DOL’s September Opinion Letters Address CBA and FMLA Conflicts and Retail and Service Overtime Exemption (US)

The United States Department of Labor’s (“DOL”) Wage and Hour Division issued two opinion letters on September 10, 2019, addressing certain aspects of the federal Family and Medical Leave Act (“FMLA”) and Fair Labor Standards Act (“FLSA”). DOL opinion letters are not binding law, but provide guidance into how the DOL interprets the laws that it enforces. Below is a brief summary of the guidance provided in these recent letters.

One of these letters indicated that employers may not delay the designation of FMLA leave even if the employer is subject to a Collective Bargaining Agreement (“CBA”) that provides for such an option. This letter responded to an inquiry by a government employer who reported that it was subject to a CBA that provides job-protected, paid leave for employees to use for certain family and medical reasons. The CBA also provides that employees continue to accrue seniority while using such paid leave. The employer had previously allowed employees to delay any concurrently applicable unpaid leave under the FMLA until after they exhausted any CBA-provided paid leave. Further, the employer did not allow employees to accrue seniority while on FMLA leave. The DOL’s letter declared that both the employer’s practice of delaying leave and, under the circumstances, disallowing seniority accrual, violate the FMLA. First, the DOL explained, the FMLA requires that neither employees nor employers may decline to apply FMLA protection for a qualifying leave, which the DOL explained includes a delay of such leave – FMLA protections begin upon the employer’s knowledge that a qualifying reason exists. Second, employers must allow for the accrual of employee benefits, such as seniority, during FMLA leave in the same manner allowed during other forms of employer-provided leave. Thus, because the CBA requires the employer to allow seniority to accrue during CBA-provided paid leave, the employer must apply this same rule to periods of FMLA leave. The takeaway from this is that employers (through CBAs or otherwise) may provide additional forms of paid and/or job-protected leave to their employees over and above what the law requires, but they must either provide for any such leave to run concurrently with or after an employee uses any available FMLA leave.

The DOL issued another opinion letter on the same day that discusses the retail and service exception to overtime pay under Section 7(i) of the FLSA. This Section exempts an employee of a retail or service establishment from overtime payments if the employee’s regular rate of pay is at least one-and-one-half times the federal minimum wage, and more than fifty percent of the employee’s compensation is comprised of earned commissions on goods or services. Under the FLSA, employers must use pay information from a period of “not less than one month” when determining whether the employee’s compensation is sufficiently commission-based. The DOL’s letter advises that “one month” refers to a calendar month, and that a period of four weeks or two bi-weekly pay periods falls short of this timeframe. However, employers may use larger periods of time, such as six weeks or three bi-weekly pay periods to perform this analysis.

Employers who provide employees with leave or utilize the retail and service overtime exemption should analyze their practices to ensure they comply with the DOL’s interpretative guidance.