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The U.S. Department of Labor (DOL) recently issued three opinion letters of interest to employers. Here are the answers provided to three questions.

1. How is the retail or service establishment exemption of the Fair Labor Standards Act (FLSA) calculated? The FLSA exempts retail or service establishment employees paid by commission from overtime pay if more than half of their compensation for "not less than one month" represents commissions on goods or services. This DOL opinion letter responds to a request regarding how many pay periods (four or six weekly or two or three biweekly) would qualify for the "not less than one month" time period for the exemption.

The DOL concluded that four weekly or two biweekly pay periods is typically not a calendar month and wouldn't satisfy the statutory requirement that the time period be at least one month. However, six weekly or three biweekly pay periods would satisfy the FLSA's exemption. (FLSA 2019-13)

2. Can an employer delay designating paid leave as Family Medical Leave Act (FMLA) leave due to a collective bargaining agreement? The FMLA provides eligible employees of covered employers with up to 12 weeks of unpaid, job-protected leave per year for specified family and medical reasons. This DOL opinion letter responds to whether an employer may delay designating paid leave as FMLA leave if the delay complies with a collective bargaining agreement and the employee prefers that the designation be delayed.

The DOL concluded that once an eligible employee communicates a need to take leave for an FMLA-qualifying reason, an employer may not delay designating such leave as FMLA leave, and neither the employee nor the employer may decline FMLA protection for that leave. This would be the case even if the employer is obligated to provide job protections and other benefits equal to, or greater than, those required by the FMLA pursuant to a collective bargaining agreement or state civil service rules. (FMLA 2019-3-A)

3. Are employer contributions to the health savings accounts (HSAs) of employees considered earnings under the Consumer Credit Protection Act (CCPA)? HSAs allow employees to contribute pretax dollars towards future medical expenses. Employers may also contribute to an employee's account. The CCPA limits the amount of a debtor's disposable earnings that may be garnished. Some employers are treating their HSA contributions as earnings under the CCPA, which, particularly in regard to employees with high disposable earnings, may result in employers exceeding CCPA wage limits in calculating wage garnishments. This DOL opinion letter responds to whether employers' contributions to employees' HSAs constitute earnings for wage garnishment purposes under the CCPA.

The DOL concluded that employer contributions to HSAs aren't earnings under the CCPA and therefore aren't subject to the CCPA's garnishment limitations. Contributions that are already in a HSA are past the point when they may be withheld by or garnished by an employer

The DOL did add that when a HSA contribution is still in the employer's possession and is about to be paid to the account, it could be subject to the CCPA's limits on garnishment if it constitutes earnings (compensation paid or payable for personal services). The question is whether the employer paid the amount for the employee's services. In determining whether certain payments are earnings under the CCPA, the DOL's Wage and Hour Division generally compared the nature of those payments to wages, salaries, commissions, and bonuses. The DOL examined the characteristics of wages, salaries, commissions, and bonuses that distinguish them from employer contributions to HSAs and concluded that employer contributions to HSAs aren't earnings as defined by the CCPA.

Generally, as long as an employer doesn't determine its HSA contributions on the basis of the amount or value of an individual employees' services and doesn't give employees an option of receiving cash in lieu of an employer contribution, the employer's contributions to an HSA aren't earnings under the CCPA and aren't subject to the CCPA's garnishment limitations. (CCPA 2019-1)


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