A flurry of DOL activity ushers in 2021

The U.S. Department of Labor (DOL) ushered in the new year with a flurry of new guidance on the FLSA, FFCRA, and independent contractors. This activity in the waning days of the current administration reflects the fact that it is the final opportunity for the DOL to address open issues on its agenda.  

DOL Opinion Letters
The DOL’s Wage Hour Division (WHD) has issued six new opinion letters since the November election. While several of those opinion letters have discrete applicability, two of the opinion letters provide some broader guidance that employers will find helpful.   

• Travel Time

With many employees still working remotely, a December 31 opinion letter addresses the timely topic of home-to-work travel time. Under the FLSA, regular home to work travel time is generally not compensable, but work related travel between work locations during the workday is generally compensable for non-exempt employees. This opinion letter addresses travel time pay issues when an employee works both at home and at the office during the same workday with some personal errands mixed in between.  

Through a series of examples, the WHD 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 should 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 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, communicating how the company’s products could best fulfill those needs as well as sales activity.  

Critical to determining that the account managers met the administrative exemption, the WHD noted that the account managers 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 sales aspects of the account manager role included broad responsibilities for promoting and marketing products, designing portfolios of products and solutions for potential clients, advising potential and prospective clients. 

A takeaway from this opinion letter for employers is that meeting the administrative exemptions requires a level of involvement with marketing, product development, and client engagement  that goes beyond simply “making a sale.”

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, covered employers could voluntarily provide 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, the DOL issued new 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, 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. 

Independent Contractor Final Rule
On January 6, the DOL continued its output by finalizing rules clarifying the factors for analyzing independent contractor and employee status 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 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.  

As the DOL pushes to wrap up the current administration’s pro-employer agenda, employers should anticipate a new and more employee-centric approach from the DOL as we usher in the Biden Administration. The McDonald Hopkins Labor & Employment Law Team will continue to monitor DOL activity and keep employers updated on developments impacting their operations.