On March 6, 2009, the United States Department of Labor (DOL) released two noteworthy wage and hour opinion letters.
The first, Opinion Letter FLSA2009-16, may cause an unnecessary stir in the employer and legal communities. The opinion letter approves an employer’s “compressed work schedule.” Employees work nine hours per day Monday through Thursday and work eight hours on one of the two Fridays during the two-week pay period. The company operates under two alternative workweeks. Under the first option, the workweek begins at 11:31 a.m. on Friday and ends at 11:30 a.m. the following Friday, with the scheduled workday beginning at 7:30 a.m. Under the second option, the workweek begins at 12:31 a.m. on Friday and ends at 12:30 a.m. the following Friday, with the scheduled workday beginning at 8:30 a.m. Assuming the employees work no more than the stated hours, they do not receive overtime under this schedule.
On first glance, this opinion letter appears to allow employers to “average” the workweek – employees work 44 hours one week, 36 hours the next. While this reading would be extremely employer-friendly, it would also contradict the Fair Labor Standards Act, which sets a single workweek as the standard length of time used to determine if an employee is due overtime. The law does not allow for the averaging of hours over two or more weeks. See 29 U.S.C. § 207(a)(1); 29 C.F.R. § 778.104.
It’s crucial to look at the actual workweek in this case. Because the employer’s workweek starts and ends mid-day on Friday and employees begin their workday that morning, the work performed on a Friday is technically split between two workweeks. Four hours fall into the first workweek, four hours into the second. Therefore, the employee is actually working only 40 hours each workweek.
While it’s important that employers and attorneys not read this opinion letter too broadly, the good news is that the DOL did approve a workweek that was skillfully created to avoid overtime. Employers who regularly deal with substantial overtime may want to consider a similar arrangement.
Opinion Letter FLSA2009-2 is potentially less exciting but just as relevant in today’s economy. In the opinion letter, the DOL approved an employer’s plan to require exempt employees to use accrued vacation time during a plant shutdown of less than a workweek without violating the salary basis test and jeopardizing their exempt status.
Reiterating the position set forth in a 2004 Opinion Letter, the DOL explained that “since employers are not required under the FLSA to provide any vacation time to employees….it is our opinion that the employer may require exempt employees to use accrued vacation time for any absence, including one resulting from a plant shutdown, without affecting their exempt status, provided that employees receive a payment in an amount equal to their guaranteed salary.” (emphasis added).
Employers considering a facility shut-down should keep in mind the general rule that exempt employees must be paid for any employer-occasioned absence of less than one full workweek. Employers who, for economic reasons, need to implement unpaid shutdowns should make sure that exempt employees are on furlough for a full workweek.
In addition to these two opinion letters, the DOL also released 33 others. All of the opinion letters were signed by the Acting Administrator before President Obama’s inauguration. Eighteen of the letters, but neither of the letters discussed above, were given only a conditional release, with the DOL explaining that the while agency is “making these letters available to the requestor and to the public, the agency has decided to simultaneously withdraw these letters for future consideration.” While employers (and attorneys) may understandably be confused by this development, the best course of action is to avoid relying on any of the conditional letters until the DOL either issues final approval or completely withdraws the letters.
We’ll keep you updated on the status of these opinion letters.