The Department of Labor’s Wage and Hour Division (WHD) published two opinion letters addressing questions regarding the Fair Labor Standards Act (FLSA) and the Family and Medical Leave Act (FMLA).
The first opinion letter (FLSA2024-01) seeks to explain whether daily expense payments for tools and equipment may be excluded from regular rate calculations for overtime pay. The letter responds to an employer that provides its employees with a per diem for living and meal expenses, as well as reimbursements for mileage, personal cell phone use, camera, computer, vehicle, safety equipment and gear, and other tools and equipment necessary to perform their jobs. On recent jobs, the employer paid tool and equipment payments totaling $25 per day for their use of the tools and equipment described above. The employer sought guidance about whether, and under what circumstances, the FLSA would permit the employer to make significantly higher tool and equipment payments—as high as $150 to $200 per day—and then exclude those payments from each employee’s regular rate of pay. In its response, the WHD notes that the FLSA only permits the exclusion of “reasonable payments for expenses…incurred by an employee in the furtherance of the employer’s interests.” Thus, for reimbursement payments to be excludable from the regular rate, employees must actually incur expenses. The WHD explained that if an employee does not actually incur ongoing tool and equipment expenses, reimbursement payments provided for purported expenses are not excludable from an employee’s rate of pay. Where employees do incur tool and equipment expenses on behalf of an employer and the employer provides reimbursement for those expenses, “only the actual or reasonably approximate amount of the expense is excludable from the regular rate.” If the reimbursement payment is not reasonably approximate to the expenses the employee actually incurred, then the excess reimbursement payment must be included in the regular rate when calculating overtime. Employers that provide excessive expense reimbursement payments may, however, still exclude the actual or reasonably approximate amount of an employee’s incurred expenses from the employee’s regular rate of pay while including the remaining amount in the regular rate.
The second opinion letter (FLMA2024-01-A) addresses the permissible use of FMLA leave for the treatment of a serious health condition when treatment is provided as part of a clinical trial. The letter responds to a request from an organization that conducts clinical trials to find a cure for an unspecified long-term and severe disease. The organization said that in a recent survey of African Americans that sought to increase their participation in clinical trials, the organization found that concern about taking time off work is a “significant barrier” to participation. The organization requested an opinion on whether participation in clinical trials “regardless of whether the individual receives the applicable treatment” qualifies for leave under the FMLA. In response, the WHD said that eligible employees may take FMLA leave for the treatment of a serious health condition when treatment is part of a clinical trial. WHD explains that the FMLA regulations define “continuing treatment” very broadly, establishing only the general principles that a regimen of continuing treatment includes, for example, prescription medication or therapy requiring the use of specialized equipment, but not, ordinarily, routine physical examinations, or over-the-counter medications “that can be initiated without a visit to a health care provider.” The WHD notes that the medical interventions generally involved in clinical trials are similar to the former examples, often involving prescription medication, equipment, or other significant interventions.