DOL Issues COVID-19-Related Guidance Regarding Whether Overtime Payments Based on Expected Hours Worked are Credited for Overtime

In Opinion Letter FLSA2020-20, the Department of Labor’s Wage and Hour Division (WHD) provided guidance on paying overtime to live-in caregivers who work shifts of more than 24 hours based on an expected number of hours worked, and whether these overtime payments can be excluded from the regular rate and credited for overtime.

The employer addressed in the Opinion Letter employs caregivers to provide in-home or live-in care services for shifts of 24 hours or more. Typically, a caregiver works five days per week for 120 hours or more, spending this time in a client’s home without direct supervision. Due to COVID-19, most clients prefer their caregivers remain in their home for the entire shift to reduce the risk of infection.

The employer states that it is not possible to track compensable time under this scenario. The employer has assumed the caregivers perform compensable work for the entire extended shift, minus bona-fide meal and sleep periods of up to 8 hours per day. If the meal or sleep periods are interrupted, the interruption time is counted as compensable work time. The employer pays caregivers an hourly rate plus a rate of 1.5 times the regular rate for hours worked in excess of 40 hours per week. The employer also pays 1.5 times the regular rate for each hour worked in excess of eight hours a day, even if the weekly hours total less than 40 hours a week.

Section 207(e) of the FLSA carves out eight categories of compensation that can be excluded from the regular rate on which overtime pay is calculated. One of these exclusions is “extra compensation provided by a premium rate paid for certain hours worked by the employee in any day or workweek because such hours are hours worked in excess of eight in a day or in excess of the maximum workweek applicable to such employee…. or in excess of the employee’s normal working hours or regular working hours.” (§ 207(e)(5)) In addition, under § 207(h)(2), extra compensation paid is creditable toward overtime compensation.

Therefore, based on the facts provided by the employer, the WHD concluded that the premiums paid for hours worked over eight hours per day may be excluded from the regular rate and credited toward overtime owed. 

Hall Benefits Law has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 678-439-6236.

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