Could Your Employee Classification, Bonus, Meal Break, or Timekeeping Policies Be Outdated?

The U.S. Department of Labor (DOL) has released four new opinion letters covering several everyday wage-and-hour issues that many employers face. The guidance addresses exempt employees performing hourly work, quarterly bonuses, meal periods, and time clock rounding. While these opinion letters are not law, they show how the DOL is likely to interpret and enforce the Fair Labor Standards Act (FLSA). Employers should also remember that states like California may have stricter rules than federal law.

If you have questions regarding the DOL’s recent opinion letters or would like to review your company’s wage-and-hour policies, please contact the ILS legal team at contact@consultils.com.

What This Update Covers

An opinion letter does not have the force of law, but it does indicate to employers and employees how the current Department of Labor understands and will enforce and interpret the FLSA. The recent letters, issued on May 28, 2026, address the following topics:

• Exempt employees performing nonexempt work

• Quarterly bonuses and overtime calculations

• Off-site meal periods

• Time clock rounding practice

Can employers have exempt employees perform nonexempt work at a hourly rate, without losing the employee’s exemption?

Is it possible for employers to permit exempt employees to take occasional shifts, performing nonexempt work and being paid on an hourly basis, without causing them to lose their exempt status?

According to DOL Opinion Letter, issued on May 28, 2026, the answer is yes—under certain conditions.  

To maintain the exemption:

• The employee’s primary duties must continue to qualify as exempt work.

• The employee’s pay must pass the salary basis test (they must be paid at least the minimum exempt salary)—before and without considering the extra hourly work.

If the employee begins spending so much time performing nonexempt work that those duties become their primary responsibility, the exemption could be lost, creating a potential misclassification risk. However, the DOL’s guidance makes clear that where the nonexempt work is simply extra compensation, and not the main part of the employment, then the exempt employee does not lose the exemption by doing the nonexempt work.

Employer takeaway: Before allowing exempt employees to perform hourly work, confirm that exempt duties remain their primary responsibility and that salary basis requirements continue to be satisfied.

How can employers issue quarterly bonuses to nonexempt employees without having to recalculate overtime?

Nondiscretionary bonuses often require employers to recalculate an employee’s regular rate of pay, which can make overtime calculations significantly more complicated.

However, the DOL recently clarified that bonuses structured as a percentage of an employee’s total earnings generally do not require overtime to be recalculated.  

The opinion letter specifically addresses quarterly bonus pools that are distributed proportionally based on each employee’s prior earnings. According to the DOL, this type of calculation qualifies as a percentage-of-total-earnings bonus, meaning overtime is already accounted for mathematically and no separate recalculation is required.  

Employer takeaway: Bonus structures can have significant overtime implications. Employers should review how quarterly bonuses are calculated before assuming overtime adjustments are unnecessary.

Are Off-Site Meal Periods Compensable?

Imagine an hourly employee who works in a secured part of a large office park, who is given a 30-minute meal period. It takes about 10 minutes to walk to the car from the secured area, which leaves only 10 minutes for lunch. Does this mean that the employer has to pay for the time spent walking to the car?

The DOL’s answer is no. Simply traveling to and from an off-site meal location does not convert a bona fide meal period into paid working time.

Employer takeaway: Employers with secured workplaces should review their meal period policies to ensure they remain compliant while allowing employees a meaningful meal break.

Is Time Clock Rounding Still Permitted?

Employers facing various practical issues with wage-and-hour employees often consider time clock rounding. This process is often risky and whether it is lawful depends on the specific facts of the situation. But can an employer permissibly round an employee’s clock-in time to the official start time, so long as it doesn’t let the employee clock out early?

Recent DOL guidance says, it depends. For example, rounding an employee’s early clock-in to the scheduled start time may be lawful only if:

• The employee performs no compensable work before the scheduled start time; and

• The rounding policy is neutral overall, meaning employees sometimes benefit from rounding as well.

If employees perform work before their scheduled shift without compensation, or if the policy consistently favors the employer, the practice is likely unlawful.  

Employer takeaway: If your company uses time clock rounding, review whether employees ever perform unpaid work before or after scheduled shifts.

Key Takeaways

Although DOL opinion letters are not legally binding, they provide valuable insight into how federal investigators are likely to evaluate wage-and-hour issues.

These four opinion letters focus on everyday employment practices that many businesses use, making them worthwhile for employers to review. Companies operating in California and other states with stricter labor laws should also ensure that their policies comply with applicable state requirements in addition to federal law.  

If you have questions regarding the DOL’s recent opinion letters or would like to review your company’s wage-and-hour policies, please contact the ILS legal team at contact@consultils.com.

Disclaimer: The materials provided on this website are for general informational purposes only and do not, and are not intended to, constitute legal advice. You should not act or refrain from acting based on any information provided here. Please consult with your own legal counsel regarding your specific situation and legal questions.

As Partner and Head of Litigation at ILS, Ted brings over a decade of experience handling complex commercial, employment, and wage-and-hour disputes for businesses. He has successfully represented clients before federal and state courts as well as private arbitration panels, achieving major wins that include multimillion-dollar jury verdicts, high-value settlements, and multiple pre-trial dismissals.

Before joining ILS, Ted represented both plaintiffs and defendants in civil rights, constitutional, and employment litigation. He worked alongside a retired Missouri Court of Appeals judge and assisted a U.S. magistrate judge during law school. This dual-sided, trial-to-appeal experience gives him a unique perspective to craft cost-effective, strategic solutions for clients.

Email:  contact@consultils.com | Phone: 626-344-8949