In an opinion letter dated April 29, 2019, the U.S. Department of Labor (DOL) explained that some service providers working for a virtual marketplace company (VMC) are independent contractors under the Fair Labor Standards Act (FLSA).   This opinion letter identifies the test the DOL is expected to use when considering the classification of workers

Last week, the U.S. Department of Labor’s Wage and Hour Division issued an Opinion Letter in which it stated that an employer may not delay the designation of leave qualifying under the Family and Medical Leave Act, even if the affected employee would prefer not to take FMLA leave, and employers may not designate more than 12 weeks of leave as FMLA leave.
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Photo: OTA Photos via Flickr (CC by SA 2.0)

Yesterday, the U.S. Department of Labor released its long-awaited updated overtime rule proposal.  Under the proposed rule, the minimum salary level at which an employee can be exempted from federal overtime and minimum wage requirements (assuming other criteria are met) would increase from $455 per week ($23,660 annually) to $679 per week ($35,308 annually).  If enacted, more than a million more workers would become eligible for overtime under the proposed rule.


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On February 1, 2019 the Keene Sentinel reported that a Massachusetts construction company had been hit with more than $64,000 in fines after an audit conducted by the New Hampshire Department of Labor. Although the bulk of the fines were related to the misclassification of employees as independent contractors, there were also a number of recordkeeping violations found.

The Keene Sentinel article devotes significant attention to the problems of trying to classify individuals as independent contractors under NH state law, a very difficult burden to meet. The result of the audit and the fines imposed on the business, however, showcase how difficult it is for businesses who typically do not operate in a state to establish a workforce there and be in compliance with state laws.


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Photo: 401(K) 2012 via Flickr

For those who thought the Trump DOL would back off the increased enforcement efforts of the Obama administration, last week’s news was not all good.  The U.S. Department of Labor just announced that the Wage and Hour Division (WHD) recovered a record $304 million in wages owed to workers in Fiscal Year 2018.  WHD also set a new record for compliance assistance events in FY 2018, holding 3,643 outreach events – including on the ground presentations and trainings – targeted to educate employers about their legal responsibilities regarding payment of wages.


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During the month of September, the Department of Labor will be holding a series of “Listening Sessions” throughout the country in order to hear public comments about planned changes to the overtime rules under the Fair Labor Standards Act.

On this blog, we have followed the long and winding path of the years-long efforts to update the FLSA’s overtime rules (see our posts on the subject here, here, here, here, here, here, here, here, here, and here).  To recap, in 2014, the Obama Administration set out to overhaul the overtime rules, and, after nearly two years, issued a set of final regulations, which were to have gone into effect on December 1, 2016. Among other things, these regulations would have increased the minimum salary threshold for exempt workers from $455 per week to $913.  This change would have dramatically increased the number of workers who would be classified as non-exempt, and therefore eligible to earn overtime pay.  However, after President Trump’s election, and just days before the regulations were to take effect, a federal court issued an injunction halting the changes.  After almost a year of litigation and uncertainty, the Trump Administration finally abandoned the Obama Administration’s regulations and went back to the drawing board and started the entire rulemaking process over from scratch.


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Back in September, we reported that the Trump Administration had abandoned the appeal of an injunction blocking new overtime rules from going into effect.  That action effectively killed the Obama Administration’s effort to update and expand the overtime rule by raising the “salary level test” for executive, administrative, and professional workers from $455 per week to $913 per week.  At the same time, the Trump Administration signaled that a scaled-down update of the overtime rule was on the way … eventually.

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The U.S. Department of Labor recently initiated a nationwide pilot program referred to as the Payroll Audit Independent Determination (“PAID”) program.  The stated purpose of the program is to facilitate resolution of potential overtime and minimum wage violations under the Fair Labor Standards Act (“FLSA”).  The expectation is that FLSA claims will resolve more expeditiously and without litigation thus improving employer compliance with wage and hour laws and getting back wages to employees more quickly.

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Last week, the Department of Labor issued new guidance on whether interns are “employees” covered by the Fair Labor Standards Act’s minimum wage and overtime provisions.  In the updated guidance, the DOL has adopted the “primary beneficiary test,” first applied by the U.S. Court of Appeals for the Second Circuit in 2015, and used by a growing number of courts in recent years.

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