What You Need to Know about Labor Department Opinion Letters

Department of Labor

Our role as an online payroll specialist for small businesses gives us plenty of opportunities to work with clients trying to sort out the confusion relating to the Fair Labor Standards Act (FLSA). Much of the confusion over the last seven years has been the direct result of the Obama Labor Department dispensing with the use of opinion letters in favor of administrative interpretations of FLSA rules. We are happy to report that opinion letters are back.

Thanks to a decision by the Trump Labor Department, the department's Wage and Hour Division (WHD) has reinstated opinion letters as the primary resource for employers looking for information to help them comply with the FLSA. In a June 27 statement, Labor Secretary Alexander Acosta said the following:

"The U.S. Department of Labor is committed to helping employers and employees clearly understand their labor responsibilities so employers can concentrate on doing what they do best: growing their businesses and creating jobs."

 

Opinion Letters Are Better

You may not understand what opinion letters are or even why they are a better resource than administrative interpretations. If so, keep reading. We offer a thorough explanation here.

An opinion letter is a document written by an experienced attorney who knows what the likely consequences of a particular action might be – according to the law. In the case of FLSA rules, opinion letters serve as important guidelines for directing employers in areas where the rules may be ambiguous. Trusting the information contained in an opinion letter is like trusting an attorney who might have provided the same advice in person.

A WHD administrative interpretation is the opinion of an administrator within the WHD who may, or may not, have legal experience on which to base that interpretation. As such, there is a vast difference between the administrator's interpretation of a rule and sound advice from an experienced attorney who knows the law.

The previous administration's Labor Department switched from opinion letters to administrative interpretations in 2010 in order to expand the number of American workers classified as employees and the number of entities classified as joint employers, according to Bloomberg BNA's Michael Trimarchi. Returning to opinion letters eliminates the expanded definitions and returns things to pre-2010 standards.

 

What This Means to You

As an employer, the Labor Department decision means more clearly defined guidelines based on legal opinions from experienced attorneys. It means that the vast library of information available prior to the implementation of administrator interpretations is once again at your disposal. It does not mean you are free from your obligations under the FLSA.

The FLSA remains in force whether you do payroll in-house or you process payroll with a third-party payroll solution from a provider like BenefitMall. As an employer, you are still required to accurately track time and attendance, pay overtime when applicable, keep accurate documentation, and correctly classify workers.

Returning to opinion letters simply clarifies what has been a confusing situation since 2010. If you have been struggling to understand your obligations under the FLSA, you should now find compliance easier with the more concrete guidelines of opinion letters.

As an online payroll specialist, we are here to help you make sure you maintain FLSA compliance in addition to processing your payroll efficiently and on time. If you are not yet using a third-party payroll solution from BenefitMall, there is no better time than now to get started. We encourage you to contact us and speak with one of our representatives to learn more about how a BenefitMall payroll solution can benefit your company.

Sources:

Bloomberg BNA – https://www.bna.com/back-future-labor-b73014460997/