Four DOL Opinion Letters Clarify FLSA Exemptions for Minimum Pay, Bonuses, ‘Duties’ + ‘Roll Call’ Time

Takeaways

• New DOL opinion letters clarify FLSA exemptions and calculations, including that the federal minimum wage ($7.25 per hour) is the proper measure for determining whether the 7(i) exemption’s minimum pay standards are met, even in states with higher minimum wage rates.
• Incentive bonuses awarded automatically when employees satisfy predetermined criteria are not discretionary and must be factored into the regular rate when calculating employees’ regular rate for overtime purposes.
• Supervisory responsibilities are not a component of the “duties” test for the learned professional exemption.
• Union-negotiated “roll call” time counts toward “working hours” for overtime purposes, but an employer may consider negotiating a CBA that complies with partial overtime exemptions.

Related links

• FLSA 2026-1
• FLSA 2026-2
• FLSA 2026-3
• FLSA 2026-4
• WHD Opinion Letters page

Article

The Department of Labor Wage and Hour Division issued four opinion letters interpreting the Fair Labor Standards Act (FLSA) on Jan. 5, 2026. The letters, signed by Wage and Hour Division Administrator Andrew Rogers, address:

1. The learned professional exemption; 
2. Whether incentive bonuses are nondiscretionary and thus must be factored into overtime calculations; 
3. The applicable minimum wage rate that applies when determining the minimum pay standards for the section 7(i) exemption; and 
4. Whether a union-negotiated “roll call” period must be counted when calculating overtime due.

Learned Professional Exemption

A Licensed Clinical Social Worker (LCSW) who was relieved of supervisory responsibilities following an organizational restructuring, and reclassified from exempt to nonexempt, likely continued to satisfy the “duties” requirements of the FLSA’s learned professional exemption, the administrator advised. (FLSA2026-1.)

Although the LCSW no longer had supervisory duties, the administrator explained that supervision is not required for this exemption. What matters is that the employee continued to perform “work requiring advanced knowledge,” such as conducting clinical assessments and psychosocial evaluations, as well as treatment planning and documentation.

Not having enough information to determine whether the employee continued to meet the salary test for the exemption, the administrator could not advise as to whether the LCSW still met all the requirements for the learned professional exemption. He noted, however, that if the employee is now being paid on an hourly rather than salary basis, the exemption would not apply.

The DOL advised the employee that an employer may reclassify an exempt employee as nonexempt even when the employee meets the criteria for a statutory exemption, explaining “it is the employer—not the employee—that claims the exemption” and “the FLSA only prohibits the misclassification of a nonexempt employee as an exempt one.”

Inclusion of Bonus Payments in Regular Rate

Incentive bonuses awarded by an employer based on predetermined, detailed criteria established in the employer’s “Safety, Job Duties, and Performance” bonus plan are nondiscretionary and, therefore, must be included when calculating employees’ regular rate of pay for overtime purposes, the administrator advised. (FLSA 2026-2.)

The bonus plan sets forth clear criteria that, once met, automatically trigger eligibility for the bonus, and the bonus amount is set by these criteria as well. As such, the employer does not exercise sole discretion whether to award the bonus payments to an employee or the amount awarded.

To be discretionary, a bonus must not be awarded based on a “prior contract, agreement, or promises.” In this case, because the bonus plan is designed to motivate employees to meet various clearly stated goals, employees are informed about the bonus requirements in advance. The administrator said this reinforced the conclusion that employees understood the bonuses were not made at the employer’s sole discretion.

Because the bonuses were nondiscretionary, they must be counted as part of the employees’ regular rate of pay, the administrator advised.

Union-Negotiated “Roll Call” Time

An employer may not exclude a union-negotiated, mandatory 15‑minute pre‑shift roll call for emergency dispatch employees from compensable “hours worked” when determining overtime due, the administrator advised. (FLSA 2026-3.)

The writer, an official of the union representing the dispatchers, also asked whether the 15-minute roll calls can be excluded from the overtime calculation given that their sole purpose is to bring employees closer to the standard 2,080 hours worked in an annual 52-week work period. The administrator stated that the roll call time constitutes compensable hours worked and, therefore, must be counted as part of the workweek for all employees who attend roll call.

The administrator also advised, however, that under certain circumstances, an employer may minimize overtime exposure by structuring a collective bargaining agreement to take advantage of partial overtime exemptions under FLSA section 7(b)(1) or 7(b)(2). These partial exemptions allow for payment of an overtime premium only for those hours that exceed 12 in a workday or 56 in a workweek. The opinion letter provides an example of a weekly work schedule that would fit within the hour limits of either exemption without triggering additional overtime liability.

Minimum Wage Rate for 7(i) Exemption

To satisfy the section 7(i) overtime exemption for commissioned “retail or service establishment” employees, the employee’s regular rate of pay must exceed one and one-half times the federal minimum wage (currently, $7.25 per hour). The administrator clarified that even in jurisdictions with a higher state minimum wage, the federal minimum wage is used to determine whether 7(i)’s minimum pay standard is met. Thus, to meet the minimum pay standard, the employee must be paid a rate that exceeds $10.875 per hour. (FLSA2026-4.)

Uncertainty over which minimum wage rate applies for 7(i) purposes has been a concern for retail and service employers, particularly in states with higher minimum wage rates but no state overtime law. The administrator, however, cited the plain language of the statutory provision and its expressed reference to section 206 of the FLSA (which establishes the federal minimum wage) in resolving any potential confusion over which minimum wage applies.

The 7(i) exemption also requires that commissions comprise more than 50% of the employee’s compensation for a representative period of not less than one month. The opinion letter explained that, although tips generally are not “compensation” for purposes of meeting this requirement, a tip credit used toward the employer’s minimum wage obligations is part of an employee’s guaranteed earnings and, as such, it counts as “compensation” for this purpose. The opinion letter includes examples to illustrate how the principle is applied.

Opinion Letters

DOL opinion letters offer useful guidance on how the agency may apply the FLSA in specific fact situations. An opinion letter can be a valuable defense for an employer to avoid a finding of a “willful” violation of the FLSA in a lawsuit related to the matter addressed in the guidance on which it relied. Employers can review opinion letters and submit requests on the DOL’s Opinion Letters page.

Reach out to your Jackson Lewis attorney with any questions or for assistance in preparing an opinion letter request.