DOL Provides Opinions on Non-Discretionary Bonuses, Per-Project Payments, and Public Agency FMLA Eligibility

Types : Alerts

On Tuesday, the Wage and Hour Division of the U.S. Department of Labor (“DOL”) issued three opinion letters regarding Fair Labor Standards Act (FLSA) and Family and Medical Leave Act (FMLA) compliance.  While not legally binding or universally applicable, these opinion letters offer guidance and insight to DOL’s interpretation of employers’ specific questions about federal wage and hour laws.

Calculating overtime pay for a nondiscretionary, multi-week bonus under the FLSA

• The DOL’s first letter (FLSA 2020-1) addressed how an employer should include a bonus in the calculation of employees’ regular rate for overtime purposes. Employees become eligible for a lump-sum $3,000 bonus if they complete a 10-week training program and sign up for an additional eight weeks of training.  The employees’ overtime hours fluctuate over the 10-week training period.
• Under the FLSA, the employees’ regular rate of pay must include the lump-sum bonus for the initial 10-week period. Furthermore, because the bonus cannot be attributed to any smaller or larger period, the employer must equally divide the bonus over the 10-week period.
• Key Takeaway: “[A]llocating bonuses equally to each week of the bonus period is the appropriate method for computing overtime pay on bonus earnings that cannot be identified in particular work weeks.”

Whether proposed per-project payments to educational consultants constitute payments on a “fee basis” or “salary basis”

• The Wage and Hour Division’s second letter (2020-2) addresses the treatment of per project payments under the FLSA’s white collar exemptions.
• The letter responds to two proposed methods of payment:
  1. Education Consultant A is paid to develop a project over 40 weeks, working irregular hours ranging from 0-80 per week.  Consultant A is paid $80,000 over the 40-week period on a bi-weekly basis.
  2. Educational Consultant A is assigned to another project at the same time, lasting eight weeks, to be paid an additional $6,000 in four, bi-weekly payments.
• Therefore, in the four weeks in which the projects overlap, the consultant is paid $5,500 bi-weekly.
• Key Takeaway: Each of the proposed payment methods qualifies as a salary-based payment under the FLSA while complying with the regulations, despite the nonconventional structures.

Whether a combined general health district must count the employees of the County in which the health district is located for the purpose of determining FMLA eligibility for its employees

• Generally, the FMLA applies to public employers with 50 or more employees within a 75-mile radius and requires covered employers to provide up to 12 weeks of unpaid leave to eligible public employees. A “Public Agency” under both the FLSA and FMLA may include a state government or its political subdivisions, including counties, cities, and towns, as well as state agencies and agencies of political subdivisions.
• The letter specifically addresses an Ohio health district, which under state law is considered a wholly separate political subdivision, despite federal classification of health districts as subordinate agencies of counties.
• Key Takeaway: Weighing these and other “factors,” the DOL would not consider the health district and the County to be a single employer for purposes of FMLA eligibility

If you have any questions regarding the applicability of the DOL’s opinion letters to your business, the FMLA, or the FLSA, members of Montgomery McCracken’s Labor and Employment group are available to assist.