2026 January Newsletter
DOL Kicks Off 2026 With Key FLSA Guidance for Employers
The U.S. Department of Labor’s Wage and Hour Division (WHD) opened 2026 by issuing several FLSA opinion letters that clarify recurring wage-and-hour issues around exemptions, bonuses, collective bargaining agreements, and commission pay. Together, the letters highlight compliance pressure points HR and legal teams should closely monitor.
Exempt Duties Don’t Override Pay Structure
In one opinion, the WHD confirmed that a licensed clinical social worker’s duties generally met the “learned professional” exemption. But the agency stressed that duties alone are not enough: exempt employees must also be paid on a salary basis. Reclassifying a role to hourly pay likely defeats exempt status, even if the work itself remains unchanged. Employers may voluntarily classify eligible professionals as nonexempt, provided minimum wage and overtime requirements are met.
Bonuses Must Be Counted in Overtime
Another letter addressed performance bonuses for waste-management drivers, concluding that formula-based incentives tied to attendance, safety, or efficiency are nondiscretionary. As a result, those bonuses must be included in the employee’s regular rate of pay when calculating overtime. Employers must allocate bonuses to the workweeks in which they are earned and pay overtime premiums accordingly.
Mandatory Pre-Shift Time Is Compensable
The WHD also ruled that a required 15-minute pre-shift roll call for 911 dispatchers constitutes compensable work time. That time must count toward weekly hours worked for overtime purposes. While certain collective bargaining agreements may qualify for narrow partial overtime exemptions, any relief depends entirely on meeting the statute’s strict requirements and on the final CBA language.
Commission Exemption Clarified
Finally, the agency clarified that employers should use the federal minimum wage (not higher state or local rates) when evaluating eligibility for the federal commission exemption under FLSA Section 7(i). The WHD also emphasized that tips are not commissions, and only tips used as a lawful tip credit may count toward compensation tests. Because commission and tip earnings fluctuate, employers must regularly reassess exemption eligibility on a workweek-by-workweek basis.
Bottom Line
Across all four letters, the WHD reiterated a consistent theme: employers are never required to claim an exemption, but they must avoid misclassifying nonexempt workers as exempt. Careful attention to pay structure, incentive programs, and scheduling rules remains essential to FLSA compliance in 2026.