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DOL: Day Rates Do Not Satisfy “Salary Basis” Test

The Department of Labor recently issued an opinion letter which stated that day rate workers are not paid on a “salary basis” and thus cannot be subject to any exemptions which require a salary as a prerequisite. On August 31, 2020, the DOL issued Opinion No. FLSA2020-13. In in, the agency was asked to consider “the applicability of the learned professional exemption and the highly compensated employee test to part-time employees who provide corporate-management training and are paid a day rate with additional hourly compensation.” The agency determined that while the workers met the duties test, they did not satisfy the “salary basis” test because they were paid a day rate. Relying on the reasoning of the Fifth Circuit in Hewitt v. Helix Energy Sols. Group, Inc., 956 F.3d 341 (5th Cir. 2020), the DOL stated:

The company’s payments for delivery work do not meet this test. First, the payments for delivery work are not a predetermined amount. They may be as low as $1,500 during a workweek in which the employee performs one day of work; they may be more than $10,000 per week. Second, the amounts are not calculated on a weekly or less frequent basis. They are based instead on the number of days worked. 

In support of its opinion, the DOL cited with approval the reasoning of the Fifth Circuit’s opinion in Hewitt, which held that day rates do not satisfy the salary basis test. Where persuasive, DOL’s Opinion Letters are entitled to deference. Moreover, if the regulation is ambiguous, agency opinion letters are “controlling unless plainly erroneous or inconsistent with the regulation.” This opinion letter should put to rest any doubt that the payment of day rates does not satisfy the salary basis test. 

About the author: Josh Borsellino is an attorney who represents workers for claims of unpaid overtime.  If you were paid a day rate and denied overtime pay, call Josh today at 817.908.9861 for a free consultation.  

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