Wage and Hour Administrator’s Interpretations- Employee Changing Clothes

Kegler Brown E-mployment Alert

The U.S. Department of Labor is becoming more aggressive and, in the process, changing many of the accepted practices in Wage-Hour law. The Department announced last month that it would no longer issue specific opinion letters advising employers on the Department’s interpretation of the law. Instead, the Wage and Hour Division will now issue Administrator’s Interpretations, in which it outlines generalized guidance on issues that the Division feels deserve more clarity. These Interpretations appear to be directed to specific industries or broad categories of employees.

In its first Interpretation, the Division sent shock waves through the financial industry. Based upon prior opinion letters, the universal practice was to treat employees who worked as mortgage lenders as exempt employees, meaning that the lenders were not entitled to overtime pay. The Division abruptly reversed that position and issued an Interpretation in early 2010 that mortgage lenders held non-exempt positions and must be paid overtime compensation.

The Division’s second Interpretation portends similar consequences. Section 203(o) of the Fair Labor Standards Act exempts time spent by employees “changing clothes” from compensable time. In its Interpretation, the Division now says that this exemption “does not extend to protective equipment worn by employees that is required by law, by the employer, or by the nature of the job.”

The potential consequences of the new Interpretation are two-fold. First, if the time spent by an employee is considered compensable time, that means that the employee must be paid for the time, and that the time must be added with other work hours to determine whether overtime is due in a given workweek. The second consequence depends on whether the time spent changing clothes is considered a “principal activity” in a given situation. If so, the clothes changing triggers the start of the workday, so that later activities – like walking to the work location or sitting while waiting to start work – are also compensable activities. [Wage and Hour Administrator’s Interpretation FLSA 2010-2 (June 16, 2010).]