DOL Opinions Shed Light on Overtime, Other Issues
written by Margaret M. Clark

The tricky issue of computing overtime for employees who work more than one job for the same employer has been the subject of two among several recent opinion letters offering insight into the U.S. Department of Labor’s positions on various technical issues under the Fair Labor Standards Act (FLSA).

One of these two letters discusses circumstances in which an employer is allowed to calculate overtime based on two different rates of pay for an employee doing separate nonexempt jobs. The other deals with how to calculate overtime for a worker who holds an exempt and a nonexempt position with the same employer.

In a letter dated Feb. 14, 2005, an official in DOL’s Office of Enforcement Policy wrote that an employer that has taken affirmative steps to prove that its pay scheme was designed neither to shortchange the worker nor to evade FLSA requirements is allowed to pay overtime to an employee based on two separate hourly wages.

As a general matter, when an employee works at two or more jobs with different hourly rates of pay in a single workweek, the employer must pay overtime based on the weighted average of the two hourly rates. But FLSA regulations permit the employer to use two different rates if all of the following conditions are met:

• The employee performs two or more kinds of work.
• There is a bona fide different hourly rate for each position.
• The employee is paid based on an agreement between the employer and the employee that is made before the work is performed.
• The rate of compensation is no less than one and one-half times the rate paid when the work is performed during non-overtime hours.

For a more detailed discussion of both the weighted average and multiple rate methods of calculating overtime, click here.

A March 17 opinion letter from a Wage and Hour Division official stated that an employee who works two distinct jobs regularly—one exempt, one non-exempt—must be compensated based on primary duty. That is, if the employee’s primary duty is the performance of exempt work, the employer is not obligated to—but is permitted to—pay the employee anything in addition to the employee’s salary for performing nonexempt work.

If, however, the employee’s primary duty is nonexempt, the employer cannot segregate the hours worked into exempt and nonexempt hours but must add up all the hours worked on both jobs to determine the number of overtime hours. Once the total hours are determined, the employer determines the regular rate for purposes of computing overtime pay using either the weighted average or the multiple rate method as discussed earlier.

Headed for high court?

In another Wage and Hour Division letter dated March 17, 2005, DOL indicated that the domestic service exemption from overtime contained in section 13(a)(15) of the FLSA and interpreted in 29 CFR Section 552.109(a) is applicable to employees who are engaged in companionship services and who are employed by a third party.

Deputy Administrator Alfred B. Robinson Jr. said DOL adheres to its interpretation despite the July 2004 ruling of the 2nd U.S. Circuit Court of Appeals in Coke v. Long Island Care at Home. In that case, the federal appeals court held that agency employees are not covered by the overtime exemption. Accordingly, employers in states outside the jurisdiction of the 2nd Circuit may continue to rely on DOL’s position. “[W]e will monitor any case law that addresses this issue in other courts,” the letter said, “and may reconsider our interpretation if case law so requires.”

Long Island Care has petitioned the Supreme Court for review of the 2nd Circuit’s decision, and on June 6 the high court asked the solicitor general of the United States for an opinion as to whether third-party home health care providers are overtime-exempt.

In a related March 17 opinion letter, DOL explained that although it considers agency-employed providers of companionship services to be exempt from the FLSA’s overtime requirements, they must be paid the applicable minimum wage for all hours worked.

In determining the number of hours worked by registered and licensed practical nurses who provide 24-hour care, the employer and employee may agree on the amount of sleeping time, meal time and periods of complete freedom from all duties to be excluded from hours worked, according to 29 CFR 552.102(a). If any of these periods is interrupted by a call to duty, the interruption must be counted as time worked. To be excluded from hours worked, periods of free time (not related to meals and sleeping) must be long enough “to enable the employee to make effective use of the time,” the regulation says.

Keep on truckin’

In other opinion letters issued earlier this year, DOL officials have addressed the interstate trucking exemptions from the FLSA’s overtime requirements, how to pay employees for a shift that spans two workweeks, and a minimum wage issue involving the extent to which an employer can require an employee to reimburse training costs if the employee resigns.

Truck drivers who drive only in-state are covered by the interstate commerce exemption from overtime in a situation where they haul products to retail stores from warehouses where the products had been stored after delivery from out of state. The shipments were interstate, so the drivers were involved in interstate commerce even though they worked in only one state, according to DOL in an April 27 letter.

All hours worked in a single shift that spans two workweeks can be attributed to the workweek in which the shift begins as long as the arrangement is not part of a scheme to avoid overtime, Robinson said in a May 27 opinion letter. In the specific case, the employees worked four 10-hour shifts during a Saturday-to-Saturday workweek. On the fourth day of the week, the shift begins at 10 p.m. on Saturday and ended at 8 a.m. on Sunday. The employee would have worked only 32 hours during the official workweek, but the employer wished to pay for the 40 hours including the shift that extended into the next workweek. DOL approved that approach.

In a May 31, 2005, letter, the Wage and Hour Division addressed the question of whether a police offer who was paid his salary while in a training program, according to an applicable state law, could be required, under the same law, to reimburse the employer the full amount of the salary received if the employee resigned and was re-employed by another department in the same state.

DOL said that wages cannot be considered to have been paid by the employer and received by the employee unless they are paid “finally and conditionally or ‘free and clear.’ ” Any required kickbacks to the employer that took the employee’s pay below the required minimum wage or overtime levels would be unlawful, the letter said.

Not binding, but …

Sometimes DOL opinion letters are iterations of well-established principles; in other cases they are groundbreaking. In all instances, they are based exclusively on the facts and circumstances described in a specific request for an opinion, and, as such, are not precedent-setting. Nevertheless, opinion letters can be helpful to employers in charting a particular course of action if the principles stated in them are applied with caution to circumstances that match closely those discussed in the letters.

Even if an employer’s reliance on positions expressed in DOL opinion letters is off base, the employer still can argue that any violation that may have occurred as a result of its good-faith—but incorrect—understanding of the rules was not willful. (For a detailed discussion of the good-faith defense in FLSA matters, see the Legal Trends column in the July 2005 HR Magazine.)

Opinion letters are available on the DOL web site. In addition, copies of specific opinion letters identified by date and topic can be requested by calling the Wage and Hour Referral Service at (866) 487-9243.

Margaret M. Clark, J.D., SPHR, is SHRM’s manager of workplace law content.

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