The United States Department of Labor Shifts Its Focus
On April 1, 2010, the U.S. Department of Labor (“DOL”) issued a press release in which it announced a new DOL website. The website – www.dol.gov/wecanhelp/ — is part and parcel of the DOL’s public outreach and education program that it has been working on for some time. One of the stated purposes of the program is to educate employees regarding their rights under the Fair Labor Standards Act (“FLSA”). Other interesting developments include: the DOL will no longer issue fact-specific opinion letters to employers who request them from the DOL and the DOL has allocated $25 million of its 2011 fiscal year budget to a Misclassification Initiative.
DOL Opinion Letters
Until recently, an employer that wanted to confirm whether an employee qualified for an exemption under the FLSA could request a fact-specific opinion letter from the DOL by submitting a written request. If the DOL determined it would respond, the DOL would analyze the fact situation, the applicable law and provide a formal written opinion to the requestor. No longer will the DOL provide fact-specific opinion letters to employers. Instead, the DOL will respond to a written request by providing statutory and regulatory references to the request, but no analysis regarding whether the individual qualifies as salary-exempt.
Fact-specific opinion letters will be replaced with interpretive guidance issued periodically in the form of an Administrator’s Interpretation, i.e. the DOL’s interpretation of the FLSA and its regulations.
First Administrator’s Interpretation of 2010
In its first Administrator’s Interpretation for 2010, the DOL gives interpretive advice on Section 13(a)(1) of the Fair Labor Standards Act, 29 U.S.C. §213(a)(1) (commonly known as the administrative employee exemption), regarding Employees who Perform the Typical Job Duties of a Mortgage Loan Officer. Employers generally, including the financial and real estate industries, have long relied on the administrative employee exemption when classifying employees as exempt.
The Administrator’s Interpretation makes it clear that the DOL’s view is that employees responsible for loan generation (even if the person has to perform administrative functions) do not qualify for the administrative exemption because the individuals are involved in selling the products of the employer, i.e. loan generation rather than performing the administrative function of the business, e.g. policy development.
Will this Administrator’s Interpretation impact the DOL’s view regarding the administrative employee exemption?
The answer is most likely yes given that the Administrator stated in its recently issued Administrator’s Interpretation that salary exemptions under the FLSA should be construed narrowly. Keep in mind that simply paying a regular minimum salary of $455 a week to an employee does not mean the employee is a salaried-exempt employee under the FLSA. The duties test must also be satisfied.
Employers relying on the administrative exemption should review employee job descriptions and compare them to the FLSA administrative employee exemption criteria. Questions about whether an employee’s job duties satisfy the requirements of the administrative, employee exemption, or any other exemption for that matter, should be reviewed with competent legal counsel.
DOL 2011 Fiscal Year Budget – Misclassification Initiative/Enforcement
Congress approved a $117 million 2011 fiscal year budget for the DOL, $25 million of which the DOL has earmarked for a Misclassification Initiative. The stated purposes of the Misclassification Initiative are “to enforce statutory prohibitions, identify and deter misclassification of employees as independent contractors.” As part of the initiative, the DOL plans to seek passage of federal legislation that would make it a violation of the FLSA to misclassify an employee as an independent contractor. A likely result of the Misclassification Initiative will be more employer audits. Note that the DOL is not the only agency interested in employees being misclassified as independent contractors.
Shift In Focus
The DOL has made it clear that one of its top priorities is to ensure fair compensation for all employees. Among other initiatives, to achieve its goal the DOL launched its public education programs, its new website, its Misclassification Initiative, and will step up enforcement as evidenced by the fact that the DOL has hired scores of new wage and hour investigators. As a result, there will likely be an uptick in the number of wage and hour claims filed against employers. The uptick will further the ever-rising trend of these types of claims.
Employers are well advised to review their compliance under the FLSA before the DOL knocks on the door.
 The Internal Revenue Service has also announced its intentions to increase the number of employer audits that it performs.
A note to the reader: This article is intended to provide general information and is not intended to be a substitute for competent legal advice. This article has been reprinted with the permission of Lee Building Industry Association, www.bia.net. Questions regarding the content of this column or past columns may be e-mailed to Christina Harris Schwinn at email@example.com. To view past columns written by Ms. Schwinn please visit the firm’s website at www.paveselaw.com. Ms. Schwinn is an experienced employment lawyer and a partner with the Pavese Law Firm, 1833 Hendry Street, Fort Myers, FL 33901; Telephone: (239) 336-6228; Telecopier: (239) 332-2243.