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Department of Labor’s Wage & Hour Division (“WHD”) Issues Three New Opinion Letters

On April 12 of this year, the WHD issued three new opinion letters, the first letters of their kind in nearly ten years. The letters respond to employer questions regarding the following issues:

  1. calculation of work hours for employees who travel in connection with their employment;
  2. the rules regarding FSLA-protected rest-breaks; and
  3. the classification of payments to employees concerning “disposable earnings” subject to Consumer Credit Protection Act garnishment limitations.

The letters clarify the existing laws and regulations, provide fact specific scenarios, and reaffirm the traditional interpretations of the statutes in question.

FLSA2018-18: Travel Time Subject to FLSA

Opinion Letter FLSA2018-18 provides guidance regarding the calculation of compensable hours for travel time under the FLSA. The employer was questioning the extent to which an employee’s travel time should be counted toward compensable hours when the employee had no fixed schedule and frequently traveled overnight.

The letter affirms the traditional rule that employee travel time, outside of a regular commute to and from work, is compensable if it occurs during the employee’s regular workday. For an employee working 9-5 Monday through Friday, time spent traveling for work during these hours are compensable. Additionally, if an employee has a regular work schedule of 9-5 Monday through Friday and the employee has to travel for work between the hours of 9-5 on a Saturday or Sunday, then the travel time on Saturday or Sunday becomes compensable because it cuts across the employee’s regular working hours.

The letter also addresses the issue of what happens when an employee’s schedule is not consistent and the regular workday for the employee is not easily defined. The WHD advises that employers should review the employee’s prior month’s work to identify a pattern of hours regularly worked and use that pattern as the regular workday for the employee. If no pattern can be identified, then the WHD advises that employers and employees should negotiate a reasonable timeframe to be considered each employee’s workday, with travel being paid during those hours.

FLSA2018-19: Compensability of Medical Rest Breaks

Opinion Letter FLSA2018-19 addresses whether regular rest breaks necessitated by an employee’s medical condition should be included when calculating the employee’s compensable time. WHD concluded that even though medical rest breaks are protected by the Family and Medical Leave Act, the Act expressly states that medical leave does not have to be compensated. The WHD concluded that physician--prescribed rest breaks are not compensable as a result.

The WHD reached its conclusion by turning to the 1948 U.S. Supreme Court case Armour & Co. v. Wantock, in which the Court concluded that the compensability of breaks depends on whether the purpose of the break is predominantly for the benefit of the employer or the employee. The WHD noted that physician-prescribed work breaks are predominantly for the benefit of the employee, meaning the employer does not have to compensate for the breaks, even if they are protected by the FMLA.

CCPA2018-1NA: CCPA Classification of Employee Payments

The third WHD opinion identifies the forms of payments to employees that constitute “earnings” under the Consumer Credit Protection Act (CCPA) which limits the amount of earnings that can be garnished for child support or other obligations. WHD identified three categories of payments: (1) payments which qualify as earnings; (2) payments which partially qualify as earnings; and (3) payments which do not qualify as earnings.

The WHD noted that when deciding what into category a payment falls, employers should look to the “compensatory nature of the payment” to determine whether the compensation is paid as consideration for services rendered to the employer. If a payment has a direct relationship to the services provided by the employee, the payment is considered “earnings.” The WHD identified regular wages, commissions, bonuses, profit-sharing, service awards, holiday pay, severance pay, and other similar payments as examples of earnings subject to CCPA garnishment limitations.

Payments partially qualify as earnings if a portion, but not all, of the payment can be traced to past or future wages. The payment can be divided between earnings and non-earnings to determine what percentage of the payment is subject to the CCPA garnishment limitations. WHD identified workers’ compensation and wrongful termination settlements as falling within this category.

The last category includes payments that do not qualify as “earnings” because they are not meant to compensate employees for their services. WHD gives the example of a buyback of company stock from an employee as an example of payments that do not qualify as earnings and are not subject to the CCPA garnishment limitations.

If you have any questions about the opinion letters above please contact a CGWG attorney for further assistance.