April 6 and 12, 2018
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April has been a busy month for the U.S. Department of Labor (“DOL”). The Wage and Hour Division issued a number of opinion letters, a bulletin, and a revised fact sheet addressing different employee pay practices, such as tip credits, travel time, and rest periods. Employers should review the different letters for applicability to their workforce.
- Employers May Not Keep Employee Tips for Any Purpose
On April 6, 2018, the DOL issued Field Assistance Bulletin 2018-3 to provide clarity on the Consolidated Appropriations Act of 2018, which prohibits employers from keeping tips received by employees, even if the employer takes a tip credit. The bulletin also nullifies 2011 regulations that prohibited tip pooling with customarily non-tipped employees (e.g., cooks, kitchen helpers, or dishwashers), though supervisors and managers may not participate in such tip pools. Additionally, employers are still permitted to deduct credit card fees when processing credit card tips. Although permitted by the DOL, employers in some states may still be limited by state or local laws and should review applicable rules before adopting the DOL’s guidance.
- Compensability of Hourly Employees’ Travel Time
On April 12, 2018, the DOL issued Opinion Letter FLSA2018-18 addressing the compensability of non-exempt employee travel time under the FLSA. Whereas commuting from home to a worksite is not compensable time (unless considered “extraordinary”), the letter presents several scenarios in which an employee’s travel time must be compensated, regardless if the employee travels via a company or personally-owned vehicle:
- Travelling from an initial worksite to other worksites within the same workday;
- Travelling to another worksite from an initial worksite in which the employee picks up materials/assignments;
- Any travel time that occurs during the employee’s normal hours of work, including travel occurring on a Saturday or Sunday during a time period analogous to an employee’s normal working hours;
- Example: if an employee typically works Monday-Friday, 8:00 AM – 5:00 PM, travel time occurring on a Saturday or Sunday from 8:00 AM – 5:00 PM is also compensable;
- If an employee does not have a fixed schedule, employers may use different methods to determine “normal work hours,” such as reviewing the employee’s time records in the last month of regular employment, choosing average start/end time for work days, or negotiating with the employee; and
- Time spent performing actual work (e.g., working while on a plane), even outside of the employee’s normal working hours.
Note that this document is issued by the DOL and reflects federal guidance, which may differ from state laws. For example, California regulations regarding employee travel time do not include the “during normal working hours” provision. Employers should consult with local counsel to determine if additional compensation regulations that are more beneficial to employees apply.
- Compensability of Rest Periods for Medical Reasons
On April 12, 2018, the DOL issued Opinion Letter FLSA2018-19 providing guidance on the compensability of medically mandated rest periods. In this scenario, the employer’s non-exempt employee has provided FMLA certification from a healthcare provider stating that the employee must take 15-minute breaks every hour due to the employee’s condition.
The Letter indicates that additional breaks beyond the employer’s regular policy (typically a 10- or 15-minute break for every four hours of work) primarily benefit the employee, not the employer, and do not need to be paid. However, the rest periods defined by the employer’s regular policy must still be compensated.
- Lump-Sum Payments and Garnishment Limits
Issued on April 12, 2018, Opinion Letter CCPA2018-1NA reviews how employers should determine whether certain lump-sum payments should be counted as earnings applicable for garnishment under the Consumer Credit Protection Act (“CCPA”). The letter provides examples of different types of lump-sum payments (e.g., commissions, discretionary bonuses, referral bonuses, sign-on bonuses), and indicated that a major factor (though not the sole determinant) in deciding if such payments qualify as earnings is “whether the employer paid the amount in question for the employee’s services.” Using this standard, the Letter determined that the following 18 types of lump-sum payments fall into the below categories:
|Lump-Sum Payments that Qualify as Earnings under CCPA||Commissions, discretionary and nondiscretionary bonuses, productivity/performance bonuses, profit sharing, referral or sign-on bonuses, moving/relocation payments, attendance awards, safety awards, cash service awards, retroactive merit increases, holiday pay, termination pay, severance pay tied to an employee’s length of service|
|Lump-Sum Payments Where Certain Portions Qualify as Earnings under the CCPA||Workers’ compensation payments intended to replace employee wages, insurance settlements attributable to front/back pay|
|Lump-Sum Payments that Do Not Qualify as Earnings under CCPA||Buybacks of company shares|
- Overtime Exemptions for Higher Education Institutions
Lastly on April 12, 2018, the DOL issued Fact Sheet #17S. This next fact sheet discusses the applicability of the FLSA’s white-collar overtime exemptions to jobs related to higher education institutions, such as teachers, coaches, administrative employees, graduate teaching assistants, research assistants, and student residential assistants.
- Review each document for applicability to your workforce.
- Have tipping rules and procedures reviewed for compliance.
- Have travel time pay audited and have policies updated consistent with the recent guidance.
- Review rest period accommodation policies and procedures, including timekeeping and payroll processes.
- Have garnishment procedures and calculations audited consistent with the recent guidance.
- Have FLSA overtime exemptions reviewed for compliance.
- 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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