On December 31, 2020, the U.S. Department of Labor’s Wage and Hour Division (WHD) issued two opinion letters—one on home-to-office travel time and one on live-in caregivers.  Such “lame duck” opinion letters—issued post-Election Day when there is a change in both administration and political party—were at one point in recent memory quite uncommon.  The Carter administration issued a single wage and hour opinion letter following President Reagan’s election in late 1980, and George H.W. Bush’s and Bill Clinton’s administrations each issued four such opinion letters (following the 1988 and 2000 elections, respectively).  The practice of issuing lame duck opinion letters spiked following the 2008 election of President Obama—WHD issued no fewer than 48 opinion letters between November 4, 2008 and January 20, 2009, in the waning days of the G.W. Bush administration.  President Obama’s DOL—which discontinued the practice of issuing wage and hour opinion letters in favor of publishing so-called “Administrator’s Interpretations”—issued none.  WHD has issued a total of four since Election Day 2020.

Similar to “midnight regulations,” lame duck opinion letters provide an outgoing administration a last chance to articulate its policy priorities.  Opinion letters issued by the WHD Administrator may be relied upon, pursuant to § 259 of the Fair Labor Standards Act (FLSA), as a good faith defense to wage claims—even if the opinion letters are later “modified or rescinded or … determined by judicial authority to be invalid or of no legal effect.”  This said, the long-term efficacy of lame duck opinion letters is questionable, given the DOL’s ability to withdraw opinion letters that do not—or no longer—reflect the agency’s current position.  (President Obama’s DOL withdrew a number of the G.W. Bush administration’s wage and hour opinion letters, several of which were later reissued by WHD during the Trump administration.)

In any event, WHD opinion letters provide a “safe harbor” for employers for as long as they exist, so let’s look at the two most recent ones.

Travel Time

In FLSA2020-19, WHD tackles the compensability of home-to-office travel time for an employee who chooses to work from home for part of the day from the office for part of the day, with sufficient time in between those working periods to perform personal tasks.

The opinion letter gives two examples, both of which involve an employee with a one-hour commute to and from her office who normally works Monday through Friday from 8:00 a.m. to 4:30 p.m.  The employee performs no work during her commutes.

In the first example, an employee begins the work day at the office, and receives permission to attend a parent-teacher conference at her child’s school from 1:30 p.m. to 2:15 p.m. and to work the remainder of the day from her home.  She leaves the office at 1:00 p.m., drives 30 minutes to the school, meets with the teacher for 45 minutes, and then spends 30 minutes driving home.  The question is whether the time spent driving from the office to the school and from the school to home is compensable, assuming that—at some point after returning home—the employee resumes working.

WHD begins by outlining a number of the fundamental rules and principles governing compensable work:

• Whether an employee is “working” typically depends on whether her activity is primarily for the benefit of the employer.
• Employees don’t have to be paid for time spent “off duty”—periods during which they are completely relieves from duties and that are long enough to enable them to effectively use the time for their own purposes.
• Ordinary “commute” time—from home to work at the beginning of the work day and from work to home at the end of the work day—is not compensable.
• Travel that is part of an employee’s principal work activities—such as travel between different worksites during the work day—is compensable under the “continuous workday” doctrine.

Applying these basic principles to the first example, the employee is considered “off duty” once she leaves the office at 1:00 p.m. to drive to the parent-teacher conference.  The employer is not obligated to pay the employee until she resumes work after arriving at home.

In the second example, an employee begins working from home, then drives to a doctor’s appointment, and then drives to the office to work the remainder of the day.  As with the first example, none of the employee’s travel time is compensable.  The time spent working from home before the doctor’s appointment is compensable, just as it would be in the office.  But once she stops working, her time remains noncompensable until she reaches the office and resumes work.

In each of the examples, the travel time does not fall within the “continuous workday” rule, as the employer is not requiring the employee to travel as part of her work.  To the contrary, she is traveling of her own volition for personal purposes during off-duty time.  WHD summarizes:

When an employee arranges for her workday to be divided into a block worked at home and a block worked at the office, separated by a block reserved for the employee to use for her own purposes, the reserved time is not compensable, even if the employee uses some of that time to travel between home and the office.

WHD references several court opinions that reach a similar conclusion, including Kuebel v. Black & Decker Inc., in which the Second Circuit held that an employee’s morning and evening commutes were not compensable even though the employee performed various job-related tasks immediately before leaving home and/or immediately after returning home (such as checking email, syncing a PDA, and printing a sales report).

In-Home Caregivers

In FLSA2020-20, WHD examines the practice of paying overtime based on an expected number of hours worked to live-in caregivers who work extended shifts of 24 hours or more, and specifically, whether such overtime payments can be excluded from the regular rate and credited toward the amount of overtime pay owed.

In the fact pattern presented, it is difficult, if not impossible, to track the hours during which live-in and 24-hours-or-more shift caregivers perform compensable work (as opposed to being able to use time effectively for their own purposes).  The employer, therefore, assumes that the entire extended shift is compensable, excluding bona fide meal periods and sleep periods of up to eight hours per day.  The employer tracks and counts as hours worked any work-related interruptions to meal or sleep periods, and counts the entire sleep period as hours worked if such interruptions prevent the caregiver from getting the required minimum of sleep time per day.

Pursuant to a written agreement with the caregiver, the employer pays overtime compensation based on the anticipated number of hours that the caregiver will work each workweek.  If the caregiver exceeds the anticipated number of hours, the employer supplements the “prepaid” compensation with additional overtime payments.  All overtime hours are paid at one and one-half times the employee’s regular hourly rate of pay.  In addition, the employer pays time-and-a-half for each hour worked in excess of eight in a day, even if weekly hours don’t exceed 40.

Under § 207(e) of the FLSA, only eight discrete categories of compensation can be excluded from the regular rate on which overtime pay is computed.  Unless excludable, compensation must be considered part of the regular rate and included in the overtime calculation.  One of the excludable categories is extra compensation provided by a premium rate paid for certain hours worked in any day or workweek because such hours are in excess of eight in a day or 40 in a workweek (§ 207(e)(5)).  Not only are those extra premiums excludable from the regular rate, they can be applied as a credit toward overtime pay owed for the week (§ 207(h)(2)).  So for example, if an employer pays an overtime-eligible employee whose pay rate is $20 an hour “double time” (i.e., $40) for any hours beyond eight in a day, it can not only exclude the $20-per-hour extra payments from the regular rate, it can take a credit for the $20-per-hour extra payments toward any overtime it owes the employee for the workweek.

On the facts presented, WHD concluded that the premiums paid for hours worked in excess of eight in each day may be excluded from the regular rate under § 207(e)(5) and credited toward any overtime owed under § 207(h).  As to the “prepaid” overtime (based on anticipated hours), if the employee works the expected number of hours, the agreed-upon premium paid at time-and-a-half for the expected overtime hours would fulfill any overtime obligations.  If the employee works more than the expected number of hours, the employer would have to supplement pay, at time-and-a-half for each additional hour.

Final Thoughts

With slightly more than two weeks left in the Trump administration, it’s quite possible we’ll see some additional opinion letters from WHD before President-Elect Biden takes office.  We’ll report on them if and as they’re published.

Proskauer’s Wage and Hour Group is comprised of seasoned litigators who regularly advise the world’s leading companies to help them avoid, minimize, and manage exposure to wage and hour-related risk.  Subscribe to our wage and hour blog to stay current on the latest developments.