In a September 10, 2019 opinion letter, FLSA2019-23, the U.S. Department of Labor was asked to interpret what a “month” means for purposes of the retail or service establishment exemption (29 U.S.C. 207(i)). In this exemption, an employee need not be paid overtime if the employee is employed by a “retail or service establishment,” their pay is at least 1.5 times minimum wage, and they receive half their compensation for a “representative period (not less than one month)” based on commissions for goods or services.
At first I was baffled that an actual opinion letter was written about the definition of a “month”. However, as I read on, I began to understand the lack of clarify. For example, an employer can designate a “workweek” based on any start day/time the employer desires – this is well established. So certainly the same is true with a “month”, right? Nope.
Here, the employer asked if four pay periods or two bi-weekly pay periods could be considered a valid representative month – essentially allowing the employer to designate the start of a “month”. Citing to several cases (including Whiteside v. Metro Life Ins. from Minnesota), the DOL concluded that the fair reading is that a month means a calendar month. Thus, 6 – but not 4 weeks (or 3 bi-weekly payrolls) is sufficient to meet the requirement of “not less than one month” – so long as the period is a “representative” period.