Wage And Hour Division Issues FLSA Opinion Letters

The Wage and Hour Division (WHD) of the U.S. Department of Labor (DOL) issued various opinion letters construing the Fair Labor Standards Act (FLSA) in early January 2026. The letters address various issues under the FLSA, including the loss of exempt status after a pay change, the interplay between performance bonuses and overtime, and the provisions of collective bargaining agreements (CBAs). 

Exempt Duties and Nonexempt Pay

In  FLSA2026-1, the WHD found that a licensed clinical social worker who performed clinical assessments, developed treatment plans, and engaged in crisis intervention and similar tasks generally met the duties test for the learned professional exemption in the FLSA. According to the WHD, the worker's job duties required advanced knowledge gained through extensive specialized instruction. 

Nonetheless, the opinion letter reminded employers that meeting the duties criteria alone is insufficient to confer exempt status on a worker. Exempt workers must also meet the compensation test, meaning they are paid a salary rather than an hourly wage. Since the employer reclassified the worker from salaried to hourly after eliminating supervisory duties, the WHD concluded that the compensation change would likely render the position nonexempt, despite the duties. 

Finally, the WHD emphasized that the FLSA does not require employers to claim an exemption for a qualified professional. Employers can classify workers as nonexempt as long as they are paid at least minimum wage and overtime pay for any hours worked over 40 hours in one week. However, the FLSA does prohibit the reverse; an employer cannot claim that a nonexempt role is exempt. 

Performance Bonuses and Overtime

The WHD also issued  FLSA2026-2, which concluded that an employer could not exclude incentive bonuses from the “regular rate of pay” under FLSA Section 7(e)(3). The WHD reached this conclusion because the employer used a formula based on attendance, safety tasks, attire, and efficiency to calculate the bonuses. As a result, the bonuses qualified as nondiscretionary incentives under the FLSA and are included in the regular rate for each workweek when calculating overtime. 

In its opinion letter, the WHD clarified that the employer need not claim the exemption, but that the incentive pay counts as part of the true regular rate for that week and thus requires payment of overtime pay based on a higher amount. Again, the FLSA only prohibits misclassifying nonexempt roles as exempt, not the other way around. 

Mandatory Pre-Shift Roll Call as Work Time

In  FLSA2026-3, the WHD considered whether a CBA for a 911 dispatcher could include a mandatory pre-shift “roll call” as compensable work time under FLSA. Since roll call requires employees to be present at the workplace and perform job-related duties before their shifts begin, the period is considered work time. As a result, that period of work time counts toward the hours worked each week to determine whether an employee is entitled to overtime pay. 

Still, the WHD pointed out that a CBA could qualify for the partial overtime exemptions under FLSA Sections 7(b)(1) or (2). For either of these exemptions to apply, the CBA would have to guarantee a minimum annualized schedule and pay overtime for more than 12 hours per day and more than 56 hours per week. Therefore, any reduction in overtime pay is based solely on the CBA's structure and whether it meets the partial-exemption criteria. 

Interpretation of FLSA Section 7(j)

In  FLSA2026-4, the WHD discussed its interpretation of FLSA Section 7(j). The WHD stated that covered retail or service employers should use the federal minimum wage, not an applicable state minimum wage, to determine the minimum pay threshold for the federal commission exemption. Although a higher minimum wage may apply in certain states or localities, that rate is irrelevant for Section 7(j). While the employer's noncompliance with state law could result in a state law claim, the employee would have no federal law claim under the FLSA as long as the employer had met all requirements of Section 7(j). 

Furthermore, the WHD clarified that although tips are not commissions, a portion of those tips may count toward the >50% commission test if the employer takes a tip credit to satisfy the statutory wage requirement under federal, state, or local law. While employers need not claim the Section 7(j) exemption, even if a worker qualifies, the reverse is not true. As reiterated in its other opinion letters, FLSA only prohibits employers from treating a nonexempt position as exempt. 

Finally, the WHD reminded employers that, because commissions and tip earnings vary, they should regularly audit each employee's eligibility for the Section 7(j) exemption in each week to ensure all requirements are met. 

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