United States Department of Labor Issues Four New Opinion Letters Regarding Overtime Exemptions, Bonuses, and Compensable Time

Recently, the Department of Labor (“DOL”) issued four opinion letters interpreting the Fair Labor Standards Act (“FLSA”). As a general rule, the FLSA requires covered employers to pay at least the federal minimum wage for all hours worked and to compensate non-exempt employees at one and one-half times their regular rate of pay for hours worked in excess of 40 in a workweek. Certain exemptions apply, however, depending on the nature of an employee’s duties. The opinion letters discussed below provide real workplace examples and additional guidance on the application of these principles.

FLSA 2026-5: Exempt Employees Performing Additional Hourly Work

FLSA 2026-5 addresses whether an employee classified as exempt under Section 13(a)(1) of the FLSA may perform additional work in a secondary, non-exempt role for hourly pay, without affecting the employee’s exempt status or overtime obligations.

Employees employed in a “bona fide executive, administrative, or professional capacity” are exempt from the FLSA’s minimum wage and overtime requirements. The DOL concluded that an employee does not lose this exempt status merely because they perform additional non-exempt work, provided that their primary duties allow them to remain exempt and the employer continues to satisfy the salary requirements of the FLSA.

The opinion letter considered an employee who primarily served as a “Nursing Professional Development Specialist” (an exempt role), but who also periodically picked up shifts as a “Staff Nurse” (a non-exempt role). The employee was paid an hourly rate for the additional “Staff Nurse” shifts but did not receive overtime compensation.

The DOL explains that the employee stays exempt if the primary duty remains the performance of exempt work. In applying the primary duty test, the DOL emphasized that the analysis is more qualitative rather than a purely quantitative question of hours worked in each. Relevant factors include:

• The relative importance of exempt versus non-exempt duties;
• The amount of time spent performing exempt work;
• The employee’s relative freedom from direct supervision; and
• The relationship between the employee’s salary and wages paid for non-exempt work.

Time alone is not determinative.

The qualitative analysis involved in determining whether an employee is primarily exempt or non-exempt means it can be challenging to predict particular outcomes or overtime requirements. Individual situations should be evaluated on a case-by-case basis.

FLSA 2026-6: Percentage-of-Total-Earnings Bonuses

FLSA 2026-6 considers whether a non-discretionary bonus calculated as a percentage of an employee’s total earnings, including both straight-time and overtime compensation, satisfies the FLSA’s overtime requirements without requiring recalculation of the regular hourly rate.

Under the FLSA, non-discretionary bonuses must generally be included in the employee’s regular rate of pay, requiring employers to recalculate overtime to cover the period in which the bonus was earned. In other words, for a “quarterly” bonus, the bonus amount would have to be apportioned back into the regular rate for employees for each overtime week in the quarter. However, certain “percentage of total earnings” bonuses, as described in 29 C.F.R. § 778.210, automatically satisfy overtime requirements because they proportionally increase both straight-time and overtime compensation.

The DOL evaluated a bonus structure in which:

• A bonus pool was established for a group of employees; and
• Each employee’s quarterly bonus was calculated based on their share of total earnings (including overtime) relative to the group.

The DOL concluded that this method qualifies as a permissible percentage-of-total-earnings bonus, meaning the bonus inherently includes any required overtime premium. As a result, employers using this method are not required to retroactively recalculate overtime. The DOL warns, however, that an employer may not use the percentage-of-total-earnings bonus to evade the overtime requirements of the FLSA.

The DOL’s example demonstrates that because the bonus increases each employee’s total compensation by the same percentage, it correspondingly increases both straight-time and overtime earnings.

This method provides employers with a practical alternative to the otherwise burdensome process of recalculating overtime each time a non-discretionary bonus is paid.

FLSA 2026-7: Meal Periods and Off-Site Travel

FLSA 2026-7 addresses whether time spent during a meal period traveling off-site, such as walking through a large facility and passing through security checkpoints, is compensable.

Although the FLSA does not require employers to provide meal periods, when they do, the compensability of that time is governed by federal regulations. A meal period is not compensable if the employee is “actually” relieved from duty for the purpose of eating a regular meal. When determining whether an employee is “actually” relieved from duty, courts generally apply the predominant benefit test. This test examines whether the time is spent primarily for the benefit of the employer or the employee.

In this case, the employer provided a 30-minute meal period and allowed employees to either remain on-site or leave the premises. The employee alleged that the size of the facility and security procedures significantly reduced the time available to eat when leaving the premises. The employee claimed this created a “coercive dynamic” that discouraged employees from taking meals off-site. The employee argued that the time spent traversing the premises should be compensated because it was not spent for the purpose of eating.

The DOL determined that the meal period was nonetheless bona fide and non-compensable. The key factors were:

• The employee was fully relieved of duties; and
• The employer was not required to permit employees to leave the premises in the first place.

Accordingly, an employee’s voluntary decision to leave the premises, and the resulting reduction in usable mealtime, does not render the meal period compensable.

FLSA 2026-8: Pre-Shift Work, De Minimis Doctrine, and Rounding Practices

FLSA 2026-8 addresses whether certain pre-shift activities are compensable and whether an employer’s rounding practices comply with the FLSA.

The DOL analyzed a hospital policy allowing employees to clock in up to seven minutes before their scheduled shifts, with time entries rounded to the scheduled start time. As a result, early clock-ins were effectively uncompensated.

As a threshold matter, the DOL explained that the legality of a rounding policy depends on whether the underlying time is compensable. The DOL distinguished between:

• Compensable activities (e.g., receiving patient handoff reports, locating assignments, and reviewing charts), which are integral and indispensable to principal job duties in question; and
• Non-compensable activities (e.g., waiting in line to clock in), which are considered preliminary.

The opinion letter also addressed the de minimis doctrine, which permits employers to disregard minimal amounts of otherwise compensable time when recording that time is administratively difficult. The DOL cautioned that this doctrine is increasingly limited in application given modern timekeeping technology and is unlikely to apply where the work is regular and measurable.

Finally, the DOL evaluated the employer’s rounding practice under 29 C.F.R. § 785.48(b), which requires rounding policies to be neutral in application and not systematically favor the employer. Here, the DOL found the rounding practice to be problematic under the FLSA because:

• Early clock-in time was consistently rounded in the employer’s favor; and
• The policy did not provide a meaningful opportunity for employees to benefit from rounding.

As a result, the rounding practice did not “average out” over time and could lead to undercompensating employees. The DOL, however, noted that the rounding practice could be acceptable if, for example, employees who clock in up to 7 minutes late are nonetheless credited with starting at their scheduled time and that practice averages out over time to offset any work time lost due to the rounding of early check-ins to the scheduled shift time.

Kelli P. Lieurance
Samantha C. Harres, Summer Associate