"Hours Worked" When A Shift Straddles Two Workweeks. In a recent opinion letter, the U.S. Department of Labor (DOL) explained how "hours worked" may be calculated where a single shift encompasses two work weeks. For example, in the specific case before the DOL, employees worked four ten-hour shifts in a Saturday-to-Saturday work week. The last shift of the week began at 10:00 p.m. on Saturday and ended at 8:00 a.m. on Sunday. If only hours worked during the official work week were counted, employees would have worked less than 40. According to the DOL, as long as the employer's arrangement is not a scheme to avoid paying overtime owed under the Fair Labor Standards Act (FLSA), an employer may attribute all hours worked in a single shift to the work week in which the shift began, even if the shift extends into the subsequent work week. This technical clarification should help manufacturing and other industrial employers who routinely have shifts straddling two work weeks.

When Do Meal Periods Become "Working Time"? The DOL recently addressed, in another opinion letter, the parameters for when meal periods must be paid work time under the FLSA. Generally, under the so-called "employee freedom" test used by the DOL and some courts, a meal or break period may be unpaid if (1) the employee is "completely relieved of all duties"; (2) the employee may leave his or her "duty post"; and the period is at least 30 minutes long (a shorter period may suffice in limited circumstances where, for example, the employer and employee negotiate a specific time in exchange for leaving early).

As you might expect, application of this test to specific situations has led to varying outcomes. Emergency workers and public safety employees, for instance, who must remain ready for a call during meal or break periods are often considered working and are accordingly paid. The DOL recently concluded that a lunch break could be unpaid even though, for security reasons, the employer required employees to remain in a particular lunch room, prohibited a change of clothes, and did not even allow employees to make telephone calls. Despite those restrictions, the DOL said, the employees were completely relieved of their duties and were given an uninterrupted meal period, thus satisfying the test. A key question is always whether the break is used for the "predominant benefit" of the employer or employee. Of course, these rules are only for non-exempt hourly employees, since reductions in salary for meal periods would be inconsistent with the "white collar" overtime pay exemptions.

Reimbursement Of Training Wages Could Violate FLSA's "Free And Clear" Provision. In a May 31, 2005 opinion letter, the DOL confirmed that requiring a departing employee to reimburse the company for wages paid during an initial training period would violate the "free and clear" provisions of the FLSA if, in doing so, actual wages paid fell below the required minimum wage or overtime levels. Any requirement that an employee directly or indirectly "kick back" all or part of a wage payment is inconsistent with the FLSA rule that minimum wages and overtime must be paid finally and unconditionally. Consequently, a private agreement or employment policy that has the effect of requiring employees to sign away baseline wage protections under the FLSA is not enforceable.

Non-Supervisory "Management Activities" For Exempt Executives. Turning to the overtime exemptions, in an August 2, 2005 opinion letter the DOL clarified that activities such as "planning and controlling the budget" and "monitoring or implementing legal compliance measures" were examples of management activities supporting the "executive" overtime pay exemption. Although budgeting and legal compliance responsibilities were added to the regulations in August 2004, this merely clarified earlier positions taken by several courts in defining executive employees. The DOL also reiterated that "management activities are not limited to the supervisory activities" and the spectrum of exempt management duties will extend beyond traditional supervisory duties.

Managers Concurrently Performing Exempt And Non-Exempt Duties. Time spent by an otherwise exempt employee performing non-exempt work will not guarantee overtime pay if the employee's "primary" duty (i.e., "principal, main, major or most important duty") consists of management activities, even if less than 50% of the employee's time is spent on such duties. This interpretation has proved especially helpful to retail and service establishments where on-site managers routinely perform non-exempt work (e.g., running a cash register or filling orders) in addition to their management responsibilities. Despite the perceived leniency in the revised FLSA regulations on this point, determining a manager's primary duty requires planning and documentation to preserve the exemption, particularly if the manager will perform non-exempt work on a regular basis.

Tracking Hours Worked By Exempt Employees. On April 11, 2005, the DOL confirmed that requiring exempt employees to submit time sheets tracking hours worked in various activities did not contradict the "salary basis" test for the white-collar overtime exemptions. Explaining that employers often use time sheets to track hours spent by exempt employees for purposes of preparing budgets and administering paid time off or other benefits, the DOL reasoned that as long as these employees are paid on a salary basis within the meaning of the FLSA (i.e., payment of a predetermined salary regardless of the quality or quantity of work), mandatory time sheets do not convert exempt workers into nonexempt workers. Nevertheless, if the employer tracked exempt employee hours in order to correlate pay with hours actually worked, the salary basis test would not be satisfied and the exemption would be jeopardized.

These recent developments illustrate the intensely fact-specific analysis required by the FLSA and the DOL regulations when determining whether an exemption applies or has possibly been compromised by an employer's pay policy or practices.

Margaret Carroll Alli

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