Federal Opinion Letters: EEO Enforcement, Additional Commissioned Employee Overtime Guidance

The Equal Employment Opportunity Commission (EEOC) and the U.S. Department of Labor (DOL) recently released opinion letters providing guidance on Title VII case enforcement and commissioned employee overtime exemptions.

EEOC Opinion letter on Section 707.  In its second opinion letter of 2020, issued on September 3, 2020, the EEOC addressed the interpretation and enforcement of Section 707(a) of Title VII of the Civil Rights Act of 1964.  In it, the letter addresses whether the EEOC may bring litigation against employers based on a “pattern or practice” of discrimination, and whether the EEOC must satisfy pre-suit requirements before bringing a Section 707 lawsuit.

Section 707(a) of Title VII authorizes the EEOC to sue employers engaged in a “pattern or practice” of discrimination.  The opinion letter clarifies that Section 707(a) claims still require allegations of violations of Section 703 or 704, which contain anti-discrimination/retaliation provisions, in order to bring a “pattern or practice” suit.  This interpretation may limit the EEOC’s claims in pattern or practice suits to only those with a concrete allegation of violation of discrimination/retaliation having taken place.

Similarly, the Commission then concluded that a charge must precede any action brought pursuant to Section 707, and that a civil action under Title VII can only be brought after a charge has been filed.  Additionally, the Commission is required to attempt to conciliate claims before filing suite under Section 707.

Commissioned Employees Overtime Exemption. Recently, on May 19, 2020, the DOL clarified the “establishment” test for the purpose of determining if a commission-paid employee is exempt from overtime. On August 31, 2020, the DOL issued FLSA2020-11, an opinion letter that provides further guidance on the establishment test now that the list of 134 qualifying industries has been revoked.

Rather than looking to the catalog of industries, the DOL now focuses on four criteria to determine if a business has a “retail concept” for purposes of qualifying for the commissioned employee overtime exemption, including:

• Sells goods or services to the general public;
• Serves the everyday needs of the community in which it is located;
• Disposes in small quantities its products or skills; and
• Does not take part in the manufacturing process.

In the opinion letter, the DOL interpreted the first factor to include services that are similar to those provided to the public, if not the general public.  For example, in the letter, a waste removal contractor paying a delivery commission to its drivers for transporting waste from a commercial customer’s oilfield location to a disposal facility was considered similar enough to the same service it provides to the general public (e.g., transporting waste from a rural homeowner’s property to disposal facilities), and therefore interpreted as a retail concept. As such, employers who serve commercial customers could potentially qualify for the exemption if their services are similar to services provided to the general public in the same industry.

Action Items

1. Review the DOL Opinion Letters.
2. Evaluate commissioned employee overtime exemption status in connection with this guidance.
3. Review discrimination exposure with legal counsel.
4. Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.

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