Employer relied on opinion letter & lost big in court: Avoid its mistake

Opinion letters from agencies like the Dept. of Labor (DOL) provide employers with helpful guidance for compliance. But beware, they aren’t the be-all and end-all for following wage and hour law. 

Relying too heavily on opinion letters can be a mistake that costs companies big bucks. One employer learned this lesson the hard way after a recent lawsuit involving unpaid rest breaks.

Opinion letters had no explanation for exemption

In Pilmenstein v. Devereux Cleo Wallace, an employee sued her employer because she didn’t receive compensated rest breaks during her shifts, as the state required for workers in her industry.

The employer’s defense was that it was exempt from this requirement, based on its interpretation of the language in two opinion letters from the state department of labor.

However, a district court ruled in favor of the employee. And its decision held up on appeal. Though the opinion letters seemed to imply that the employer was exempt from the rule, they contained no clear rationale for this conclusion.

As the appeals court said, the opinion letters were simply “interpretations” of existing regs, and the language in the actual law was clear that paid rest breaks were required. The employer’s now on the hook for back wages – and possibly additional penalties.

This case serves as a reminder to you and your Payroll team not to rely solely on opinion letters when paying employees. While they offer helpful insight, they’re typically based on a specific set of circumstances. If your company isn’t in the same situation, the rules may apply differently.

Meanwhile, the DOL’s waiting in the wings. The agency is ready to pounce on any errors your Payroll team might make with wage and hour laws.

To avoid scrutiny, your Payroll pros must closely review the actual terms of the regs. It’s also a good idea to speak with a lawyer to make sure any guidance you’re relying on for compliance is applicable to your company based on existing laws.