the following issues: (i) whether certain employee travel time qualifies as “work time” under the Fair Labor Standards Act; (ii) whether an employer must compensate an employee for hourly 15-minute rest breaks required by an employee’s serious health condition; and (iii) whether various types of lump-sum payments made to an employee constitute “earnings” subject to garnishment limitations under the Consumer Credit Protection Act.

Compensable employee travel time

The first WHD opinion letter addresses whether an employee’s travel time is compensable in three specific scenarios: (i) an hourly technician travels by plane on a Sunday to a different state to attend a training seminar running Monday through Friday; (ii) an hourly employee, using a company vehicle, travels from home to the company office and then travels to a customer location; and (iii) an hourly technician drives from home to multiple customer locations on any given day.

Regarding scenario (i), the WHD observes that “travel away from home is clearly worktime when it cuts across the employee’s workday. The employee is simply substituting travel for other duties.”

Rather than providing a definitive answer as to how this question should be resolved, the letter states that whether travel time takes place during an employee’s regular working hours should be determined on a case-by-case basis, based on the specific facts.

In this regard, WHD carefully scrutinizes an employer’s claim that its employees do not have regular working hours. Even if an employee’s working hours vary from week to week, trends can be established, and consistencies may be found in, for example, start and stop times.

Regarding scenarios (ii) and (iii), the division emphasizes that “compensable worktime generally does not include time spent commuting to or from work,” but that “travel from job site to job site during the workday must be counted as hours worked.” It is of no consequence, therefore, whether an employee’s initial trip takes him or her from home to the employer’s office or from home to a customer location. Finally, WHD opines that the use of a company vehicle generally does not make otherwise non-compensable travel time compensable.

Medically required breaks

In the second opinion letter, the WHD opines on whether a non-exempt employee’s hourly 15-minute rest breaks — certified by a health care provider as required by a serious medical condition (and thus covered under the Family and Medical Leave Act) — are compensable under the FLSA. The WHD concludes that such breaks are not compensable.

The opinion letter references a recent 3rd U.S. Circuit Court of Appeals case holding that short rest breaks of up to 20 minutes “primarily benefit the employer.” Thus, according to the WHD, “rest breaks up to 20 minutes in length are ordinarily compensable.”

The letter goes on to state, however, that “in limited circumstances … short rest breaks primarily benefit the employee and therefore are not compensable.” In the scenario at issue here, taking a 15-minute break every hour through an eight-hour shift would mean that the employee would perform a total of only six hours of work over that shift. As the WHD indicates, this “differs significantly from ordinary work breaks commonly provided to employees.”

Further, the WHD notes that the FMLA expressly provides that leave may be unpaid and “provides no exception for breaks up to 20 minutes in length.” Therefore, the WHD concludes that because the “FMLA-protected breaks (at issue) are given to accommodate the employee’s serious health condition, the breaks predominantly benefit the employee and are non-compensable.”

Lump-sum payments and the CCPA

The last opinion letter addresses whether the Consumer Credit Protection Act’s garnishment limitations apply to certain lump-sum payments to employees. Title III of the CCPA limits the percentage of an employee’s earnings that can be garnished for “the support of any person” — typically child support.

There is little debate that an employee’s regular earnings fall within the CCPA’s garnishment limitations. However, it is less clear whether the CCPA’s garnishment limitations apply to infrequent, lump-sum payments made to employees.

The WHD’s opinion letter analyzes 18 separate types of lump-sum payments that may be made to employees, including commissions, various forms of bonuses, profit-sharing distributions, moving and workers’ compensation and termination and severance pay.

According to the WHD, the determinative issue is “the compensatory nature of the payment, i.e., whether the payment is for services provided by the employee.” This standard applies regardless of whether a lump-sum payment is one-time or occasional.

The opinion letter concludes that the majority of the types of lump-sum payments considered do constitute “earnings” under the CCPA. The WHD similarly opines that unusual lump-sum payments — such as signing and referral bonuses, moving and relocation expenses, and profit-sharing distributions — constitute “earnings” because they are paid out in connection with the employee’s provision of services to the employer.

Even severance pay tied to an employee’s length of service constitutes earnings under the CCPA, in the WHD’s view, because it is compensation related directly to the employee’s service to the employer.

The opinion letter concludes that only one of the types of lump-sum payments analyzed unconditionally does not constitute earnings under the CCPA — buybacks of company shares. The WHD states “there is no nexus between personal services rendered and the company’s decision to repurchase the stock.”

Anthony L. DeProspo Jr. practices at Schwartz Hannum in Andover, Massachusetts, which represents management in labor and employment law matters, as well as educational institutions.