New DOL Opinion Letter on the FLSA’s Retail/Service Establishment Employee Exemption

Our colleagues Jeffrey H. Ruzal and Carly Baratt at Epstein Becker Green have recently published a post on the Wage and Hour Defense blog that will be of interest to our readers in the retail industry: “Latest Department of Labor Opinion Letter Addresses the FLSA’s Retail/Service Establishment Employee Exemption.”

Following is an excerpt:

As background, FLSA Section 7(i) exempts a retail or service establishment employee from the FLSA’s overtime pay requirements if (i) the employee’s regular rate of pay exceeds 1.5 times the federal minimum wage for any week in which the employer seeks to claim the exemption and (ii) more than half of the employee’s compensation “for a representative period (not less than one month)” represents commissions on goods and services.  29 U.S.C. § 207(i).  In Opinion Letter FLSA2019-13, the WHD provided guidance on the representative period requirement, addressing whether four weekly pay periods or two bi-weekly pay periods, or alternatively, six consecutive weekly pay periods or three bi-weekly pay periods constitute a valid representative period.

As the WHD observed, the implementing regulations provide no guidance on the meaning of the phrase “not less than one month” other than the self-evident statement that the period cannot “be less than 1 month.”  29 C.F.R. § 779.417(c).  Accordingly, the WHD proceeded to interpret this language, guided by the Supreme Court’s holding in Encino Motorcars, LLC v. Navarro that FLSA exemptions receive a fair and appropriate reading.  Relying on Supreme Court and other case law, the WHD posited that a fair reading of a “month” is a “calendar month”—i.e., the period of time from a given day of a particular month in the calendar to the corresponding day of the following month. …

Read the full article here.