- Employers may reimburse delivery drivers who use their personal vehicles to complete deliveries with a "reasonable approximation of expenses incurred for the employer's benefit rather than the actual amount of expenses incurred" in order to satisfy their requirements under the Fair Labor Standards Act (FLSA), the U.S. Department of Labor (DOL) said in an Aug. 31 opinion letter.
- The FLSA does not require employers to use the IRS' standard mileage rates to reasonably approximate an employee's expenses, DOL said, but the agency said it "neither approves nor disapproves" certain other methods and sources for doing so. Employers are expected to reimburse fixed vehicle expenses — such as registration fees, license fees and insurance costs — "only to the extent that the employee uses the vehicle as a tool of the trade, i.e., primarily for the benefit of his or her employer," the agency noted.
- The letter is one of four published earlier this week by the department's Wage and Hour Division covering this and other subjects, including the fluctuating workweek method for overtime calculations as well as FLSA exemptions for certain oilfield service workers and part-time employees who provide corporate management training.
DOL's opinion letter on delivery driver reimbursements provides a couple of takeaways for employers, according to Susan Harthill, partner at Morgan Lewis. The first concerns DOL's statement in the letter that its Field Operations Handbook "does not establish a binding legal standard on the public and is not 'a device for establishing interpretive policy.'" This indicates the agency took the opportunity to "reiterate" that the handbook "is not a source of but is an internal operational guide that follows the law, regulations, and court decisions,” Harthill said.
"Another takeaway is whether and how the DOL's opinion may be applied to other situations, such as teleworking employees who incur business expenses," Harthill said. "Note that some states have different or additional expense reimbursement requirements, so it is recommended to consult counsel to review applicable law in specific jurisdictions."
The department's letter on the FLSA's fluctuating workweek method for overtime calculations comes just weeks after the effective date of a recent final rule that revised DOL guidance on how employers calculate overtime pay for workers with fluctuating workweeks. The letter stated that the fluctuating workweek method "requires only that an employee's hours worked fluctuate from week to week, not that they fluctuate above and below 40 hours worked per week."
This clarification is helpful, Harthill said, because some courts have required that an employee's hours fluctuate below the 40-hour threshold in some weeks in order for the employer to use the fluctuating workweek method. But she noted that courts may not defer to DOL's interpretation and that some states do not allow employers to use this method.
Opinion letters do not always apply to every situation for a given area of compliance. "While DOL opinion letters are helpful for employers as they provide clarification on often complicated laws and provide a good-faith reliance defense, there is still a lot of gray area for how these will be applied in individual situations and interpreted by some courts," Harthill said.