DOL Says Staffing Firm Workers Can Be Exempt from FLSA

January 22, 2021

A last-minute opinion letter from the outgoing Wage and Hour Administrator ruled employees of staffing firms can, under certain circumstances, fit into an exemption to federal overtime pay requirements for workers at retail and service businesses.

The opinion letter, which can be relied upon in court, says “a typical staffing firm” that provides temporary workers to clients qualifies as retail or service establishments under the FLSA, but the determination is highly dependent on how each specific business operates.

  • In addition, the firm's employees must be paid at least one-and-a-half times the minimum wage and receive half of their earnings as commissions in order to be exempt under the FLSA.

Until recently, staffing agencies could not qualify as retail or service establishments under DOL regulations because they did not have “a retail concept,” but the department withdrew the list in May after courts questioned its logic.

Outlook:  It is unclear if the incoming Biden administration will keep the opinion letter, rescind it, or replace it with a different determination.