New opinion letters address FLSA issues

The Labor Department’s Wage and Hour Division (WHD) has issued some new opinion letters August 28 addressing various compliance issues under the FLSA. The department says that the release of the letters “demonstrates its continued commitment to providing meaningful compliance assistance to help employees understand their rights and ensure that employers have the information they need to comply with federal labor laws.”

The DOL also noted that it now offers a search function that lets users search opinion letters by key word, year, topic, and a variety of other filters.

Time spent attending benefit fairs and wellness activities

Because voluntary participation in biometric screenings, wellness activities, and benefits fairs predominantly benefited the employee, they did not amount to compensable worktime under the FLSA. These activities provided direct financial benefit to only the employee; helped the employee make more informed decisions about matters unrelated to his/her job; participation was wholly optional for the employee (the employer never required it); and the employer did not require the employee to perform any job-related duties while he/she participate in the activities.

The activities were also noncompensable “off duty” time under 29 C.F.R. §785.16. When the employer allowed an employee to voluntarily participate in the wellness activities, it relieved the employee of all job duties. There was no indication that the employer restricted the amount of time an employee may participate in such activities (assuming the time allowed was long enough for the employee to use it effectively for his or her own purposes). (U.S. Department of Labor, WHD Opinion Letter FLSA2018-20, August 28, 2018.)

Movie theater overtime exemption

The motion picture theater exemption in Section 13(b)(27) applied where the food services operations were functionally integrated with theater operations (lack of functional separation showed they operated as a single establishment under 29 C.F.R. §779.305); the same employees performed work for both parts of the business; (thus, even if the theaters and food service operations were not functionally integrated, they would still constitute a single establishment under 29 C.F.R. §779.305 because of the “interchange of employees between the units”); and the establishments were primarily engaged in showing motion pictures consistently throughout their hours of operation (well in excess of the 50 percent threshold necessary to qualify as a “motion picture theater” under Section 13(b)(27).). (U.S. Department of Labor, WHD Opinion Letter FLSA2018-23, August 28, 2018.)

Commissioned sales employee overtime exemption

A business that “sells a technology platform to merchants that enables online and retail merchants to accept credit card payments from their customers from a mobile device, online, or in-person” qualified as a “retail or service establishment” exemption under 29 U.S.C. §207(i). The business operated in a highly competitive industry and employed sales representatives to promote its platform to merchant-customers. The business’ technology payment platform “cannot be resold, as the platform is designed for each specific merchant,” and the sale of this platform amounted to 100 percent of the business’s sales.

The issue presented centered on whether the business met the first requirement under Section 7(i): whether it qualified as a “retail or service establishment.” To qualify as a “retail or service establishment,” 29 C.F.R. §779.313 requires that (1) the business must “engage in the making of sales of goods or services”; (2) “75 percent of its sales of goods or services, or of both, must be recognized as retail in the particular industry”; and (3) “not over 25 percent of its sales of goods or services, or of both, may be sales for resale.” The letter applied the Encino Motorcars “fair reading” standard (rather than prior precedent’s narrow interpretation standard) to the exemption and applied it where the customers were predominantly commercial entities. (U.S. Department of Labor, WHD Opinion Letter FLSA2018-21, August 28, 2018.)

Credentialing examination graders

“Member examination graders” who “travel either domestically or from abroad to the United States once a year for a one- to two-week period to grade a global credentialing examination” for a nonprofit organization that administers professional examinations necessary to obtain professional designations could be treated as volunteers under the FLSA. The graders would serve for various service-oriented reasons, including giving back to the profession; were typically highly compensated executives who continued to receive their regular salaries from their primary employers; would travel from their home locations to serve as graders, and do so only once per year for no more than two weeks. These and other factors indicated that graders offered their services freely and without pressure or coercion. The nonprofit could continue to pay for graders’ travel, lodging, meals, and other expenses incidental to volunteering without negating their volunteer status. The nonprofit planned to stop paying the graders a flat fee for their services.

The opinion letters are official, written opinions by the WHD on how a particular law applies in specific circumstances presented by the person or entity requesting the letter. The WHD encourages the public to submit requests for opinion letters to WHD. Further information is available at https://www.dol.gov/whd/opinion/FLSA/2018/2018_08_28_23_FLSA.pdf. (U.S. Department of Labor, WHD Opinion Letter FLSA2018-22, August 28, 2018.)

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