Employment: A Few Tidbits From Our Friends In The Government


Our friends at the Wage and Hour Division of the Department of Labor have been busy. On March 6, they released 40 opinion letters, all of which had been written during the Bush Administration. Then, they immediately withdrew 20 of the opinions. Those opinions that were not withdrawn provide some good guidance for employers.

  • Don’t forget an exemption requires the employee be paid on a salary basis. When these hard times lead you to reduce the hours of your employees, you may jeopardize the exempt status of employees if you make a corresponding reduction in salary. The “salary basis” of exempt employee compensation is not met when there are day-to-day or week-to-week fluctuations in pay. Employers can use voluntary time off, where the employee does not get paid the usual salary, but continues to accrue leave benefits. An employer can also require an employee to use paid time off to ensure that an exempt employee receives full salary. Use of paid time off can also be required during a temporary business shutdown. But when the employee runs out of paid time off, the employer must continue the regular salary.
  • Are you considering 9 work days in a two-week period? A compressed 9 day work period where an employee works 8 hours on only one of the two Fridays in the pay period will not violate overtime requirements provided the employer changes its designation of the “work week.” And the designation does not have to be the same for all employees. Do the math. For example, if the work week starts at 11:30 a.m. on Friday and ends at 11:30 a.m. the following Friday, and the employee starts work at 7:30 a.m. on the chosen Friday, he won’t work more than 40 hours in a work week.
  • Don’t forget bonuses when calculating overtime. An employer’s plan to reward employees with a bonus for job safety will result in a higher overtime rate. A nondiscretionary bonus must be included in the “regular rate of pay” calculation. No way around it.

Not to be outdone by the Department of Labor, a federal court in Connecticut ruled that the outside sale exemption does not apply to pharmaceutical sales representatives. According to the court, their real job was schmoozing doctors and educating them about their employer’s drugs – not making sales. Because drug reps do not close the deal, they get overtime . . . at least in Connecticut.

Wage and hour issues continue to plague employers. The Employer’s Legal Resource will continue to bring you updates to help ensure that you are complying with the latest rules and pronouncements.

By Rebecca M. Fowler, rfowler@dsda.com.

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Rebecca D. Bullard

Rebecca D. Bullard

Rebecca represents clients primarily in labor and employment litigation and counsels clients regarding everyday employment matters. 

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