Labor & Employment Law Daily New WHD opinion letters discuss exemptions, OT pay calculations, delivery driver reimbursements
Wednesday, September 2, 2020

New WHD opinion letters discuss exemptions, OT pay calculations, delivery driver reimbursements

By Pamela Wolf, J.D.

The WHD has issued four more opinion letters, bringing the total to 65 under the Trump Administration.

The DOL’s Wage and Hour Division has issued four new opinion letters addressing FLSA compliance issues. In those August 31, 2020, opinion letters, Wage and Hour Administrator Sheryl M. Stanton discusses the retail or service establishment exemptions, reimbursement of business-related expenses for pizza delivery drivers, the learned professional exemption and highly compensated employee test, and the fluctuating workweek method of calculating overtime pay.

Retail or service establishment exemption. In opinion letter FLSA2020-11, the question is whether a private “oilfield service company” that provides waste-removal services for oilfield operators may qualify as a “retail or service establishment” eligible to claim the FLSA’s Section 7(i) exemption for certain truck drivers whom it employs. The drivers, who were paid solely on commission basis, were paid 27 percent of the total revenue received for each truck drive—no matter how many hours are worked per week. Drivers worked about 60 hours per week in five 12-hour shifts per week. Their regular pay exceeded one-and-a-half times the federal minimum wage.

Here, the Administrator concluded that provided the employer’s waste removal services were not different from general waste removal services provided to the public and that its services were recognized as retail within the waste-removal industry, the oilfield service company may qualify as a “retail or service establishment” to claim the exemption.

Delivery driver vehicle-related reimbursements. Opinion letter FLSA2020-12 considers an employer’s compliance with the FLSA’s minimum wage requirements when reimbursing pizza delivery drivers for business-related expenses incurred while using their personal vehicles during the course of their employment.

Answering several related questions, the Administrator concluded that WHD regulations permit reimbursement of a reasonable approximation of actual expenses incurred by employees for the benefit of the employer under any appropriate methodology. The IRS standard business mileage rate is not mandated under WHD regulations, but it is presumptively reasonable. Applicable regulation Section 778.217(c) states that reimbursements at the same or less than the IRS rate can qualify as reasonable per se, or that employers may use the actual or a reasonable approximation of the expense.

The WHD letter refused to approve or disapprove of any of the methods or sources the employer offered as to drivers’ vehicle expenses, noting that “to the extent that some or all of these methods may reasonable approximate actual business expenses incurred by employees under certain circumstances, they will comply with the Act. To the extent that these methods fail to reasonably approximate such expenses, they will not.” Ultimately, the reasonableness depends on a “myriad of particulars.” Further, reimbursement for fixed and variable vehicle expenses hinges on whether the cost at issue primarily benefits the employer—only to the extent that the employee uses the vehicle as “a tool of the trade.”

Learned professional exemption, highly compensated employee test. In opinion letter FLSA2020-13, the question is whether part-time employees, who provided corporate-management training and were paid a day rate with additional hourly compensation, qualified for the learned professional exemption and the highly compensated employee test under Section 13(a)(1) of the FLSA.

Here, the Administrator concluded that the employees likely perform exempt learned professional duties. However, the employer’s payments for delivery work (presenting the educational program to clients, using interactive models that are part of the program, and evaluating participants’ results) did not satisfy the salary duties test. Further, payments for development work (creating new content and interactive models for the program) would not result in the otherwise-applicable professional exemption. Finally, the highly compensated employee test cannot be satisfied by payments proportional to the amount of work performed by a part-time employee.

Fluctuating work week overtime calculation. Opinion letter FLSA2020-14 considers whether employees’ hours must fluctuate above and below 40 hours per week to qualify for the fluctuating workweek method of calculating overtime pay. Here, the Administrator clarified that the fluctuating workweek method requires only that an employee’s work hours fluctuate from week to week, not above and below 40 hours per week. Thus, assuming all other conditions for using the fluctuating work week method are satisfied, an employee may qualify for the fluctuating work week method if their hours fluctuate only above 40 hours a week.

The Administrator also reaffirmed that employers using the fluctuating work week method may not make deductions from an employee’s pay for absences occasioned by the employee, except for occasional disciplinary deductions for willful tardiness, absences, or infractions of major workplace rules.

Official opinions. The WHD noted that an opinion letter is an official, written opinion by the WHD on how a particular law applies in specific circumstances presented by the person or entity that requested the letter. The divisions has issued 65 opinion letters since January 20, 2017.

“As businesses continue to reopen and rebuild, the Wage and Hour Division will continue to make clear the rules of the road during the economic recovery allowing workers to return to work and prosper again,” Stanton said in a press release.

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