Human Resources

FLSA Employer-Friendly Opinion Letters

Hey Compliance Warriors!

The DOL has put out four new opinion letters that may be of to help certain employers. Read on…Article via: www.mondaq.com 

  • “Time Spent on Employer-Offered Wellness Activities and Benefits Affairs is Noncompensable. (FLSA2018-20)

An employer sought guidance on whether the FLSA requires compensation for the time an employee spends voluntarily participating in certain wellness activities, biometric screenings, and benefits affairs. The biometric screenings, completely voluntary, test an employee’s cholesterol levels, blood pressure, and nicotine uses. The employee’s participation in the screenings could decrease his or her health insurance deductibles. The screenings are in no way related to the employee’s job.

The employer also permits employees to participate in wellness activities such as attending health classes, participating in Weight Watchers, and using the employer-provided gym. Again, these wellness activities are completely voluntary and do not relate to the employee’s job. They are offered because they could also potentially decrease the employee’s health insurance premiums. Finally, the employee may choose to attend a benefits fair to learn about financial planning, employer-provided benefits, or college attendance opportunities. Attendance is entirely optional.

The DOL concluded that the employee’s voluntary participation in all of these activities predominantly benefits the employee and thus does not constitute compensable worktime under the FLSA. The DOL emphasized that given the activities were completely optional and provided direct financial benefit to only the employee, the time was noncompensable. Moreover, the DOL concluded that the activities are noncompensable “off duty time” under 29 C.F.R. § 785.16 because the employer relieved employees of all job duties when it allowed them to participate.

  • Technology Company Selling Credit Card Platform to Businesses Qualifies for the Retail Establishment Exemption. (FLSA2018-21)

This opinion was highly fact-sensitive. The employer employs sales representatives to sell a technology platform to merchants that enables online and retail merchants to accept credit card payments from a mobile device, online, or in person. The employer sought guidance on whether its employees were exempt under the “retail or service establishment” exemption under the FLSA. 29 U.S.C. § 207(i). The exemption applies if the employee works at a retail or service establishment, the employee’s regular rate of pay exceeds one and one-half the applicable minimum wage in the workweek in which s/he works overtime, and more than half of the employee’s earnings in a representative period consists of commissions. The question was whether the employer qualified as a “retail or service establishment.” To qualify, the company must “engage in the making of sales of goods or services”; “75 percent of its sales of goods or services . . . must be recognized as retail in a particular industry”; and “not over 25 percent of its sales of goods or services . . . may be sales for resale.”

The DOL concluded that the exemption applied. It concluded that the employer sells its wares to a variety of purchasers, the platform serves everyday needs, the platform is not resold, and the company does not sell large quantities to any single customer. That the employer sells its goods to commercial entities did not alter the DOL’s conclusion. It cited a long line of cases holding that businesses may qualify as retail or service establishments when their customers and end-users are predominantly commercial entities. Given the specific facts underlying the employer’s business, the DOL found that the employer was a “retail or service establishment” under 29 U.S.C. § 207(i).

  • Non-Profit Organization May Treat Graders of Licensing Examinations as Volunteers. (FLSA2018-22)

A non-profit organization sought the DOL’s opinion on whether it could treat individuals who traveled to the United States once a year for a one- to two-week period to grade a global credentialing examination as volunteers instead of short-term employees if the graders did not receive a fee for their services going forward. The DOL concluded that it could.

Each year, the organization selects over 600 members who are credential-holders to grade an examination. The graders tend to be “the most successful and highly compensated individuals in their professions.” The organization pays for the graders’ transportation, accommodation and meals. They are motivated to serve mainly to “give back to the profession,” among other salutary aims. The organization previously provided a flat fee to the graders but plans to stop paying the fee and classify the graders as volunteers.

The DOL opined that it could do so. As long as the volunteer offers his or her services “freely without coercion or undue pressure” from an employer, s/he could be classified as a volunteer. The organization could still pay for the graders’ travel, lodging, and other expenses without negating their volunteer status.

  • Food Vendors in Movie Theatres May Qualify for the Movie Theater Exemption if the Food Service and Film Entities are Unitary. (FLSA2018-23)

The FLSA exempts from its overtime requirements “any employee employed by an establishment which is a motion picture theater.” 29 U.S.C. § 213(b)(27). The question this DOL opinion addressed was whether the exemption applied to the food service operations of a particular motion picture theater company.

The movie theater employer provides in-theater dining. Some of the company’s locations have a full-service on-site restaurant. This opinion letter hinged on the fact that movies are shown at all times during all locations’ hours of operation. In almost all instances, people who eat at the restaurant must purchase a movie ticket. The food service operations are not separately incorporated and do not operate in any way as separate entities. For instance, the same payroll is used for theater staff and food service staff.

The DOL concluded that the employer qualified as a motion picture theater within the meaning of the exemption. Interpreting 29 C.F.R. § 779.05, which governs whether portions of a business are a single unit, the DOL found that the company’s food services operations were functionally integrated with its theater operations as a single unit. The DOL went further and opined that even if there was no full functional integration, the company’s location would still be a single establishment because of the “interchange of employees between the units. The company’s locations showed films well in excess of the 50 percent threshold necessary to qualify as a “motion picture theater” under § 213(b)(27), so the exemption applied.

Employers’ Bottom Line: The DOL continues to issue employer-friendly opinions. Employers should be pleased to note the DOL is even “backstopping” its opinions with what courts would consider “dicta,” offering opinions it does not need to offer to resolve employer inquiries. That is a good indication that the Department likely will continue to issue employer-friendly opinions in the coming years.”

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Until Next Time, Be Audit-Secure!

Lisa Smith


Lisa Smith is CEO of Andere Seminars, LLC and Chief Content Developer at BeAuditSecure.com. Follow her on Twitter, connect with her on LinkedIn, listen to her Small Business Spoonfuls Podcast, and find more from her in Audit-Secure Authority at BeAuditSecure.com

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