U.S. Department of Labor Issues New FLSA Opinion Letters on Exempt Work, Bonus Calculations, Meal Periods, and Rounding Practices
Introduction
On May 30, 2026, the U.S. Department of Labor’s Wage and Hour Division (WHD) released four new opinion letters addressing important Fair Labor Standards Act (FLSA) compliance issues. These letters provide updated guidance on (1) exempt employees performing additional hourly work, (2) the treatment of certain bonus payments for overtime purposes, (3) compensability of time during meal periods, and (4) the permissibility of rounding practices for hospital employees. Below is a summary of each letter and its practical implications for employers.
1. Exempt Employees Performing Additional Hourly Work (FLSA2026-5)
Factual Background: The opinion letter arose from an inquiry by an employer whose exempt executive employee expressed interest in working additional hours in a nonexempt hourly role at the same company. Specifically, the employee held a salaried exempt position as a regional manager but wished to take on weekend shifts as a line supervisor at a different facility, for which the employer proposed paying an hourly wage. The employer sought clarification on whether this arrangement would jeopardize the employee’s exempt status and how overtime should be calculated if the employee worked more than 40 hours in a workweek.
Legal Context: Under section 13(a)(1) of the FLSA, employees employed in a bona fide executive, administrative, or professional capacity are exempt from both minimum wage and overtime requirements. To qualify for these “white collar” exemptions, an employee must generally be paid on a salary basis of at least $684 per week (as of 2024 regulations) and must perform duties that meet certain tests. The salary basis requirement means the employee must receive a predetermined amount each pay period that is not subject to reduction based on variations in the quality or quantity of work performed.
WHD Analysis: The WHD confirmed that an employee may hold both an exempt position and a nonexempt position with the same employer without losing the exemption for the primary role, provided that the salary basis is maintained. The key consideration is that the exempt employee’s guaranteed salary cannot be reduced based on the quality or quantity of work in the exempt role. Compensation for the secondary, nonexempt role may be paid on an hourly basis without affecting the exemption. However, when calculating overtime for hours worked beyond 40 in a workweek, the employer must include all remuneration—both the salary and the hourly wages—in the regular rate calculation. The WHD emphasized that all hours worked in the nonexempt capacity must be counted toward the 40-hour overtime threshold.
Practical Takeaways: Employers considering allowing exempt employees to take on additional hourly work should: (1) maintain rigorous timekeeping systems that separately track hours worked in each role; (2) ensure the employee’s salary for the exempt position remains guaranteed and is not subject to improper deductions; (3) properly calculate the regular rate by combining all compensation when overtime is due; and (4) document the distinct nature of the duties performed in each role to support the exemption classification.
2. Percentage of Total Earnings Bonus and Overtime (FLSA2026-6)
Factual Background: The opinion letter responded to an employer’s inquiry about its quarterly bonus program for production employees. Under the employer’s plan, a pool of bonus funds was distributed among eligible employees based on each employee’s total earnings (straight-time and overtime) as a proportion of the aggregate earnings of all participants. For example, if the bonus pool totaled $50,000 and Employee A’s combined earnings represented 2% of all participants’ earnings, Employee A would receive $1,000. The employer asked whether this bonus structure qualified as a “percentage of total earnings” bonus under DOL regulations, which would mean the bonus already included the overtime premium and no additional overtime calculation was required.
Legal Context: Under the FLSA, nondiscretionary bonuses must generally be included in the “regular rate” of pay for purposes of calculating overtime. This means employers must recalculate overtime compensation to account for bonuses that were not included in the original overtime payments. However, 29 C.F.R. § 778.210 provides an exception: if a bonus is paid as a uniform percentage of each employee’s own total earnings—including both straight-time and overtime compensation—for the period, the bonus is deemed to have already satisfied the overtime requirement because the overtime hours are compensated at the same percentage rate as straight-time hours. This exception simplifies compliance by eliminating the need for a separate retroactive overtime calculation.
WHD Analysis: The WHD concluded that the employer’s bonus plan did not qualify for the section 778.210 exception. The critical distinction is that the regulation requires the bonus to be a percentage of each individual employee’s own total earnings, not a share of a pool determined by comparing one employee’s earnings to others. In the employer’s plan, an employee’s bonus was determined by their proportional share of the total earnings of all participants—a relative measure—rather than a fixed percentage of their individual earnings. As a result, the bonus must be included in the regular rate, and the employer must perform a separate calculation to pay any additional overtime premium attributable to the bonus. The WHD noted that even small deviations from the regulatory formula can disqualify a bonus from the exception.
Practical Takeaways: Employers should carefully review their bonus structures to determine whether they qualify for the section 778.210 exception. To qualify, a bonus must be calculated as a fixed, uniform percentage of each employee’s own total earnings (including overtime) for the relevant period. Bonus plans that allocate from a pool based on relative earnings, performance rankings, or other comparative metrics do not qualify. For non-qualifying bonuses, employers must include the bonus in the regular rate and calculate any additional overtime due. Employers may wish to restructure bonus programs to meet the regulatory requirements or build the additional overtime cost into their compensation planning.
3. Compensability of Time During Meal Periods (FLSA2026-7)
Factual Background: The opinion letter addressed a manufacturing employer’s questions about compensability of meal periods. The employer provided employees with a 30-minute unpaid meal break during each shift. Employees were free to leave their workstations and were not required to perform any work during this time. However, due to the size of the facility, some employees chose to walk across the premises to reach a cafeteria or break room, which required passing through security checkpoints with controlled access (such as badge readers or turnstiles). The employer sought clarification on whether the time spent walking and passing through these access points rendered the meal period compensable, even though employees were not required to leave their immediate work area and could bring their own food.
Legal Context: Under 29 C.F.R. § 785.19, bona fide meal periods are not considered hours worked and are not compensable. A meal period qualifies as bona fide if it is at least 30 minutes long and the employee is “completely relieved from duty for the purpose of eating regular meals.” The employee need not be permitted to leave the premises, but must be free from the performance of any duties. If an employee is required to perform any duties—whether active or inactive—the meal period is compensable. The regulations recognize that the question of whether an employee is completely relieved from duty is fact-specific and depends on the particular circumstances of each case.
WHD Analysis: The WHD determined that the meal periods described were bona fide and not compensable. The key factor was that employees were completely relieved from duty during the meal period—they were not required to perform work, monitor equipment, or respond to work-related demands. The fact that employees voluntarily chose to walk across the facility and pass through security checkpoints did not convert the meal period into compensable time. The WHD distinguished between employer-imposed requirements and voluntary employee choices, noting that the employer did not require employees to traverse the premises or pass through security during meal breaks. Employees had the option to remain at or near their workstations and bring their own food. Because the walking and security transit were voluntary, they did not constitute work or interrupt the employees’ relief from duty.
Practical Takeaways: Employers should ensure that meal periods meet the criteria for bona fide breaks: (1) the break must be at least 30 minutes; (2) employees must be completely relieved from duty; and (3) employees must not be required to perform work-related tasks. Employers need not provide specific amenities or allow employees to leave the premises, but must not impose requirements that effectively keep employees on duty. Voluntary activities—such as walking to a cafeteria or passing through routine security—do not render meal periods compensable. However, if the employer requires employees to remain available for work, carry communication devices and respond to calls, or perform any duties during the meal period, the time becomes compensable. Employers should clearly communicate meal break policies and train supervisors not to interrupt employees during designated meal periods.
4. Pre-Shift Activities and Rounding Practices for Hospital Employees (FLSA2026-8)
Factual Background: The opinion letter addressed questions from a hospital employer regarding its timekeeping practices for nurses and patient care technicians. Employees were scheduled for 12-hour shifts beginning at 7:00 a.m. The hospital required employees to complete certain activities before the start of their shifts, including logging into computer systems, reviewing patient assignments, and gathering necessary supplies and equipment. Employees typically arrived 10 to 15 minutes before the scheduled shift start to complete these tasks. The hospital’s timekeeping system rounded clock-in times to the nearest quarter hour, meaning employees who clocked in at 6:50 a.m. had their time recorded as 7:00 a.m. The hospital asked whether the pre-shift activities were compensable and whether its rounding practice was permissible under the FLSA.
Legal Context: The FLSA requires employers to compensate employees for all hours worked, including time spent in activities that are “integral and indispensable” to an employee’s principal activities. Under the Portal-to-Portal Act, preliminary and postliminary activities—such as walking, waiting, and other activities performed before or after the “principal activities” of employment—are generally not compensable. However, the Supreme Court in IBP, Inc. v. Alvarez (2005) clarified that activities that are integral and indispensable to principal activities are themselves principal activities and must be compensated. Separately, 29 C.F.R. § 785.48 permits employers to use rounding practices that round employee time to the nearest increment (not exceeding 15 minutes), provided the practice is used in a consistent manner and, over time, averages out so that employees are fully compensated for all time actually worked.
WHD Analysis: The WHD found that the pre-shift activities described—logging into computer systems, reviewing patient assignments, and gathering supplies—were integral and indispensable to the nurses’ and technicians’ principal duties of patient care. These activities were necessary for employees to perform their jobs effectively and safely, and the employer required them to be completed before the shift officially began. Accordingly, time spent on these activities was compensable working time. Regarding the rounding practice, the WHD reiterated that rounding to the nearest quarter hour is permissible only if, over time, the practice does not systematically undercompensate employees. Where employees are consistently required to perform compensable work before the rounding threshold, a rounding practice that eliminates that time from compensation would violate the FLSA. The WHD advised the hospital to evaluate whether its rounding practice, as applied, resulted in employees being paid for all hours actually worked.
Practical Takeaways: Healthcare employers and other employers with pre-shift requirements should: (1) identify all activities employees are required or expected to perform before their scheduled shifts; (2) evaluate whether those activities are integral and indispensable to principal job duties; (3) ensure timekeeping systems capture all compensable time, including pre-shift and post-shift work; and (4) audit rounding practices to confirm they do not systematically undercompensate employees. If pre-shift activities are required and integral to the job, employers should either adjust scheduled shift start times, require employees to clock in before beginning those activities, or eliminate rounding for those time periods. Employers should also review whether similar issues exist for post-shift activities such as completing documentation, cleaning equipment, or securing patient information.
Conclusion
These new opinion letters provide important clarifications for employers navigating FLSA compliance. Employers should review their pay practices, bonus structures, and timekeeping policies in light of this guidance and consult with counsel to ensure ongoing compliance.
For further information or assistance with FLSA compliance, please contact Gordon Berger on our Labor & Employment team: gordon.berger@pierferd.com.
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