A Flurry of DOL Activity Ushers in 2021
By: Miriam L. Rosen, McDonald Hopkins LLC
The end of the year saw a flurry of activity at the U.S. Department of Labor (“DOL”) with new guidance on the FLSA, FFCRA, and independent contractors. This level of activity in the waning days of the current administration reflects the final opportunity for the DOL to address open issues on their agenda.
DOL Opinion Letters
The Wage Hour Division (“WHD”) of the DOL has issued six opinion letters since the November election. While several of the opinion letters have discrete applicability, two of the opinion letters provide some broader guidance that employers will find helpful.
· Travel Time
With so many employees working remotely, a December 31, 2020 opinion letter addresses the timely topic of home to work travel. Specifically, the opinion letter considers the compensability of home-to-office travel that occurs during the work day when an employee chooses to work from home for part of the day and from the office for part of the day with time in between for personal matters.
Under the FLSA, regular home to work travel time is generally not compensable, but work related travel between work locations during the work day is generally compensable for non-exempt employees. So, what happens when an employee works both at home and at office during the work day with some personal errands in between?
Through a series of examples, the DOL explains that travel time does not fall within the “continuous workday” pay rule, when a non-exempt employee arranges for the workday to be divided into a block of time worked at home and a block worked at the office, separated by a block reserved for the employee to use for their own purposes. In that case, the reserved time is not compensable, even if the employee uses some of that time to travel between home and the office.
A takeaway from this opinion letter is that employers need to pay close attention to the reasons and timing of the travel when an employee is working between home and office in a single day.
· Administrative Exemption
In a January 8, 2021 opinion letter, the WHD addressed the administrative exemption as it applies to account managers at a life science company. The opinion letter details the nature of the account managers' duties that included learning the needs of potential clients, researching company products that would meet those needs, and communicating about how the company’s products could best fulfill those needs.
Critical to determining that the account managers meet the administrative exemption, the WHD noted that they acted with autonomy, were not closely supervised, and were expected to independently develop account plans and strategies and make independent decisions in answering client questions. In addition, the WHD noted that the sales aspects of the account manager role satisfied the strategic operational requirements of the administrative exemption.
Additional FFCRA Guidance
The December 2020 stimulus bill left employers in a bit of a quandary about the Families First Coronavirus Response Act (FFCRA). The stimulus bill did not extend the FFCRA, but provided that as of January 1, 2021 covered employers could voluntarily provide the emergency paid sick leave or emergency paid FMLA leave and claim the tax credit made available for FFCRA leaves through March 31, 2021. To help employers understand this outcome, on December 31, 2020 the DOL issued guidance to provide “clarity around some of the novel issues that the FFCRA's expiration raises.”
The DOL’s guidance affirms that employers are not required to provide FFCRA leave after December 31, 2020, but may do so voluntarily. An employer that does provide such leave may claim the IRS tax credit. The DOL also clarified that even though the FFCRA has expired an employee must be paid for any FFCRA time used through December 31, 2020.
Independent Contractor Final Rule
On January 6, 2021, the DOL continued its output by finalizing rules clarifying independent contractor versus an employee under the FLSA. The final rule reaffirms the use of the economic-reality test to determine whether an individual is an independent contractor in business for themselves or whether the individual is an employee who is economically dependent on an employer for work.
The DOL’s final rule focuses on two core factors in assessing independent contractor status:
1. The nature and degree of control over the work.
2. The worker's opportunity for profit or loss based on initiative and investment.
Under the final rule, businesses can also look to three other factors to assist with the independent contractor analysis:
1. The amount of skill required for the work.
2. The degree of permanence of the working relationship between the worker and the potential employer.
3. Whether the work is part of an integrated unit of production.
Before taking any action based on this rule, however, employers should note that this rule and other recent DOL guidance will be closely reviewed by the Biden Administration and may be modified, withdrawn, or rescinded.
The guidance discussed above along with other actions taken by the DOL in the final days of the current administration reflects a final push to wrap up a pro-employer agenda. Employers should anticipate a new more employee-centric approach from the DOL as we usher in the Biden Administration.
This article was written by Miriam L. Rosen, who is Chair of the Legal Affairs Committee of Detroit SHRM and Chair of the Labor and Employment Law Practice Group in the Bloomfield Hills office of McDonald Hopkins PLC, a full service law firm. She can be reached at [email protected] or at (248) 220-1342. Additional articles addressing the many legal and operational concerns impacting businesses as a result of the COVID-19 crisis can be found at: https://mcdonaldhopkins.com/Insights/March-2020/Coronavirus-Legal-and-business-concerns
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