To close out 2020, the U.S. Department of Labor’s Wage and Hour Division (“WHD”) recently issued two new opinion letters addressing overtime payments for caregivers and travel time for partial-day teleworkers under the Fair Labor Standards Act (“FLSA”).  We recommend a close review of these opinion letters as they offer a helpful overview of key FLSA principles and may provide answers to questions shared by numerous employers.

FLSA2020-19

In Opinion Letter FLSA2020-19, the WHD addressed whether an employee who voluntarily teleworks for part of the day and works at the office for the remainder, and performs certain personal tasks in between (but otherwise performs no work during the commute), must be compensated for travel time between her home and the office under several different scenarios (some where the employee’s work preceded the travel to personal appointments and ultimately the office, and others where the employee continued working after traveling back home from a personal appointment).

The following principles inform the compensability of travel time:

1. An employee does not need to be paid for hours that they are off duty – i.e., when they are completely relieved from duties for a period of time long enough to use the time effectively for their own purpose. 29 C.F.R. § 785.16(a).

2. Normal commuting or ordinary travel from home to work and vice versa is specifically excluded from compensable hours. 29 C.F.R. § 785.35.

3. Travel that is part of an employee’s principal activity – e.g., travel between different worksites within the workday – is considered part of the day’s work. 29 C.F.R. § 785.38.

4. The period between commencement and completion on the same workday of an employee’s principal activity or activities is compensable under the continuous workday doctrine. 29 C.F.R. § 790.6(b).

The WHD advised that none of the contemplated travel time was compensable because, in each scenario, the employee was either off duty or engaged in normal commuting, or the travel was clearly not worksite-to-worksite travel or otherwise compensable under the continuous workday doctrine.  Relevant to the off-duty inquiry, the WHD emphasized that she could use the time effectively and for her own purpose before returning to work at the hour of her choosing.  As to the applicability of the continuous workday doctrine, relying in part on Second and Ninth Circuit precedent, the WHD explained that the doctrine does not apply where the travel time is off-duty time and the employee is not required to perform his or her work at any particular time (i.e., immediately before or after commuting from a work site), even if the employee chooses to perform some work before traveling to the office.

 FLSA2020-20

As background, although many states have stricter requirements, the FLSA requires overtime pay at a minimum of one and one-half times a non-exempt employee’s regular rate of pay for all hours worked in excess of 40 hours in a workweek by that employee.  29 U.S.C. § 207(a).  The regular rate of pay must include “all remuneration for employment paid to, or on behalf of, the employee,” subject to certain exceptions, including extra compensation provided by a premium rate paid for certain hours worked in any day or workweek because such hours are in excess of 8 in a work day or 40 in a workweek.  29 U.S.C. § 207(e)(5).  Such extra compensation must be contingent upon working hours in excess of 40 in a workweek or 8 in a day and be made pursuant to some form of legitimate agreement or understanding (though not necessarily a written agreement).  An employer can credit any payments excludable from the regular rate under section 7(e)(5) towards overtime pay owed under the FLSA.  29 U.S.C. § 207(h)(2).

In Opinion Letter FLSA2020-20, the WHD addressed whether an employer can pay its caregivers an overtime premium equal to one and one-half times the hourly rate for hours over 8 in a day based on expected number of hours worked and provide supplemental pay at a rate of one and one-half times the hourly rate for unexpected additional hours (i.e., pre-calculate overtime payments).

The WHD confirmed that extra compensation for hours worked in excess of 40 in a workweek or in excess of 8 hours in a workday may be excluded from the regular rate as an overtime premium under section 7(e)(5) of the FLSA and credited towards an employer’s overtime pay obligations under Section 7(h) of the FLSA in any workweek in which overtime pay is owed.

While not relevant to the core inquiry, the WHD also restated its position on the excludability of sleep time from hours worked for live-in employees and those who work shifts of 24 hours or more: For live-in employees, sleep time can be excluded if there is a reasonable agreement to do so, the employee has private quarters in a homelike environment, and the employee is afforded reasonable periods of sleep totaling at least five hours.  For employees working shifts equal to or more than 24 hours, up to 8 hours of sleep time can be excluded provided the employee has adequate sleeping facilities, can usually enjoy an uninterrupted night’s sleep, and there is an express/implied agreement to exclude sleep time.