DOL unveils five new FLSA opinion letters

Posted July 2, 2020

On June 25, 2020, the DOL issued five new opinion letters that provide employers with compliance assistance related to the Fair Labor Standards Act (FLSA).

Below are brief recaps of the five new opinion letters:

• Outside Salespeople (FLSA2020-6): This opinion letter addresses whether salespeople who travel to different locations to sell products using their employer’s mobile assets (e.g., vehicles) qualify for the outside sales exemption. The DOL concludes that the salespeople – who in this scenario use stylized trucks stocked with merchandise, marketing displays, and demonstration units – meet the outside-sales exemption, thus making them exempt from the FLSA’s minimum-wage and overtime-pay requirements.
• Minimum Wage (FLSA2020-7): This opinion letter addresses whether an automobile manufacturer’s direct payments to an automobile dealership’s employee, compensating the employee for work done on behalf of the dealership, may count toward the dealership’s minimum wage obligation to the employee under the FLSA. Here, the automobile sales consultants receive payments from manufacturers pursuant to an incentive program, and the employing dealership asks whether such third-party payments are wages for purposes of the FLSA’s minimum wage requirements. The DOL states that it depends upon the agreement between the parties, which may be explicit or implied by the particulars of the incentive program, the understanding and practices of the parties, and any other relevant circumstances.
• Outside Salespeople (FLSA2020-8): This opinion letter addresses whether salespeople who set up displays and perform demonstrations at various retail locations not owned, operated, or controlled by their employer to sell the employer’s products qualify for the outside sales employee exemption. The salespeople in this letter travel to various retail operations such as home and garden shows, trade shows, state and county fairs, and so-called big-box stores. The salespeople set up displays in which they exhibit and demonstrate products they are selling. Such sales shows may be a one-day event or extend as long as 21 days. The DOL concludes that the salespeople in this case are engaged in selling at most of the sites; may be engaged in selling at the retail sites if they obtain commitments to buy and are credited with the sale; are away from the employer’s place of business; and will qualify for the outside sales exemption if their primary duty is making sales at those sites, which would usually be the case if more than half of their time is spent on that task.
• Exempt Employees (FLSA2020-9): This opinion letter addresses whether emergency-management coordinators employed by a county government qualify for administrative exemptions. To qualify for the administrative exemption, each coordinator’s primary duty must relate to the management or general business operations of the employer or the employer’s customers. The DOL concludes that depending on which duty is their primary duty, they may be exempt administrative employees.
• Retail/Service Commission Sales (FLSA2020-10): This opinion letter addresses the application of the retail or service commission sales exemption of the FLSA, where more than half of an employee’s compensation in the relevant representative period ultimately does not consist of commissions. The WHD addressed similar circumstances in a 1981 opinion letter, which recognized that an employer may follow that same method “simultaneously with the commencement of the representative period.” The 1981 letter made clear, however, that if an employer chooses to do this and, at the conclusion of that initial representative period, the requirement that commissions constitute more than half of compensation for a representative period has not been satisfied, the employer must pay overtime premium compensation for any overtime hours worked during that period. In the current scenario, the employer could again attempt to establish a representative period for the new employee and simultaneously claim the exemption for that employee on a prospective basis.

Opinion letters are an official, written opinion by the DOL’s Wage and Hour Division (WHD) on how a particular law applies in specific circumstances presented by a person or entity/business. The WHD has issued 61 opinion letters since January 20, 2017.

While each letter is unique, all employers may benefit from their content by using the information within them as a guide if they encounter a similar scenario.

This article was written by Darlene Clabault of J. J. Keller & Associates, Inc.