Since President Barack Obama’s inauguration approximately 14 months ago, the Wage and Hour Division of the U.S. Department of Labor had seemed to be asleep: it had issued not a single opinion letter related to the Fair Labor Standards Act (FLSA).
At the end of March 2010, the sleeping giant finally awoke, and employers are unlikely to be pleased with the result. The division announced that it would be departing from its longstanding practice of publishing opinion letters to provide fact-specific guidance to employers and employees.
In the future, requests for opinion letters will be responded to by providing references to statutes, regulations, interpretations and cases that are relevant to the specific request, but without an analysis of the specific facts presented.
The division also withdrew a September 2006 opinion letter that had been favorable to finance industry employers regarding the exempt status of mortgage loan officers and similar positions.
‘Administrative Interpretations’ Replace Opinion Letters
The division has entirely changed the format of its written guidance. Since the FLSA was enacted in 1938, the division has issued opinion letters written in response to specific requests from employers, employees, unions and attorneys. At the end of March, the division announced that it is abandoning this type of opinion letter in favor of “administrator’s interpretations.”
Where opinion letters responded to specific situations, the administrator’s interpretations will “set forth a general interpretation of law and regulations, applicable across-the-board to all those affected by the provision in issue.”
Where opinion letters were intended to respond to each request from a member of the regulated community, the “administrator’s interpretations” will be written only when the administrator believes that an interpretation is warranted; that is, when she [deputy administrator Nancy J. Leppink] determines that “further clarity regarding the proper interpretation of a statutory or regulatory issue is appropriate.”
Judging from the first issue that the administrator determined needed clarity, we are concerned that these interpretations will be issued primarily when the administrator determines that the division should take a more “employee-friendly” position than it has in the past.
Many questions remain unanswered about “administrator’s interpretations.” Will the division take another 14 months before we see a second administrator’s interpretation, or has the floodgate been opened? Will the courts give more deference to these administrator’s interpretations than they gave to opinion letters, or less? Will we see more administrator’s interpretations that withdraw prior opinion letters on which employers had relied? What will become of an employer’s ability to plead and prove the statutory affirmative defense to liability under the FLSA based on good faith reliance on the written rulings and interpretations of the division?
We will have to wait and see, but this change will probably benefit employers rarely, if ever, if this first administrator’s interpretation is an accurate indicator.
James M. Coleman and Maureen R. Knight are attorneys in the Fairfax, Va., office of Constangy, Brooks & Smith LLP, which has counseled employers on labor and employment law matters, exclusively, since 1946. Republished with permission. © 2010 Constangy, Brooks & Smith LLP. All rights reserved.