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DOL Update: COVID-19-Related Guidance and New Opinion Letters (US)

During the week of June 22, 2020, the U.S. Department of Labor (“DOL”) Wage and Hour Division (“WHD”) issued three Field Assistance Bulletins, each providing guidance to WHD field staff regarding three unique compliance issues related to the COVID-19 pandemic. In addition, on June 25, 2020, the DOL released five fact-specific opinion letters discussing various pay practices specifically relating to certain salespersons and county government employees.

Field Assistance Bulletins Address COVID-19 Issues

Each of the recent Field Assistance Bulletins at least tangentially relate to the COVID-19 pandemic. The first bulletin announces a change to the DOL’s practice of seeking pre-litigation liquidated damages. The second bulletin addresses when an employee may take leave under the Families First Coronavirus Response Act (“FFCRA”) to care for a child based on the closure of a summer camp or other summer programs. Finally, the third bulletin provides guidance regarding when schools that have physically closed in response to the COVID-19 are considered “in session” for purposes of child labor laws.

“Double Damages” No Longer the DOL’s Default Practice in Pre-Litigation Settlements

Since 2011, the DOL sought liquidated damages—which double the amount of back pay workers receive—as part of any pre-litigation negotiated settlement of alleged Fair Labor Standards Act (“FLSA”) violations.  On June 24, 2020, the DOL provided employers with some good news when it announced that the agency will no longer automatically pursue pre-litigation liquidated damages in administrative actions. The DOL explained that the change in practice was based on President Trump’s Executive Order 13924, Regulatory Relief to Support Economic Recovery, requiring the DOL to continue removing certain regulatory and enforcement barriers to economic prosperity as America strives to defeat the economic effects of COVID-19.

According to the DOL, administrative FLSA investigations involving liquidated damages take 28% more time than those involving back wages only. Thus, the DOL expressed that that continuing to seek recovery of pre-litigation liquidated damages as the rule, rather than the exception, would be an administrative enforcement practice that would potentially inhibit economic recovery in these trying times, particularly as employers face novel and practical challenges in applying the FLSA to new conditions in response to the COVID-19 pandemic. Therefore, in order to reduce the time needed to conclude FLSA administrative cases and to provide back wages to employees faster, the WHD will no longer pursue pre-litigation liquidated damages from employers by default.

Accordingly, effective July 1, 2020, the DOL will not assess pre-litigation liquidated damages if any one of the following circumstances are present:

  • there is not clear evidence of bad faith and willfulness;

  • the employer’s explanation for the violation(s) show that the violation(s) were the result of a bona fide dispute of unsettled law under the FLSA;

  • the employer has no previous history of violations;

  • the matter involves individual coverage only;

  • the matter involves complex section 13(a)(1) and 13(b)(1) exemptions; or

  • the matter involves State and local government agencies or other non-profits.

Further, each request for pre-litigation liquidated damages under the FLSA must be submitted to and approved by both the WHD Administrator and the Solicitor of Labor (or either of her designees) on an individual case-by-case basis.

It is important to understand that this new policy does not affect the DOL’s authority to seek liquidated damages against employers in court, and does not prohibit employees from pursuing liquidated damages in private actions against employers. Although this new guidance does not completely eliminate the possibility that an employer may be subject to double damages in all wage-and-hour claims, employers can breathe a sigh of relief as they try to navigate the unique challenges created by COVID-19, knowing that the DOL will not automatically pursue pre-litigation liquidated damages in administrative actions. With that said, employers should continue to comply with all wage and hour requirements, and should consult with an attorney as questions arise in order to avoid the potential exposure associated with FLSA violations.

FFCRA Leave Based on Closure of Summer Programs

On June 26, 2020, the DOL released guidance regarding when an employee may take leave under the FFCRA to care for his or her child based on the closure of a summer camp, summer enrichment program, or other summer program, for COVID-19 related reasons.

The FFCRA requires public employers and private employers with fewer than 500 employees to provide eligible employees with up to 80 hours of paid sick leave and up to 12 weeks of expanded family and medical leave, of which up to 10 weeks may be paid (these requirements sunset on December 31, 2020, unless extended by Congress). One of the qualifying reasons for leave under the FFCRA is if the employee is unable to work or telework due to a need to care for his or her child whose place of care is closed due to COVID-19 related reasons. A “place of care” is a physical location in which care is provided for the employee’s child while the employee works and includes schools and day care centers, as well as summer camps and summer enrichment programs.

However, unlike schools and day care centers, many summer camps and programs closed in response to COVID-19 before any children began to attend and, in some cases, before they were even able to enroll. Such camps and programs therefore would not have been places of care of any child at the time they closed. Accordingly, determining whether a closed camp or program would have been the place of care of an employee’s child, qualifying him or her for leave under the FFCRA, is somewhat confusing. The DOL guidance attempts to provide clarification.

The DOL specifically recognized that summer camps and programs may qualify as places of care for the purposes of FFCRA leave, even if they would have not been operating at the time those regulations were issued in April 2020. However, the question is whether a specific summer camp or program would have been the place of care for an employee’s child had it not closed for COVID-19 related reasons, which must be established by a preponderance of evidence in any enforcement action (i.e., more likely than not).

In the bulletin, the DOL advises WHD investigators evaluating whether an employer improperly denied FFCRA leave to an employee based on the closure of a summer camp or program to consider whether there is evidence of a plan for the child to attend the camp or program. If there is no “plan,” investigators are instructed to assess whether it is still more likely than not that the child would have attended the camp or program had it not closed due to COVID-19. A parent or guardian’s mere interest in a camp or program is generally not enough. The DOL indicates that the following circumstances would likely be sufficient to demonstrate that a closed summer camp or program may be considered the place of care for an employee’s child:

  • The child was enrolled in the camp or program before it closed.

  • The employee took other affirmative steps short of actual enrollment, for example, submission of an application or deposit before the closure.

  • The child had previously attended and is currently eligible to attend the camp or program, for example, if the child attended during the summers of 2018 or 2019, that may indicate the camp or program would have been the child’s place of care during summer 2020, as long as the child continues to satisfy qualifications for attendance.

An employee who requests FFCRA leave must provide the employer with information in support of the need for leave either orally or in writing, including an explanation of the reason for leave and a statement that the employee is unable to work because of that reason. Additionally, in the case of leave to care for the employee’s child whose school or place of care is closed, the employee must provide: (1) the name of the child, (2) the name of the school or place of care, and (3) a statement that no other suitable person is available to care for the child. An employee who requests leave to care for his or her child based on the closure of a summer camp, summer enrichment program, or other summer program is subject to these same requirements and should provide the name of the specific summer camp or program that would have been the place of care for the child had it not closed.

Due to the nuanced nature of this analysis, we recommend consulting with counsel before denying an employee’s request for FFCRA leave based on the closure of a child’s summer camp or program.

Impact of School Closures for the Purposes of Child Labor Compliance

The other Field Assistance Bulletin released on June 26, 2020 is pertinent to employers who employ minors under the age of 16.  Specifically, the DOL provided guidance regarding when schools that have physically closed in response to the COVID-19 pandemic are nonetheless considered to be “in session” for the purposes of applicable child labor laws. The DOL’s Child Labor regulations outline employment standards for 14- and 15-year olds, including limitations on hours of employment depending on whether school is “in session.” Under these regulations, 14- and 15-yearolds are limited to performing nonagricultural work for three hours on school days and eight hours on non-school days for a total of 18 hours per week when school is in session. When school is not in session, they can work up to eight hours a day and up to 40 hours a week.  Due to COVID-19, many public schools have closed their doors and therefore no longer require students to physically attend school; however, many schools nonetheless continue to require students to receive virtual instruction through distance learning.

Under this DOL guidance, if a public school district physically closes schools in response to COVID-19 but requires all students to continue instruction through virtual or distance learning for at least one day or during any part of one day, school is in session in the school district during that day and that week.  Under those circumstances, minors age 14 and 15 may not work during school hours, as determined by the public school district in which they reside, and must limit hours of employment to three hours in any day in which virtual or distance learning is required, eight hours in any day in which no virtual or distance learning is scheduled, and 18 hours in the week. If the public school district has physically closed schools and has not issued new school hours for virtual or distance learning, the school hours that were in effect before the school closure continue to apply.

Employers who employ minors under the age of 16 should be aware of this guidance and should make sure they know whether or not the minor-employee’s school is “in session” (i.e., requiring virtual or distance learning), even if the school itself is physically closed.  If the minor employee’s school is requiring virtual or distance learning, the employer should be careful not to schedule the minor employee for more hours than permitted under applicable child labor regulations.

Opinion Letters

In addition to the Field Assistance Bulletins, the DOL also released five opinion letters concerning various wage-and-hour topics:

  • Salespersons who travel to different locations to sell products using their employer’s vehicles qualify for the outside-sales exemption under section 13(a)(1) of the FLSA, and the employer is not required to pay them minimum wage or overtime pay. See FLSA2020-6.

  • Automobile dealerships may be able to use incentive payments from automobile manufacturers to help meet their obligation to pay salespeople minimum wage, depending on the agreement between the parties. See FLSA2020-7.

  • Salespersons who set up displays and perform demonstrations at various retail locations, not owned, operated, or controlled by their employer, are exempt from overtime and minimum wage “only if their primary duty is performing sales work directed toward the consummation of their own sales.” However, sales made through a third-party retailer like a big-box store, “may not qualify as sales work directed toward the consummation of their own sales unless the employees obtain a commitment to buy from the customers and are given credit for the sales that were consummated specifically through their efforts.” See FLSA2020-8.

  • An emergency-management director employed by a county government may qualify for the learned professional or administrative exemptions if his or her duties relate “to assisting with the ‘running or servicing’ of the county government itself.” See FLSA2020-9.

  • The FLSA does not prohibit the employer from classifying a worker as exempt from overtime or minimum-wage payments when a retail or service business is starting a “representative period” for a new employee or for a store, and when it is unclear what the level of commission will be; however, if the employer chooses to do this, the employer must pay overtime premium compensation for any overtime hours worked during that period if commissions do not constitute more than half of the worker’s compensation at the end of that period. See FLSA2020-10.

Although these opinion letters are somewhat narrow in their application, they provide nuanced guidance for similarly situated employers with comparable pay practices and arrangements. Employers are encouraged to regularly audit their pay practices, with the help of counsel, to ensure compliance.

© Copyright 2020 Squire Patton Boggs (US) LLPNational Law Review, Volume X, Number 183

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About this Author

Melissa Legault Labor & Employment Attorney Squire Patton Boggs Phoenix, AZ
Associate

Melissa Legault is an associate in the Phoenix office, where she focuses her practice on labor and employment matters. Melissa assists employers in diverse matters related to their employment relationships. She routinely researches and analyzes legal authorities for drafting memoranda, pleadings and position statements related to employment law. Melissa also conducts legal research on employment case law and current events to help clients achieve their goals while complying with frequently changing regulations.

Melissa graduated magna cum laude from the...

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