July 19, 2009
US Department of Labor Issues Opinion Letter on Overtime for Plumbing Company Employees
Filed under: News
Vision Payroll

The US Department of Labor (DOL) recently issued Administrator signed Opinion Letter FLSA2009-8. Although Opinion Letters only apply to the exact set of facts and circumstances presented in each case, they are a valuable aid in understanding current interpretations of the Fair Labor Standards Act (FLSA). Because the letter was apparently never mailed after it was signed, the DOL under new Secretary Hilda L. Solis has decided to withdraw the letter for further consideration. Therefore, this letter may not be relied upon as a statement of agency policy. It is possible that a different conclusion may be reached when the Opinion Letter is reissued.

In this Opinion Letter, the DOL reviews the pay policy of a company that engages primarily in “drain cleaning and other minor plumbing repair and replacement services involving such items as water heaters, disposals, and toilets.” Eighty to ninety percent of the company’s revenues are from retail sales or services to private homeowners. The technicians receive pay based on twenty-three percent of the revenues attributable to their labor and five percent of the revenue attributable to their parts sales. They also receive a monthly bonus that is dependent on monthly sales. Their pay is guaranteed to be more than 150% of the minimum wage and is generally three to six times the minimum wage.

The DOL ruled that “because more than seventy-five percent of its annual dollar volume of goods and services it not for resale”, it qualifies as a “retail or service establishment”. Employees of such establishments are exempt from minimum wage if:

  1. The regular rate of pay of such employee is in excess of one and one-half times the minimum wage, and
  2. More than half of the employee’s compensation for a representative period (not less than one month) represents commissions on goods and services.

Since the employees apparently qualify under these standards, they are exempt from the minimum wage laws.

State laws may provide rules that are more beneficial to the employee and must be followed. The DOL may come to a different conclusion when it reissues the Opinion Letter after further consideration. Contact Vision Payroll if you have questions about this Opinion Letter.


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