DOL Issues Several Interesting Opinion Letters

Last week, the federal Department of Labor issued several Opinion Letters concerning the FLSA, regular rate and bonuses, meal breaks, time clock rounding and extra pay for exempt employees.  Such letters indicate the DOL’s official position, but it is not binding on courts.  In the first, Op. FLSA2026-5, the DOL explained that an exempt nurse trainers could be paid an hourly rate for picking up staff nurse shifts outside their regular working hours without destroying their exempt status when their primary duties remained their exempt work and the extra non-exempt shifts constituted less than 50% of the hours worked that week. In the next Opinion Letter FLSA2026-6, the DOL explained that employers need not recalculate the regular rate each quarter when providing non-discretionary bonuses that are based on the employee’s total earnings (i.e., straight and overtime) in a way that does not dilute their overtime earnings.  In another Opinion Letter FLSA2026-7, the DOL explained that an employer need not pay its employees for 30 minute meal breaks during which the employee is relieved of work responsibilities even if that is insufficient time to depart a corporate campus to travel off-site for more than 15 minutes.    In the final Letter FLSA2026-8, the DOL questioned the employer’s practice of rounding employees’ work time to the beginning or end of their scheduled shift, whether it might not be compensating all employees for certain “integral and indispensable” pre-shift activities, and whether the founding was neutral de minimis, but agreed that the employer need not compensate employees for waiting to clock in and out as long as it was before or after their principal work activity.

In the first opinion, exempt Nursing Professional Development Specialists are involved in the professional development and training of staff.  While they may assist in their discretion patients and staff nurses, they are never the patient’s primary nurse.   Some of these exempt employees sometimes pick up one or two non-exempt Staff Nurse shifts outside their normal working hours (i.e., on weekends).  Staff Nurses are paid on a hourly basis and the Specialists are  paid this same hourly rate when they pick up Staff Nurse shifts.   The DOL observed that the FLSA regulations permit employers to pay exempt employees an extra hourly rate when they work extra hours outside their normal work schedule without losing the exemption.  Further, the DOL also observed that the FLSA regulations also permit exempt employees to perform some non-exempt work as long as their exempt duties remain their primary duties, or most important part of their job.  Typically, if the employees spends at least 50% of their time on their primary exempt duties, the position will remain exempt, but it remains possible that an employee will remain exempt even if their exempt duties take less than 50% of their time.  Thus, in this case, the Specialists still spent more than 50% of their time performing exempt work and were permitted to receive additional hourly compensation for their extra work. 

In the next Opinion, the DOL addressed a quarterly profit bonus paid to non-exempt employees that was based solely on their respective percentage of straight and overtime hours worked.  In other words, the $100K, was divided among the employees at the end of the quarter based on their respective, comparative percentage of hours worked (both straight time and overtime). Their overtime hours were not diluted by other types of compensation (such as discretionary bonuses, expenses, gifts, benefits, etc.). 

Nevertheless, recomputation of an employee’s regular rate and the resulting additional overtime pay are unnecessary for a “percentage of total earnings” bonus, although they may be required for other types of bonuses. Assuming “total earnings” is the sum of an employee’s total straight-time earnings and total overtime earnings, a percentage of total earnings bonus is a bonus payment that provides for “the simultaneous payment of overtime compensation due on the bonus” (i.e., its own required overtime compensation). 29 C.F.R. § 778.210; see also id. § 778.503. This is not an exception to the FLSA’s overtime pay requirement, but the Division’s longstanding recognition that a bonus that increases an employee’s total earnings by a fixed percentage “increases both straight time and overtime wages by the same percentage, and thereby includes proper overtime compensation as an arithmetic fact.” Id. § 778.503; see also id. § 778.210 (explaining that such percentage of total earnings bonuses “satisfy in full the overtime provisions of the Act and no recomputation will be required”); Brock v. Two R Drilling Co., 789 F.2d 1177, 1179 (5th Cir. 1986). Requiring additional overtime pay for such bonuses “would be to impose overtime upon overtime,” and, therefore, be inconsistent with the Act. Siomkin v. Fairchild Camera & Instrument Corp., 174 F.2d 289, 294 (2d Cir. 1949).

Employers generally calculate total earnings bonuses in one of two ways. The first, as described in 29 C.F.R. § 778.210, occurs when an employer applies a percentage to an employee’s total straight-time and overtime earnings directly without regard to how the employee’s earnings or hours compare to those of other employees. The second takes place when an employer uses earnings or hours to compare each employee participating in a bonus pool to all the employees participating in the bonus pool. . . . an employer may divide each employee’s total earnings by the total earnings of all employees participating in the bonus pool and then multiply that percentage by the bonus pool amount to determine each employee’s share.  Or, as provided in FOH 32c05a, an employer may divide the bonus pool amount by the participating employees’ total earnings and then multiply that percentage by each employee’s total earnings to determine his or her bonus payout. Either approach is acceptable.

Generally, an employer may consider additional factors (such as seniority, work location, job title, base pay, performance, or conduct) to determine the magnitude of an employee’s percentage increase. As long as the resulting percentage increase to each employee’s pre-bonus overtime earnings is no less than the percentage increase to their pre-bonus straight-time earnings, then the principle set forth in sections 778.210 and 778.503 applies even though different employees might receive different percentages. However, an employer may not use the percentage of total earnings bonuses “to evade the overtime requirements of the Act[,]” 29 C.F.R. § 778.210, such as where the percentage bonus “decrease[s] . . . in direct proportion to increases in the number of hours worked in a week in excess of 40.” See id. § 778.503.4 An employer also may not dilute an employee’s overtime earnings by either: (1) applying a higher percentage increase to the straight time earnings than the overtime earnings5 or (2) including items within an employee’s earnings that were previously excluded from the employee’s regular rate of pay, such as gifts, discretionary bonuses, expense reimbursements, or employer contributions to employee benefit plans.

In another opinion, the employees are given 30-minute unpaid lunch breaks where they are relieved of their job duties.  They apparently have a break room which they may use for such purpose.  However, it takes at least 5-10 minutes to get through security to leave the building and walk to the parking lot, and then another 10 minutes to get back through security and return from the parking lot, leaving little, if any time, to travel to nearby restaurants for lunch.   The DOL first observed that employers are not required by the FLSA to provide meal or rest breaks to adults.   Meal breaks need not be compensated, but they must be bona fide breaks from work. Typically, thirty minutes or more is sufficient to constitute a bona fide meal break.  The DOL has since at least 2004 indicated that employers can prohibit employees from leaving the premises during their meal breaks without having to compensate employees for the meal breaks. 

The Act does not require absolute freedom for a break to be bona fide and non-compensable. An employer may place certain limitations or conditions upon a bona fide meal period without having to compensate employees for such time, and courts have agreed that employees need not be permitted to leave the premises to receive a bona fide meal period. For example, in Ruffin v. MotorCity Casino, 775 F.3d 807 (6th Cir. 2015), the Sixth Circuit ruled that meal breaks for casino security guards were not compensable under the FLSA because even though they were not permitted to leave the premises and were required to monitor their radios, they were otherwise free to eat and socialize.

In the final letter, the employer had a practice of permitting employees to clock in or out up to seven minutes before or after their shift because of potential wait times at the time clock so that they would not be assessed with tardies or unauthorized overtime.  However, the employer also had a practice of rounding those employees’ work hours to the nearest shift.  For instance, if an employee clocked in at 6:53 for a 7:00 shift, he or she would only be credited with having worked at 7:00.     Similarly, if the employee clocked out at 7:07 when the shift ended at 7:00, the time would be rounded down to 7:00. However, and importantly, if an employee clocked in late or clocked out early, the employer did NOT indicate that it would round down to the nearest shift.  The employer admitted that some employees sometimes immediately began engaging in integral and indispensable pre-shift activities, even when they clocked in early.   The DOL did not think that the de minimis doctrine applied because the employer was capable of administratively capturing this pre-shift work and the rounding practice was not neutral (i.e., it always benefitted the employer).  “The de minimis doctrine “applies only where there are uncertain and indefinite periods of time involved of a few seconds or minutes duration, and where the failure to count such time is due to considerations justified by industrial realities.”  Further, “’[w]hether time is de minimis is a fact-specific analysis, considering the practical administrative difficulty of recording the time, the aggregate amount of compensable time involved, and the regularity with which the work occurs.”

The Department’s regulations explain that employers may practice time rounding, but only under specific conditions. Under 29 C.F.R. § 785.48, employers may round employee time to the nearest fraction of an hour (such as the nearest 5 minutes, 6 minutes, or quarter-hour). This practice, however, is only acceptable if it “will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked.” 29 C.F.R. § 785.48(b). This means a rounding practice must both be neutral on its face and average out over time so it does not consistently favor the employer. . . .

When evaluating rounding practices to apply these principles, courts examine the aggregate impact over a period of time. While fluctuation from pay period to pay period is to be expected, a neutral rounding practice must “average out in the long term.” Corbin, 821 F.3d at 1077. For example, an employer’s rounding practices were found to be permissible where the pay records showed that “sometimes [the employee] gained minutes and compensation, and sometimes [the employee] lost minutes and compensation,” and the net difference between hours worked and hours compensated amounted to only 3 minutes and $15 over about a year. Id. at 1079. In contrast, an appeals court reversed a lower court’s conclusion that an employer’s practice was neutrally applied when evidence showed that its practices cost roughly 13,000 employees approximately 74,000 hours of uncompensated time over a 6-year period. Houston, 76 F.4th at 1152. Similarly, another court found an employer’s rounding policy was likely not neutrally applied when evidence showed that it favored the employer 94 percent of the time. Aguilar, 948 F.3d at 1288.

 . . .

To the extent that each day, employees are performing compensable work prior to their paid shifts commencing, such work is unlikely to be de minimis. In general, as noted above, “[a]n employer may not arbitrarily fail to count as hours worked any part, however small, of the employee’s fixed  . . . .

Conversely, to the extent that pre-shift compensable work is irregular, the practical administrative difficulty of recording the time may justify treating it as de minimis. Although the employer has a timekeeping system that is capable of documenting the time of arrival and departure, we cannot definitively say, based on the information provided, whether it is administratively feasible for the employer to record the actual time each employee performs their first principal activity—thus beginning their compensable workday—as opposed to engaging in personal activities such as getting coffee, socializing, checking phones, storing personal belongings, or simply waiting for their shift to start. Given, as noted above, the large number of hospital employees and the likely differences between the extent to which they are, or are not, on a consistent basis performing principal activities between clocking in and the formal start to their shift, we are unable to conclude that the time is—or is not—de minimis. . . .

Employers, including the hospital at issue here, should nonetheless be particularly careful about how and to what extent they apply the de minimis doctrine. Particularly given the technological advances that have made it possible for employers to track employees’ work time with increasing precision, employers should expect exacting scrutiny of de minimis claims where employees perform off-the-clock work with any degree of regularity.

In this case, the employer’s rounding always seemed to reduce the employees’ pay and was always in favor of the employer in rounding up or down. Thus, “the critical question under 29 C.F.R. § 785.48(b) is whether a rounding practice, evaluated over a period of time, is facially neutral and operates neutrally such that it does not systematically undercompensate employees for hours worked.”   The DOL could not definitely determine whether the employer was complying or not with the FLSA because of missing factual realities:

We note initially that a rounding policy for clock-in and clock-out time only affects the calculation of hours worked to the extent that employees are performing compensable work between the clock in/out time and the rounded time. As noted above, clocking in or out, by itself, is generally not considered compensable work. Likewise, the time between clocking in and beginning principal activities, and between completing principal activities and clocking out, is also not compensable. . . .

As to the beginning of the day, if employees are, in fact, performing compensable work—such as respiratory therapists receiving handoff reports—after clocking in but before their paid shifts, then based strictly on the information provided, the hospital’s rounding policy is not neutral pursuant to 29 C.F.R. § 785.48(b) because it both is not facially neutral and only ever benefits the employer without ever benefiting the employee. According to the facts presented, the employer’s only rounding practice is to round early check-ins to the scheduled shift time. As a result, employees  who perform compensable work during the up-to-7-minute early check-in period are always uncompensated for that time and are not afforded a chance for over-compensation to average that time. Accordingly, under these facts, the hospital’s rounding practice is inconsistent with section 785.48(b) and would result in a failure to properly record, as well as potentially to properly compensate for, all hours worked. If, however, the hospital’s rounding practice is facially neutral and operates such that employees can and actually do benefit from rounding in other circumstances—for example, if employees who clock in up to 7 minutes late are nonetheless credited with starting at their scheduled time and that practice averages out over time to offset any work time lost due to the rounding of early check-ins to the scheduled shift time—then the policy would likely comply with section 785.48(b).

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Supreme Court Reverses Decision Based on Arguments Never Raised or Briefed by the Parties as Inconsistent with the Adversarial System of Justice

This morning, the Supreme Court issued a per curiam decision of interest to mostly attorneys. Margolin v. Director of the Executive Office for Immigration Review, No. 25-2067 (5-26-26).    I bring it up because this has happened to most of us at one time or another and is extremely frustrating to explain to a client how we get ambushed by a court on issues never raised by our opponent.  The Court reversed the  Fourth Circuit (for the second time in a year) for reversing a judgment on grounds not raised or briefed by any of the parties in the case and not giving the parties an opportunity to file supplemental briefs on the issue.  “Federal courts adhere to the principle of party presentation.  . . .  That principle—the ‘rule that points not argued will not be considered’—distinguishes our adversarial system of justice from an inquisitorial one.  . . .  Because courts are ‘essentially passive instruments of government,’ we rely on the parties to ‘frame the issues for decision’ and decide ‘only the questions presented.’”  In other words, “[f]ederal courts are not ‘roving commissions,’  . . . licensed to ‘sally forth each day looking for wrongs to right. . . ’” 

The Fourth Circuit violated the party presentation principle when it decided “a case different from the one [respondent] advanced.”  . . .  As respondent conceded below, our precedent establishes that Congress, through the CSRA, intended to channel covered claims to the MSPB.  . . . . The parties thus confined their arguments to the narrow question whether respondent’s claims were, in fact, covered. Unsatisfied with rejecting respondent’s arguments on that question, however, the Fourth Circuit sua sponte addressed a much broader one and remanded for further proceedings on that question. The court transformed respondent’s argument that the CSRA did not channel its claims into one that the CSRA might not—in light of current conditions—channel any claims. And the court did so without giving either side a chance to address its theory.  . . .  That “‘drasti[c]’” departure from the principle of party presentation “‘constitute[d] an abuse of discretion.’”  . .  .

 Federal courts are not “roving commissions,”  . . . licensed to “‘sally forth each day looking for wrongs to right,’”  . . .

(bolding added for emphasis).

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit Affirms Employer's Summary Judgment on FMLA Interference and Retaliation Claims Where Employee Was on Last Chance Agreement and Never Sought Medical Treatment

Last week, the Sixth Circuit affirmed an employer’s summary judgment on FMLA interference and retaliation claims.  Paris v. McAllister Machinery Co., Inc., No. 25-1726 (6^th Cir. 5-14-26).  The employee could not prevail on the FMLA interference claim because he could not show that he suffered a serious health condition with hospitalization or consulting with a medical provider about his mental distress.   While he could show that his inquiries about taking FMLA leave for his mental distress were protected activities, and were temporally proximate to his termination less than a month later, he could not show that his termination was pretextual when he was already on a Last Chance Agreement and his violation of any policies justified his termination.   Temporal proximity could not satisfy his need to prove the employer’s explanation was pretextual. 

According to the Court’s opinion, the plaintiff employee had a long history of performance problems and was ultimately placed on a Last Chance Agreement in October 2018 to avoid being immediately terminated.  He was then told by his union steward in early December  that he was about to be fired.  His supervisor a few weeks later confronted him about not wearing steel-toes shoes during his shift. He denied the allegation, which prompted the supervisor to try and stomp on his foot to prove his point.  Upset, he called HR and said he needed time off for anxiety, anguish and mental distress.  They discussed him applying for FMLA and he asked for the forms so that he could do so.  However, despite the passage of a month between this event and his termination, he never sought medical care or treatment for his distress and he never submitted a formal request for FMLA leave after receiving the forms upon request.   He was then fired in mid-January 2019 for a variety of infractions over the last few months, including not wearing required protective clothing, overcharging customers,  and general inability to follow proper procedures.

The Court agreed that he could not prevail on an FMLA interference claim because he had never sought medical treatment of any kind for his mental anguish.   Without such treatment or medical consultation, he could not prove that he had a serious health condition and was entitled to take FMLA leave.  No jury could rule in his favor on such a claim, entitling the employer to summary judgment as a matter of law.

The Court also agreed that he could not prevail on his FMLA retaliation claim, but for different reasons than the trial court.  The Court agreed that his inquiries about taking FMLA leave and requesting the FMLA forms constituted protected conduct and that his termination approximately a month later could support a causal connection between the two (i.e., temporal proximity).  However, he could not show that the employer’s explanation for his termination – poor performance and violation of company policy in violation of his Last Chance Agreement – was pretextual.  He had been told by the union before his protected conduct that he was about to be fired for violating the Last Chance Agreement. The employer specified a number of incidents and violations which took place in the few months before his termination that violated his Last Chance Agreement.  “We agree with [the employer] that a single violation of [its] policies following [the plaintiff’s] entry into the LCA would have constituted a valid, nondiscriminatory reason for his termination.”

[He] then failed to carry the burden of showing that any of [the employer’s] reasons were “in reality a pretext to mask discrimination.”  . . . . He failed to do so because he provided no evidence that [its] termination was pretextual.  . . .  And temporal proximity alone cannot support a showing of pretext.  . . .  There is no genuine issue of material fact as to whether [its] termination of [his] employment was pretextual, and [it] was entitled to judgment as a matter of law on [his] FMLA retaliation claim.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit Does Not Require Clear and Convincing Evidence for Each Preliminary Injunction Element Unless Required by Statute

Yesterday, the Sixth Circuit reversed the denial of a preliminary injunction sought by an employer against a former employee who allegedly absconded with trade secret information for the benefit of his new employer, a competitor. PCC Airfoils LLC v. Daughterty, No. 25-3794 (6h Cir. 5-19-26).    The Court found that the employer need not prove each element of its claim by clear and convincing evidence in order to obtain preliminary injunctive relief.  “Rather than requiring clear and convincing evidence for each preliminary injunction factor, a court should consider all four factors to determine whether, taken together, they clearly weigh in favor of granting injunctive relief.”

According to the Court’s opinion,  a long time employee who had designed turbine airfoils was promoted to director in 2020 and then demoted a year later during a restructuring.  Frustrated, he later resigned to become a director at a competitor.  He did not have a non-compete agreement.  After his resignation, the employer discovered that he had prepared to print four confidential documents two days before leaving and that he had not left those documents in his office upon his departure.    The employer alleged that he “printed several documents containing trade secrets on his way out the door,”  but it could not prove that he actually printed them.   It sued him and his new employer to prevent him from disclosing trade secrets or working on similar products for the competitor.   The trial court denied the requested injunction on the grounds that the employer had failed to prove each element by clear and convincing evidence.

When faced with requests for a preliminary injunction, district courts consider four factors: (1) the plaintiff’s likelihood of success on the merits; (2) the risk of irreparable harm to the plaintiff in the absence of an injunction; (3) the risk that an injunction will harm others; and (4) the broader public interest. . . .

 . . . Courts, generally speaking, should engage with all four factors in a sliding-scale inquiry. A strong showing as to one factor may “outweigh[]” a weaker showing as to another factor. Winter, 555 U.S. at 23–24. After weighing the four factors against one another, a court may grant a preliminary injunction only if a plaintiff has made “a clear showing that [it] is entitled to such relief.” Id. at 22. All of this means that a movant does not need to establish a quantum of proof, whether a preponderance or clear and convincing evidence, with respect to each factor to be eligible for preliminary relief.

Two qualifications exist. If the plaintiff has “no likelihood of success on the merits,” there is nothing left to balance and the plaintiff’s request for a preliminary injunction must fail regardless of its showing on the other factors. Higuchi Int’l Corp. v. Autoliv ASP, Inc., 103 F.4th 400, 409 (6th Cir. 2024) (quotation omitted). Likewise, a court must reject a plaintiff’s request for a preliminary injunction if it fails to show any risk of irreparable injury.

Measured by these requirements, the district court erred in requiring [the employer] to establish “clear and convincing evidence” with respect to each of the four factors in order to be eligible for preliminary relief.  . . .  While a court should “consider” all four factors, it is a sliding-scale inquiry that turns “as much on the equities of a given case as the substance of the legal issues it presents.”  . . .  The necessary showing for any one factor turns on the strength of the plaintiff’s showings for the other factors. Because generalizations are dangerous when it comes to equity, and because the Supreme Court has cautioned that the clear and convincing evidence standard applies in only a few rare circumstances, . . .  a court may not require every plaintiff to meet a heightened standard of proof for every preliminary injunction factor to qualify for injunctive relief. The district court erred in reaching a contrary conclusion.

 . . . .

 . . . Requiring a “clear showing” to obtain a preliminary injunction—because it is an extraordinary form of relief—is not the same thing as requiring “clear and convincing evidence” to establish each of the four factors to establish eligibility for this relief.

Instead of creating a heightened standard of evidentiary proof for each factor individually, the “clear showing” phrase clarifies that, on balance, the four preliminary injunction factors must clearly weigh in the plaintiff’s favor to qualify for injunctive relief.

The Court agreed that an unpublished Sixth Circuit had applied the clear and convincing evidence standard to all four factors, but was not bound by that precedents or later decisions that relief on it.  The Court also agreed that Ohio state court apply the clear and convincing standard to all four elements, but the federal court procedural rules apply to claims brought in federal court, even if the substantive law is governed by Ohio law.  Further, there was no substantive statute requiring use of a higher standard of proof.

Ohio’s rules of equity generally apply the clear and convincing evidence standard to the four preliminary injunction factors.  . . .  Because one of his claims seeks relief under an Ohio statute, [the defendant employee] contends that Ohio’s preliminary injunction rules should apply. But a federal court applies federal procedural rules, even when deciding cases under state law. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938). The preliminary injunction inquiry falls on the procedural side of the line,  . . . requiring us to apply federal, not Ohio, rules. And we treat the preliminary injunction considerations as equitable factors to be weighed, not elements to be proved by clear and convincing evidence.

 . . . .

The clear and convincing evidence standard thus had no role to play in this case. Indeed, as it pertains to the plaintiff’s likelihood of success on the merits, it seems particularly odd to require the plaintiff to prove its case by a higher standard than will be required at trial even before the parties have had the benefit of discovery.  . . .  . . . .

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

DOL Formally Restores 2019 White Collar Exemption Levels Under FLSA

Yesterday, the DOL announced that it was formally revising the federal regulations published in the Code of Federal Regulations to restore the 2019 language after subsequent amendments were vacated by a federal court. "The Department’s technical amendment removes from the Code of Federal Regulations the regulatory language from a 2024 rule that was judicially vacated, and republishes the operative regulations, which were established in a rule the department issued in 2019. The restored regulations require that most exempt executive, administrative, and professional employees be paid a salary of at least $684 per week. The regulations also set a total annual compensation threshold of $107,432 for certain highly compensated employees."

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.