DOL dishes opinions on wage and hour issues . . . with a side of nuggets.

The Wage and Hour Division of the U.S. Department of Labor recently issued four Opinion Letters answering questions about a broad range of wage and hour issues.

In addition to answering the specific questions presented, the letters include valuable nuggets for Human Resources Managers and payroll administrators.

What follows are some of the questions, answers and useful nuggets.

No. 1: Can exempt employees perform additional work in secondary, non-exempt roles at hourly rates without creating overtime implications?  

Yes, provided that the employees’ primary duties remain the performance of exempt work and that the salary requirements of the Fair Labor Standards Act are met.

The question involved exempt employees working 12-hour weekend shifts, during which they were paid by the hour. The employees were not paid overtime even though they already had worked 40 hours during the same workweek in their salaried positions.

The DOL concluded that overtime pay was not required because the employees satisfied the salary test for exempt status and their primary duties remained the performance of exempt tasks. Even when working two 12-hour weekend shifts, only 38 percent of the workweek was devoted to performance of non-exempt work.

Now for the nuggets:

• If exempt employees perform any work in a workweek, they must receive their full weekly salary. Deductions can be made for full-day absences for personal reasons, major safety infractions or good-faith disciplinary suspensions. But deductions for late arrivals, early departures, or suspensions of less than one week can result in the loss of exempt status.  
• Time spent performing non-exempt activities is not necessarily determinative of exempt status. An employee such as a working foreman can spend more than half of the time performing non-exempt duties and still be exempt.
• Watch out for state laws. In California (what a surprise) the primary duties test is a quantitative (not qualitative) analysis, and the employer would have little room to spare in showing that an exempt employee spent more than half of the time on exempt duties.

No. 2: Is time spent leaving and returning to the facility during a meal break compensable when the employer allots a total of 30 minutes and allows employees to remain on the premises?

No The break was long enough to allow employees to use it for an uninterrupted meal period, during which they were relieved of all duties.

The request appears to have come from employees (or their attorneys) complaining about the fact they could spend 10 to 15 minutes of their meal break walking to and from the employee parking lot.

The DOL concluded that the employer was not required to extend the meal period to accommodate the employees’ desire to leave the facility and did not need to treat the time as compensable.

Now for the nuggets:

• With limited exceptions, the FLSA does not require an employer to provide rest breaks or meal periods.
• Meal breaks of 30 minutes or more need not be compensated. But breaks of 20 minutes or less are compensable and should not be docked.
• The law does not require absolute freedom during meal breaks. Most federal courts apply a “predominant benefits” test. In other words, the break time is compensable if it predominantly benefits the employer and non-compensable if it predominantly benefits the employee.
• Provided that it is safe to do so, employers can require employees to remain on the premises during their meal breaks under federal law.
• Beware of state laws which may require meal and rest breaks, absolute freedom during those breaks, and the right to leave the facility.

No. 3: Did a quarterly bonus that included the payment of an overtime premium due on the bonus satisfy the overtime requirements?

Yes The quarterly bonuses were calculated based on the employees’ total earnings, including overtime earnings, and therefore already factored in overtime premiums.

I confess. Math is not my strong suit, and one of the reasons I became a lawyer.

Because of that handicap, I will not do a deep dive into the workings of the bonus plan involved, the terms of which I understand may be a bit unusual.

Rather, my focus is on the following nuggets.

• An employee’s regular rate for calculating overtime pay is determined by adding all the weekly remuneration paid to, or on behalf of, the employee (with the exception of certain categories of compensation that can be excluded from the calculation), and then dividing that amount by the total number of hours worked.
• For example, if an employee’s hourly rate is $10, and the employee works 10 hours of overtime (total of 50 hours for the workweek), and in addition receives a $100 non-discretionary bonus, the rate for the 10 hours of overtime is not “time and a half” the $10 rate ($10 plus $5 an hour). It is $16 an hour. 
• Non-discretionary bonuses often are determined and paid after the normal work week in which they are earned.
• In such cases, an employer can disregard the bonus when computing the regular rate until the amount of the bonus can be ascertained.
• Once ascertained, the employer must apportion the bonus to the workweeks in which it was earned and calculate any additional overtime compensation due.

Since your eyes may be glazing over, let’s consider a simple example:

• Assume an hourly paid employee can earn a monthly sales bonus based on a percentage of the amount paid by customers for those sales.
• At the end of the month, the employer must tally up all the payments received, apply the appropriate bonus percentages and then allocate the resulting bonus amounts to the weeks in which the sales were made.
• Once allocated, if there are any weeks in which a bonus was earned and overtime was worked, the employer must recalculate the overtime payment to factor in the bonus and pay the additional overtime amount to the employee.

Not calculating the appropriate regular rate for overtime is low-hanging fruit for class action litigators. It is the type of claim that can be proven with evidence applicable to all class members, with little chance of requiring hundreds of separate trials that are the antithesis of a class action.

No. 4: A smorgasbord of questions about waiting time, the de minimis doctrine and time rounding.

The answers were equivocal responses that (mercifully for you and me) need not be explained.

Instead, let’s get right to the nuggets:

• Pre-shift activities that are “integral and indispensable” to an employee’s principal job duties are compensable.
• Time spent waiting in line to clock in and out is generally not compensable. But beware of state laws that may treat this time differently.
• The de minimis doctrine applies only to insubstantial or insignificant periods of time beyond scheduled working hours that cannot, as a practical administrative matter, be precisely recorded.
• Rounding practices are permissible if they are neutral on their face and do not, over an extended period of time, favor the employer. If your timekeeping system rounds time entries, when is the last time you did an analysis of whether it favors you or the employees? Once again, this is low-hanging fruit for class action litigators.

The value of a nugget

Over the years, I have dealt with HR professionals and payroll administrators who

• Were unaware that exempt employees must receive their full salary without deductions for late arrivals, early departures or some suspensions of less than one week.
• Had no clue how to calculate an employee’s appropriate regular rate for overtime purposes.
• Believed that a non-exempt employee’s pay could be docked for 10-minute rest breaks.
• Have never looked to see whether their time-rounding policies usually, or always, favored the employer over an extended period of time.

These Opinion Letters have provided me with a vehicle for ensuring that you know better.