New DOL Opinion Letter Addresses Retail 7i Exemption

The United States Department of Labor (DOL) has issued an opinion letter addressing the Fair Labor Standards Act (FLSA) and Retail 7i Exemption. DOL opinion letters are not binding law, but provide guidance into how the DOL interprets the laws that it enforces. Section 7(i) exempts an employee of a retail or service establishment from the overtime pay requirement if: (1) the employee’s regular rate of pay is in excess of one and one-half times the minimum wage, and (2) more than half of the compensation for a representative period (not less than one month) represents commissions on goods or services. The DOL’s letter advises that “one month” refers to a calendar month, and that a period of four weeks or two bi-weekly pay periods falls short of this timeframe. However, employers may use larger periods of time, such as six weeks or three bi-weekly pay periods to perform this analysis.