Recent WHD Developments

Recent Wage And Hour Division Developments – Budget Increase, Administrative Interpretations, Mortgage Loan Officers, “We Can Help” Campaign

Budget Increase and Expected Narrower Positions

Secretary of Labor Hilda Solis confirmed in a statement last July that the Department of Labor (“DOL” or “Department”) intends to “send a message” to employers that they must comply with federal minimum wage, overtime, and other requirements.” Notably, the budget of the Wage and Hour Division (“WHD”) increased by 28% in 2010 and it is in the process of hiring 250 new field investigators, a staff increase of more than a third.

We can expect that the WHD will take narrower positions on the administrative and outside sales exemptions. This recently was reflected in an amicus brief that the DOL filed in a case pending before the Second Circuit Court of Appeals addressing the exempt status of pharmaceutical sales representatives, In Re Novartis Wage and Hour Litigation. In its brief, the Department argued for a stricter interpretation of the “outside sales” and “administrative” exemptions as applied to pharmaceutical sales representatives. Urging the Second Circuit to reverse the district court’s ruling for the defendant, the DOL maintained that pharmaceutical sales representatives neither “make sales” nor exercise sufficient discretion to qualify for either exemption from overtime compensation. Several cases currently are before the federal courts on this very issue.

Department of Labor Announces Replacement for Wage and Hour Opinion Letters

On March 24, 2010, the WHD announced that it no longer will issue “definitive” opinion letters. Instead, it will issue interpretive guidance through “Administrator Interpretations,” which will set forth generally applicable interpretation of laws and regulations within the Department of Labor’s jurisdiction. In a press release, the WHD claimed that this procedure will be a much more efficient and productive use of resources than attempting to provide definitive opinion letters in response to fact-specific requests submitted by individuals and organizations, where a slight difference in the assumed facts may result in a different outcome. This also means that the WHD will no longer be required to wait until it receives a request for an opinion letter to weigh in on interpretive issues, but instead can issue guidance whenever it deems appropriate.

WHD Concludes Mortgage Loan Officers Exempt from Overtime Pay in First Administrator Interpretation

The issue whether mortgage loan officers are exempt from the overtime requirements of the Fair Labor Standard Act (“FLSA”) has generated significant confusion among employers. In an attempt to clarify the issue, the WHD issued its first Administrator Interpretation in which it concluded that mortgage loan officers typically do not qualify for the FLSA’s administrative exemption. See WH Administrator’s Interpretation 2010-1 (Mar. 24, 2010).

The analysis focused on whether the duties of a mortgage loan officer meet the regulatory requirement that the primary duty of administratively exempt employees must be “the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers” as opposed to production work. The WHD determined that the primary duty of loan officers is to sell their employer’s financial products. Such sales duties constitute the production work of an employer engaged in selling or brokering mortgage loan products, rather than the internal management or general business operations of the company. Since mortgage loan officers’ duties “involve the day-to-day carrying out of the employer’s business,” the WHD concluded that they “fall squarely on the production side of the business.”

WHD Announces to Workers, “We Can Help”

On April 1, 2010, the WHD officially launched a national public awareness campaign called “We Can Help.” According to the announcement, “this public awareness effort is intended to provide workers with information about their rights in the workplace and to educate them on how to seek the assistance of the Wage and Hour Division when they believe that they have been the subject of a violation.” The campaign includes the launch of a new Web site at http://www.dol.gov/wecanhelp/.