Wage and Hour Administrator Issues Opinion Letters Addressing the 8-and-80 Overtime Method, as well as “Fair Reading” of the FLSA Exemptions for Teachers & Agricultural Employees
The Acting Administrator of the U.S. Department of Labor’s Wage and Hour Division recently issued opinion letters addressing (i) the 8-and-80 overtime pay system available to certain healthcare employers; (ii) the overtime exemption for teachers, and (iii) the exemption for employees in agriculture. The analyses and conclusions in those opinion letters are instructive for employers not only in those industries, but in many other industries as well, because they confirm the Department’s commitment to construing FLSA exemptions fairly rather than narrowly.
“8 and 80” Overtime
The first opinion letter, FLSA2019-3 (Apr. 2, 2019), addresses whether the “8 and 80” method of computing overtime is available to a private, 24-hour youth residential care facility that accepts adolescents placed there by county child services bureaus.
In addition to the general provision for overtime after 40 hours in a seven-day workweek, section 7(j) of the FLSA allows an alternative overtime calculation for certain health employers. Known as the “8 and 80” method, this alternative allows “a hospital or an establishment which is an institution primarily engaged in the care of the sick, the aged, or the mentally ill . . . who reside on the premises” to enter into agreements with employees to pay overtime for hours in excess of 8 hours in a workday or 80 hours in a 14-day work period.
The Acting Administrator explained that, in addition to hospitals, section 7(j) is available to a residential care institution that meets any of the following criteria:
deriving more than 50 percent of its income from providing “domiciliary care to individuals who reside on the premises” in order to receive care “of a less critical nature than that provided by a hospital”;
providing care for residents, the majority of whom obtain admission by a qualified physician, psychiatrist, or psychologist; or
retaining a qualified physician, psychiatrist, or psychologist who regularly provides therapy to more than 50 percent of the residents.
The letter states that the Wage and Hour Division does not have sufficient information to determine whether the facility described in the request for the opinion letter qualifies under section 7(j), and it refers the requester to these standards to evaluate the availability of the 8 and 80 method.
The Overtime Exemption for Teachers
The second recent opinion letter, FLSA2019-4 (Apr. 2, 2019), considers whether “Nutritional Outreach Instructors” at a public university are subject to the FLSA’s exemption for teachers.
The teachers addressed in the letter are part of the university’s Extension Service Department and teach classes on healthy nutrition and cooking techniques. The position requires a high school diploma or GED. These classes are open to the public, and they place in locations such as community centers, churches, and homes.
After setting forth the statutory language applicable to teachers, the letter turns to the United States Supreme Court’s 2018 decision in Encino Motorcars, LLC v. Navarro, in which the Court rejected the longstanding rule of narrowly construing FLSA exemptions to effectuate the statute’s remedial purpose, in favor of giving exemptions a “fair (rather than narrow) interpretation[.]” The letter notes that the Wage and Hour Division now applies this “fair reading” standard to interpreting exemptions.
The FLSA’s regulations provide that an employee is an exempt teacher if his or her primary duty is “teaching, tutoring, instructing or lecturing in the activity of imparting knowledge” while employed in an “educational establishment.” The letter notes that an educational establishment is any form of public or private educational institution and that “[t]he teacher exemption has no minimum education or academic degree requirement.” Furthermore, because the regulations do not restrict where a teacher may teach, an employee who teaches online or remotely may qualify for the teacher exemption.
The Acting Administrator determined that because the primary duty of the Nutritional Outreach Instructors is teaching, and because they do so for an educational institution, the Instructors qualify as exempt teachers.
The Agricultural Exemption
Finally, in FLSA2019-5 (Apr. 2, 2019), the Wage and Hour Division addresses whether the exemption from overtime pay for employees in agriculture extends to a farm’s “light processing” activities—i.e., cutting or freezing its own agricultural products—and to packing, storing, and delivering those products.
As in the letter regarding teachers (and an August 2018 opinion letter), the Acting Administrator again cites Encino Motorcars for the requirement to construe FLSA exemptions “fairly” rather than narrowly.
The letter then notes that the exemption for agriculture extends to farming (known as “primary agriculture”) as well as activities performed by a farmer or on a farm in conjunction with such farming operations (known as “secondary agriculture”). An activity qualifies as secondary agriculture only if it (1) is more akin to agriculture than manufacturing, (2) is subordinate to the farming operations involved, and (3) does not amount to an independent business.
The letter states that the Wage and Hour Division lacks information sufficient to determine whether the exemption applies in this instance. However, it notes that the activities are likely to be secondary agriculture if the farm’s activities of cutting or freezing its own fruit, vegetables, or meat do not amount to an independent business, and the farm’s employees perform any delivery involving travel off of the farm.
The new batch of opinion letters provides a useful overview of the 8 and 80 method of computing overtime, as well as the exemptions for teachers and agricultural employees.
More broadly, although many past Wage and Hour Division opinion letters stated that exemptions from minimum wage and overtime requirements under the FLSA “are to be narrowly construed against the employers seeking to assert them,” it is now clear that the Wage and Hour Division views that principle as supplanted by the rule in Encino Motorcars requiring the “fair” reading of exemptions.