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DOL gifts guidance to employers on quirky FMLA, FLSA issues


Being the law nerds that we are at Seyferth Blumenthal & Harris, we get excited whenever there is specific guidance for employers on how to handle grey areas in the law.

This year, the U.S. Department of Labor (DOL) — the administrative agency in charge of enforcing many federal employment statutes — has issued over 20 opinion letters to help employers navigate tricky FMLA and FLSA issues. These opinion letters are important because they may serve as a defense to liability in FLSA lawsuits and are entitled to some court deference when there is an ambiguity in law.

This article focuses on six new opinion letters that the DOL issued on August 28, 2018.

It Is Okay to “Freeze” Absences While Employee Is on FMLA Leave

Many employers use an attendance policy that involves no-fault “points” or “occurrences” over a period of months.

For example, under these policies if an employee accrues too many points over a 12-month period, then that may lead to discipline, up to and including termination. A company asked the DOL whether they could “freeze” the period of time during which an employee would accrue points or occurrences if the employee took FMLA leave.

Consequently, if the employer evaluated points or occurrences on a 12-month basis and the employee took two months of FMLA leave, that employee’s attendance would be evaluated over a 14-month period. The DOL concluded that this “freezing” practice did not violate the law so long as the employer took the same approach with non-FMLA leave, such as workers’ compensation-related leave.

Organ Donors Are Protected under the FMLA

Generally, qualifying employees may take up to 12 weeks of unpaid leave under the FMLA for their own qualifying serious health conditions. In the typical situation, an employee unexpectedly gets ill or has an injury and needs time-off to heal or seek treatment.

But what if the employee is perfectly healthy and makes a choice to donate an organ? According to the DOL, the FMLA protects these courageous people. The FMLA and its regulations broadly apply to employees’ medical conditions involving “inpatient care” or “continuing treatment by a health care provider.”

Any surgery to donate an organ will most likely fall into either category, and therefore, warrants FMLA protection for organ donors.

No Need to Pay Employees for Time Spent on “Wellness Activities”

There has been a shift in healthcare to focus on education and prevention.

Many companies have launched health initiatives, such as wellness plans, screening tests for cholesterol and blood pressure, discounts for gym memberships, etc. One employer asked the DOL whether the time its employees spent on these various activities are compensable time under the FLSA.

The DOL concluded that employers do not have to compensate employees for such activities.

As with most compensatory time issues, the DOL analyzed whether the health initiatives primarily benefited the employee or the employer. While the employer derived no direct financial benefit from these activities, the employees benefited greatly by making better life decisions and reducing their insurance premium.

Retail or Service Exemption Interpreted to Include Tech Goods and Services Sold Mostly to Commercial Entities

For employers who sell mostly retail goods and services, i.e., goods and services not for wholesale or resale, and who have employees whom receive predominately commissions, the DOL’s opinion letter on the retail or service exemption will be useful. This provision exempts employers from having to pay overtime to certain commissioned employees.

As the FLSA’s regulations illustrate, the line between a qualifying retail or service establishments and non-qualifying establishments is sometimes murky. The quintessential examples of retail or service establishments are grocery stores, hardware stores, restaurants, hotels, barber shops, and the like.

In this opinion letter, the DOL tackled a more recent example of what types of entities qualify for this exemption.

The company in the letter sold a technology platform to merchants that enabled those merchants to accept credit card payments from customers from a mobile device, online, or in-person. Even though the company sold primarily to commercial entities, rather than to the general public, it still qualified for the retail or service exemption. Also, the company’s goods and services fell squarely within the exemption because it was not being resold to any other entities.

The law is usually slow to catch up to changing technology, so it is administrative opinions like this that will help employers at the forefront of advancement stay compliant.

Whether Someone Is a Volunteer Depends on Their Motivation

In this opinion letter, a non-profit organization asked whether people who volunteered to grade a professional exam needed to be paid for their grading time. Generally, time spent on public or charitable endeavors outside of working hours is not compensable time under the FLSA. Keep in mind volunteers for non-profit organizations and interns for for-profit organizations are analyzed under different standards.

The volunteers must freely offer their services, rather than being coerced or pressured into donating their time. Here, the graders all wanted to give back to their profession and all held highly compensated positions outside of their roles as graders.

Consequently, the nonprofit organization was not required to pay these graders for their time, but could (without negating their volunteer status) pay for their travel, lodgings, meals, and other expenses incidental to volunteering.

Motion Picture Theater Exemption Can Apply to All Attractions at a Theater

Under the motion picture exemption, a business need not comply with the FLSA’s minimum wage or overtime requirements.

Many large movie theater complexes offer entertainment options, such as food and dining, cocktails, and arcades. Depending on how closely connected each of these parts of the theater are to each other, the entire movie theater complex and its attractions may or may not qualify for the motion picture exemption. If all parts of the movie theater are not an “establishment” under the FLSA, then some employees of the theater must be paid at least the minimum wage and overtime.

A three-part test will help movie businesses gauge whether the motion picture exemption applies to its entire operations at a location: (1) physical separation of the theater’s parts; (2) whether the different theater parts are operated as separate units and have separate records and booking; and (3) whether the different parts of the theater intermix and exchange employees.

In the opinion letter, the businesses at issue was incorporated as a single business unit, filed taxes and maintained business records jointly, ordered goods and paid invoices as a single business, and used the same bank accounts to pay business expenses. The businesses also provided services to the public under a single business name and their employees were considered employees of the entire business unit.

Under these circumstances, the movie theater exemption applied to the theater’s entire operations.