Wage and Hour Opinion Letters ‘Sorely Missed’

By Allen Smith May 12, 2015
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Wage and hour opinion letters may return during the next presidency, predicted Paul DeCamp, an attorney with Jackson Lewis in Reston, Va., and former administrator with the Department of Labor’s (DOL’s) Wage and Hour Division. But not any sooner, as David Weil, the current administrator, has said that the DOL will not resume issuing opinion letters.

DOL wage and hour opinion letters, which haven’t been issued in five years, were publicly available answers to questions posed by employers who remained anonymous in the response. They “are sorely missed because they provided specific guidance to employers on thorny wage and hour issues,” according to Lee Schreter, an attorney with and chairman of the board at Littler in Atlanta.

Clear Guidance

“I believe employers and employees have the right to expect that the federal agency charged with interpreting many of the FLSA’s [Fair Labor Standards Act’s] key provisions should be required to provide clear, consistent guidance and respond to employer questions with written guidance that can be relied upon as a defense to subsequent legal claims,” Schreter said.

“When a regulated business comes to the government saying that it wants to comply with the law and needs help in figuring out exactly what it needs to do to pay its people correctly, as a matter of good government the response should be something other than, ‘Tough luck. Go pay some lawyers to sort it out, or else just pay your workers whatever the most employee-friendly and expensive reading of the law would seem to allow,’” DeCamp told SHRM Online.

Employers want clarity and a level playing field, he added. “When clients call me, they never ask, ‘How do I get around the law?’ or ‘How can I cheat my workers?’ It’s always ‘What do I need to do here?’ or ‘What does the law say about this?’ All too often, the answer is ‘It depends’ or ‘It’s a gray area.’ Businesses hate that,” he observed.

“They don’t want to hear that a practice is probably fine under law … in Chicago or Dallas, but likely unlawful in Connecticut or Seattle. Opinion letters provided clarity. They provided employers with something that they could take to the bank, at least with respect to federal law, because of the legal defense that the Portal-to-Portal Act of 1947 provides, which is that an employer who relies in good faith on an opinion letter or other written guidance from the Wage and Hour Division is not liable for back wages even if a court later determines that the agency was wrong and that the practice is unlawful,” DeCamp remarked.

Next Administration

DeCamp added, “The department first issued opinion letters during a Democratic administration, and the department has issued them consistently during administrations of both parties until the current administration. The present practice is an aberration that disserves the public by making it more difficult for well-meaning employers to comply with the law.”

John Thompson, an attorney with Fisher & Phillips in Atlanta, said opinion letters might return under a different administration, “and they should. I will certainly advocate for the return of this procedure upon the change of administrations.”

“Opinion letters have been around longer than the Rolling Stones,” noted Thomas Bundy III, an attorney with Sutherland in Washington, D.C. “An administration focused more on wage and hour compliance, rather than wage enforcement/reformation, would likely reinstitute opinion letters.”

But Mark Neuberger, an attorney with Foley & Lardner in Miami, said he doubts opinion letters will be revived. “It ties their hands, and they don’t like that,” he said, referring to DOL attorneys. “It apparently is a very labor-intensive process for the DOL. It took months and sometimes years to get an answer to your request for an opinion letter. In this era of tight budgets, I would assume DOL thinks they can better deploy resources by not having to respond to requests for opinion letters.”

“Over the course of the past several years, the focus has been on enforcement more than prevention,” noted Amy Jensen, an attorney with Hinshaw & Culbertson in San Francisco. “Even though the two obviously go hand in hand, until the focus can revert back to proactive prevention and risk management, it is probably unlikely that the department will start issuing letters again.”

However, others hold out hope that the opinion letters will return. For example, Kathleen M. Anderson, an attorney with Barnes & Thornburg in Fort Wayne, Ind., and Columbus, Ohio, said, “My hope is that opinion letters—or some form of them—might return under future leadership, or that administrator interpretations [AIs] will be issued more liberally.”

Administrator Interpretations

First unveiled when opinion letters were discontinued, AIs have been a poor substitute for opinion letters, partly because they “have been far too few in number to deal with the multitude of FLSA questions and issues that are being brought to the surface in today’s legal environment,” Thompson said. “In addition, the few that have been issued are so relatively narrow and/or even arcane as to be of no interest or use at all to most employers as they seek to maintain compliance with the FLSA.”

Jensen remarked that the AIs “are not fact- or circumstance-specific, and that’s a shame because without such discussions, the purpose is frustrated. At the same time, I believe that employers are grateful that there still exists some official or formal guidance from an agency interpreting various provisions of the law. It’s certainly not enough, and is not nearly as beneficial as the opinion letters, but it’s something.”

“In the last five years, the division has issued only a handful of interpretations,” Anderson noted. “Just four FLSA interpretations are listed on its website: two issued in 2010 and two issued in 2014.”

“Administrator interpretations are general guidance to many employers or even an entire industry,” Neuberger said. “The problem is just that: They are general and not specific. Employers need more certainty in FLSA compliance, not less. And ‘just pay overtime to everyone’ is not a good answer, although with the new regulations on the horizon that just may be where we are heading.”

DeCamp said, “There is so much that is wrong with AIs that it is tough to know where to begin.” Despite a recent Supreme Court decision upholding AIs, DeCamp expects further legal challenges of them. The challengers of the AI in the case before the Supreme Court took the position in lower courts that the department’s action was an interpretive rather than a substantive act for purposes of the Administrative Procedure Act (APA). The Supreme Court “felt bound by that concession, which in turn led to the result that the APA does not require notice-and-comment rulemaking,” he remarked. “The reality is that AIs govern primary conduct, and they change in very significant ways the compliance obligations that employers have in a variety of ways. I believe that these AIs will continue to face challenges in court, and the next challengers will surely not take the position that the AI at issue is merely interpretative.”

DeCamp added that the AIs “replace the factual assumptions contained in a request for an opinion letter with factual assumptions ginned up by the department. As a result, these assumptions do not necessarily apply to any particular employer, making it more challenging to figure out whether and when an employer’s situation falls within the contours of the guidance given.” He also remarked that the AIs “look a whole lot like the department’s amicus curiae briefs, which almost uniformly now take the pro-worker position.”

He asserted that the AIs “further a political agenda” rather than answering questions “from the regulated community that actually has to live with these requirements on a daily basis.”

The AIs are, in his view, “really just regulations minus the formality of the notice-and-comment rulemaking process, and I would not be surprised to see a future administration withdraw each and every AI that the current administration issues.”

Allen Smith, J.D., is the manager of workplace law content for SHRM. Follow him @SHRMlegaleditor.

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