Exempt/Nonexempt call: Don’t rely entirely on Labor Department opinion letters — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Exempt/Nonexempt call: Don’t rely entirely on Labor Department opinion letters

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Over the past two years, the U.S. Labor Department has been issuing “opinion letters” fairly frequently, interpreting its own new overtime regulations and addressing specific questions posed by employers. Essentially, employers concerned about Fair Labor Standards Act compliance can write to Labor, providing a set of facts, and ask whether the employees covered in the “hypothetical” situation are exempt or hourly employees.

Since Labor began issuing opinion letters more frequently, more employers have begun applying the hypothetical situations to their own. Then, if the facts seem close enough, they have been reclassifying employees as exempt if an opinion letter suggests they might be.

Caution: Not every court will agree with the Labor Department’s opinion. The only safe approach is to actually write Labor with your particular circumstance and request an opinion. Even then, getting the opinion may take months or even years, and may not stand up in court.

Bottom line: Always consult an attorney if you have questions about how to classify employees.

Recent case: Several loan officers and mortgage originators sued Delta Financial over their classification as exempt employees. The company relied on a Labor Department opinion letter that said mortgage loan officers were exempt if they compiled and analyzed customer information and evaluated whether the customers qualified for loans.

The trial court said the opinion letter shouldn’t be given much weight since it answered a hypothetical question and not the one actually facing the court. The court let the case go forward. (Pontius, et al., v. Delta Financial, No. 04-1737, WD PA, 2007)

Final note: For details on how to request a Labor Department opinion letter, go to www.dol.gov/esa/whd/opinion/opinion.htm.

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