Dive Brief:

• The U.S. Department of Labor (DOL) released two opinion letters Dec. 21, 2018; both address Fair Labor Standards Act (FLSA) compliance issues.
• The first letter, FLSA2018-28, approved a pay plan in which employees' average hourly rates varied from week to week; DOL said such an arrangement was permissible from a minimum wage standpoint because the employer ensured that the average hourly pay rate always exceeded the FLSA's minimum wage for all hours worked. The agency warned the employer, however, that the arrangement's default assumption of a regular rate of pay of $10 per hour for the purpose of calculating overtime would not comply with the FLSA's overtime requirements when an employee's regular rate of pay exceeded that amount.
• The second letter, FLSA2018-29, concluded that members of a religious commune who lived in small groups and shared all money and possessions in common were not employees within the meaning of the FLSA and were therefore exempt from its requirements.

Dive Insight:

DOL uses opinion letters to respond to fact-specific employer queries about wage-hour compliance. The Obama administration had discontinued the use of the letters in 2010 in favor of more broadly applicable "administrator interpretations" but the agency returned to opinion letters in 2017.

Opinion letters are necessarily fact-specific and limited in scope to the particular issues addressed, but employers tend to favor the letters as they can serve as a complete affirmative defense in litigation.

The applicability of FLSA2018-29, for example, is narrowly tailored to the ministerial exception, which applies only to entities whose mission "is marked by clear or obvious religious characteristics," according to DOL. FLSA2018-28, however, serves as an excellent reminder that employers are not allowed to establish arbitrary benchmarks when it comes to calculating overtime.