DOL FLSA Opinion Letters Address Per-Project Pay Under the Salary Basis Test and Overtime Pay in Multi-Week Bonus Periods | Practical Law

DOL FLSA Opinion Letters Address Per-Project Pay Under the Salary Basis Test and Overtime Pay in Multi-Week Bonus Periods | Practical Law

The Department of Labor (DOL) has issued two opinion letters addressing compliance issues under the Fair Labor Standards Act (FLSA). The first clarifies the calculation of overtime pay for a non-discretionary lump sum bonus and the second addresses per-project pay under the salary basis test for exemption.

DOL FLSA Opinion Letters Address Per-Project Pay Under the Salary Basis Test and Overtime Pay in Multi-Week Bonus Periods

by Practical Law Labor & Employment
Published on 14 Jan 2020USA (National/Federal)
The Department of Labor (DOL) has issued two opinion letters addressing compliance issues under the Fair Labor Standards Act (FLSA). The first clarifies the calculation of overtime pay for a non-discretionary lump sum bonus and the second addresses per-project pay under the salary basis test for exemption.
On January 7, 2020, the DOL issued two FLSA opinion letters, FLSA2020-1 and FLSA2020-2.
FLSA2020-1 provides that, where employees receive a non-discretionary lump sum bonus for completing a ten-week training period and each week counts equally toward earning the bonus, the employer can allocate the bonus equally over each of the ten weeks to calculate the additional overtime pay due for weeks an employee worked over 40 hours.
Non-discretionary bonuses can be allocated equally over each week of a multi-week bonus period if allocation in proportion to the amount actually earned each week is not possible. In the facts presented, missing any week disqualified an employee from receiving the bonus regardless of whether they worked overtime hours in a particular week. If other facts make it inappropriate to assume equal bonus earnings each week, the bonus is allocated equally to each hour of the bonus period.
FLSA2020-2 provides that paying exempt administrative or professional employees on a per-project basis in equal, pre-determined biweekly or monthly installments regardless of hours worked satisfies the salary basis requirement where the amounts equal at least the minimum salary threshold and do not vary based on the hours or quality of an employee's work.
Prospective increases or decreases in per-project pay because of occasional changes to the project scope do not affect the exemption if the salary threshold remains satisfied. Similarly, additional compensation, such as pay received for an overlapping second project, can be paid on any basis and total compensation (salary plus additional payments) can change several times throughout the year based on projects assigned without affecting the exemption.