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Tips from Seyfarth is a blog series for employers, and their in-house lawyers and HR, payroll, and compensation professionals, in the food, beverage, and hospitality sector. We curate wage and hour compliance “tips” to keep this busy industry informed.

Seyfarth Synopsis: In Field Assistance Bulletin 2026-1, the DOL’s Wage and Hour Division retracted the Department’s tips opinion letters and Field Operations Handbook, spelling the final end of the 80/20 Rule.

In the wake of the Fifth Circuit’s Restaurant Law Center decision vacating the DOL’s 2021 codification of the 80/20 rule, on October 19, 2026, the U.S. Department of Labor’s Wage and Hour Division (“WHD”) issued Field Assistance Bulletin 2026-1 (the “FAB”) formally retracting a trio of opinion letters—FLSA-895 (Aug. 8, 1979), FLSA-854 (Mar. 28, 1980), and FLSA-854 (Dec. 20, 1985)—which had formed the basis for the DOL’s  “80/20 rule” and the 2021 dual jobs regulation that codified it. The FAB also advises that the WHD is in the process of drafting a notice of proposed rulemaking to amend “various regulatory provisions” of the FLSA regulations related to tipped employees.

The upshot is this: the 80/20 rule is dead, both as a matter of regulatory law and DOL enforcement policy, and more changes to the ancien régime lie ahead. Though we are not in the forecasting business here at TIPS, we expect these proposed changes will serve to provide more predictability and clarity for restaurant and hospitality employers who employ tipped workers.

As a quick refresher, the now-defunct 80/20 rule, as we’ve explained, stemmed from a provision the DOL added to its 1988 Field Operations Handbook (“FOH”)—guidance that itself purported to synthesize enforcement positions taken in FLSA-895, FLSA-854, and FLSA-854.  Under the DOL’s old enforcement policy, employers could take a tip credit, and therefore pay a service rate of pay (currently $2.13/hour under federal law), for tipped workers—but only for time spent engaged in “tip producing” work and work that “directly supports” the tip producing work. And, only if the time spent on the directly supportive work was not “a substantial amount,” which the DOL said was time in excess of 20% of total hours in a workweek for which the employer sought to take a tip credit.  Then, in a 2021 rulemaking, the DOL largely codified the 80/20 Rule, and added the further limitation that employers could not take a tip credit for any directly supporting work performed for more than 30 continuous minutes. 

In Restaurant Law Center v. U.S. Department of Labor, 120 F.4th 163 (5th Cir. 2024), the Fifth Circuit vacated the 2021 regulation, finding the 80/20 rule’s focus on tip producing tasks, rather than tip-producing occupations, to be contrary to the FLSA and therefore invalid. 

In 2025, after the Fifth Circuit’s vacatur of the 2021 regulation, the DOL issued a final rule to rescind the 2021 regulatory text and reinstate the DOL’s 1967 dual jobs regulation as it existed previously. Under the now-reinstated regulation, an employer may take a tip credit for work performed in a tipped occupation even where the employee performs duties related to that occupation that are not directly tip-producing—such as a server who spends part of their time cleaning or setting tables—irrespective of the amount of time spent on those non-tip-producing tasks. 

The FAB confirms that the DOL’s prior opinion letters adopting a task-based, rather than an occupation-based, approach to the tip credit no longer reflect WHD policy. In view of Restaurant Law Center and WHD’s rescission of the 2021 dual jobs regulation, that comes as no surprise. What the FAB leaves unanswered, though, is what further regulatory changes DOL has in store in relation to tipped workers.

TIPS will be following these developments closely. Stay tuned.

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Seyfarth Synopsis: The Fifth District Court of Appeal held that a plaintiff may bring a “headless” PAGA action—seeking civil penalties solely for Labor Code violations suffered by other employees—under the post-July 1, 2024 version of PAGA, and that such an action cannot be compelled to arbitration.

In Castillo v. Belkorp AG, LLP, a former service technician signed an onboarding arbitration agreement requiring individual arbitration of employment-related disputes and waiving class and collective actions. The agreement did not expressly address PAGA or representative claims. The plaintiff later filed a single-count PAGA complaint in Stanislaus County Superior Court, seeking penalties solely on behalf of other employees and disclaiming any individual PAGA claim. The employer moved to compel arbitration under Leeper and Williams, and the trial court denied the motion, following CRST Expedited, Inc. v. Superior Court.

The Fifth District affirmed, holding that “an aggrieved employee may bring a PAGA action that consists only of nonindividual PAGA claims under the post-July 1, 2024 version of PAGA.” Adopting CRST’s reasoning, the Court found the word “and” in Labor Code section 2699(a)—which authorizes an action “on behalf of the employee and other current or former employees”—ambiguous and construed it to mean “and/or.” The Court expressly declined to follow Leeper and Williams finding Leeper’s legislative history analysis inconclusive.

The Court further held that the 2024 reforms did not change the analysis. Amended section 2699(c)(1), which requires the plaintiff to have personally suffered each alleged violation, addresses who qualifies as an aggrieved employee, not which claims that employee must bring. And because nonindividual PAGA claims are not subject to arbitration under Viking River Cruises, Inc. v. Moriana and Adolph v. Uber Technologies, Inc., the Court concluded the arbitration agreement could not be enforced against a plaintiff pursuing only those claims.

Castillo extends the Fifth District’s headless PAGA holdings in CRST and Galarsa v. Dolgen California, LLC to post-reform PAGA and deepens the appellate split with Leeper and Williams. Leeper has been scheduled for oral argument on November 3, and employees and employers alike will be waiting with baited breath for the Supreme Court’s resolution of this split.

By: Kyle D. Winnick and Andrew Simon

Seyfarth Synopsis: The New Jersey Appellate Division held that representative claims under the New Jersey Wage and Hour Law (“WHL”) and Prevailing Wage Act (“PWA”) do not require class certification and established a two-year look-back period to WHL and Earned Sick Leave Law (“ESLL”) claims predating the 2019 amendment.

In a significant decision that will affect the scope of representative actions under the WHL and PWA, the New Jersey Appellate Division held that representative actions under the WHL and PWA do not require class certification under Rule 4:32-1—significantly expanding the ability of workers to bring representative actions under New Jersey law.

This case involved a lawsuit brought by an employee of T. Slack Environmental Services, Inc. (“T. Slack”) alleging various WHL, PWA, and ESLL violations. Plaintiff initiated the lawsuit as a representative action, a procedural mechanism authorized by the WHL and PWA that permits an employee to pursue claims on behalf of similarly situated employees. Unlike a class action, which derives its authority from New Jersey Court Rule 4:32-1, a representative action derives its authority directly from the statute. The court evaluated two key issues in its decision: (1) whether a representative action brought pursuant to the WHL and PWA requires class action certification and (2) the applicable statute of limitations for WHL, PWA, and ESLL lawsuits for conduct that occurred prior to the 2019 WHL amendments.

Regarding class certification, the Appellate Division held that representative actions under the WHL and PWA are “independent of Rule 4:32-1 and therefore [do] not require class certification.”  The court also held that representative actions should not be guided by the standards governing the Fair Labor Standards Act. Instead, the court held that a plaintiff only needs to allege the existence of similarly situated employees in the complaint to pursue a representative action and need not make an evidentiary showing comparable to the certification process for class actions. As such, a lawsuit may proceed as a representative action under the WHL and PWA without satisfying numerosity, adequacy, or other certification requirements traditionally associated with class actions. The court relied heavily on the “remedial nature” of the WHL and PWA as well as the holding in Cano v. County Concrete Corp., 483 N.J. Super. 459 (App. Div. 2026), that representative actions under the WHL and PWA do not require class certification.

The Appellate Division also reversed the lower court and established a two-year look-back period for WHL and ESLL claims for conduct arising before the WHL 2019 amendments. Because the “alleged violation of the PWA is a claim for breach of contract” and the fact that the PWA does not establish a look-back period, the court held that the lower court correctly established a six-year statute of limitation for PWA claims.

This ruling will have far reaching consequences for New Jersey employers because it dramatically lowers the requirements for employees to proceed with representative actions under state wage laws. All New Jersey employers should review their compliance with state law to avoid the heightened risk of defending against costly representative actions.

By: Phillip J. Ebsworth and Kyle W. Owen

Seyfarth Synopsis: On August 3, 2026, the LWDA issued modifications to its proposed PAGA regulations, clarifying several procedures and making some notable substantive changes. The most notable proposed modifications are briefly summarized below.

High-Frequency Filers

The original proposal designated any attorney or law firm that filed 200 or more PAGA notices in a 12-month period as a “high-frequency filer.” The revised rules lower the threshold for individual attorneys to 100 notices, while retaining the 200-notice threshold for law firms.

“Vexatious” Becomes “Non-Compliant”

The proposed “vexatious filer” designation has been replaced with a “non-compliant filer” designation. A filer may now be deemed non-compliant if they submit three or more deficient, frivolous, or harassing PAGA notices within a 12-month period and continue doing so after receiving a warning from the LWDA.

More Flexibility for Settlements

The original proposed rules barred parties from amending PAGA notices to add new Labor Code violations as part of a settlement. The revised regulations allow additional claims to be settled if the amended notice includes supporting facts and explains the investigation or discovery that uncovered those claims. The applicable 65- or 120-day waiting periods must still be satisfied.

New Responsibilities for Employers

While plaintiffs remain responsible for notifying overlapping PAGA plaintiffs about a proposed settlement, employers must now verify the list of other pending PAGA actions against them.

Existing Cases Included

The LWDA clarified that the new regulations will apply to pending PAGA cases, not just those filed after the rules take effect. Parties with existing cases should ensure their settlement comply with the new requirements.

The LWDA’s revisions reflect a continued effort to balance efficiency, fairness, and oversight in PAGA litigation. While some changes clarify procedural requirements, others, such as the revised high-frequency filer thresholds and expanded settlement flexibility, could have significant practical implications for PAGA litigants. With the comment period open through August 18, 2026, interested stakeholders still have an opportunity to weigh in before the regulations are finalized.

By: Petersen D. Walrod, Kevin M. Young, and Brett C. Bartlett

Seyfarth Synopsis: On July 22, 2026, the U.S. DOL’s Wage & Hour Division (WHD) published two opinion letters addressing when commute time must be paid. In FLSA 2026-9, WHD concludes that “ordinary” commuting time during the workday does not need to be paid. In FLSA 2026-10, WHD concludes that when an employee spends the “substantial majority” of an otherwise non-compensable commute making client calls, that time is compensable. Together, the letters provide extensive guidance on commuting-time issues that have proliferated as work has become more flexible.

The lines that once defined what work is, and where it takes place, have blurred, particularly since the COVID-19 pandemic. Employees across myriad industries have more flexibility than ever with regard to when and where they work. But increased flexibility also brings increased compliance challenges for employers trying to apply a federal wage-hour law, the FLSA, that was written for a very different Depression Era workplace.

As discussed in a previous post, the U.S. DOL has been vocal about its intention to leverage opinion letters, including through the Wage & Hour Division, to provide guidance on fast-evolving issues. Last week, the Division continued that effort with two new opinion letters addressing when an employee’s normal commuting time—which is normally not compensable—may in fact need to be paid.

  • In FLSA 2026-9, WHD states that “ordinary” commuting time during the employee’s workday—e.g., an employee works at home in the morning, commutes from home to the office later in the day, and then resumes working at the office—is not compensable.
  • In FLSA 2026-10, the Division concludes that where an employee spends the “substantial majority” of commuting time calling clients, the commuting time is compensable, even if it occurs before the employee’s designated shift.
  • Employers whose employees perform work-related tasks while commuting should pay close attention to both letters.

FLSA 2026-09

Question Presented:

  • Scenario 1: An employee wants to work at home from 8 to 10 AM, drive to the office, resume working at the office, then drive back home and work there from 3:30 to 5 PM. Is the employee’s commute time compensable?
  • Scenario 2: An employee wants to work additional hours at home before their scheduled shift, then drive to the workplace to start that shift. Is the commute time compensable?
  • Scenario 3: An employee wants to leave before the end of his scheduled shift to catch the bus, then finish work at home. Is the commute time on the bus compensable?

Conclusion: WHD concludes that in each scenario, the commuting time is not compensable. The Division notes that “ordinary” or “normal” commute time is generally not work time even if it occurs during the continuous workday, akin to bona fide meal breaks.

Key Reasoning: The Division uses the three scenarios to identify a “third category of time during the workday, in addition to bona fide meal breaks and off-duty time, that is not considered ‘hours worked’ under the FLSA.” WHD clarifies that this conclusion is not based on the Portal-to-Portal Act. Instead, it reflects a longstanding principle that time spent commuting to and from work—even when it occurs during a continuous working day—is not compensable time. WHD bases this on the view that ordinary commutes are primarily for the employee’s benefit, and notes that employees generally are not paid to “perform” a daily commute, nor is the daily commute an integral or indispensable part of their principal work activities.

Takeaways: WHD makes a number of observations about “ordinary” commuting time:

  • To qualify as ordinary commuting time, “adjacent off-duty activities” (i.e., returning home early to attend a parent-teacher conference) are not necessary—the employee can immediately return to work after the commute.
  • The commuting time need not “reduce an employee’s commute time to be considered ordinary or normal.”
  • There is no minimum commute length for the time to be excluded from hours worked—a 5-minute commute and a 50-minute commute can both qualify if other requirements are met.
  • Commuting time can qualify even if the work before or after the commute is mandatory. In other words, in Scenario 2, the employee need not voluntarily choose to work the morning hours for the commute to be non-compensable.
  • Travel from worksite to worksite during the workday remains compensable.
  • WHD recognizes that some commutes may place such “significant constraints” on an employee’s time, and so clearly benefit the employer, that they would no longer be “ordinary” commuting time and would be compensable.
  • If an employee performs compensable work during a commute, the time spent on those tasks is compensable. More on that below.

WHD cautions that FLSA 2026-09 is limited to commuting time and “should not be read as suggesting that other types of activities during the continuous workday require a detailed primary-beneficiary analysis to determine their status as worktime.”

For employers, the practical point is that ordinary commute time may remain non-compensable even when it falls between periods of work—but the details of the commute still matter.

FLSA 2026-10

Question Presented:

Scenario 1: A field service engineer receives pages and makes client calls about field service requests for approximately one hour before his scheduled shift begins, then spends the first hour of his scheduled shift commuting to the client worksite. Is the pre-shift hour compensable? Is the first hour of the shift, spent commuting, compensable?

Scenario 2: For that same field service engineer, is an approximately two-hour commute compensable if the engineer begins making client calls about halfway through the commute, even though the commute occurs before the scheduled shift?

Conclusion: As to Scenario 1, the hour spent making client calls is compensable because those calls are integral and indispensable to the employee’s principal activities. The hour spent commuting also is compensable because, in WHD’s view, it is not “ordinary” commute time. As to Scenario 2, the portion of the commute spent on client calls and the travel time after those calls are compensable, while the commuting time before the client calls is not.

Key Reasoning: WHD’s analysis turns on its finding that the service engineer’s client calls are not merely preliminary activities but are integral and indispensable to their principal duties of installing and servicing medical equipment. As a result, the time spent on those activities before the shift begins in Scenario 1 is compensable.

For the later commute, however, WHD applies a “totality of the circumstances” analysis. It focuses on the fact that the commute occurs immediately after the calls and immediately before work at the client’s site, that the employee is driving a company-owned vehicle, and that the employer dictates when and where the employee drives. WHD states that these facts deprive the employee of the “flexibility and freedom” that typically characterize ordinary commute time. On that basis, WHD concludes the commute is not “ordinary” commuting time. WHD also acknowledges, however, that “[t]o the extent that your workday regularly differs from this scenario, your drive may instead be a non-compensable ordinary commute, depending on all the circumstances.”

WHD reaches a similar result for Scenario 2, where the employee begins making client calls halfway through a two-hour commute. WHD finds the first hour, when there are no client calls, is ordinary commute time and not compensable. But the Division finds that the “workday commences when [the employee] begins calling clients to schedule their appointments, and the rest of [their] travel time from your first client call until [they] arrive at [their] first client location is compensable.” Notably, that appears to be true even if a commute does not involve client calls, because WHD also relies on the fact that the employee must “regularly plan to spend much of the time between 7 and 8 AM scheduling client appointments” (emphasis added).

Takeaways: FLSA 2026-10 should be read together with FLSA 2026-09. In particular, WHD’s conclusion about Scenario 1 limits the reach of the “ordinary” commuting time concept by applying a “totality of the circumstances” analysis. This conclusion seemingly did not depend on the employee performing work while commuting. Instead, WHD treated the commute as compensable because of the work that came before and after it, and because of the employer’s control over the commute itself.

WHD’s conclusion in Scenario 2 also confirms that the “ordinary” commuting time concept does not override the basic rule that, when an employee works during a commute, that work time is compensable.

FLSA 2026-10 leaves questions unanswered. WHD notes that the analysis does not address whether “a less extensive amount of time spent on calls while traveling to your first worksite might affect whether your entire travel time after your first call would constitute hours worked.” In the letter, WHD suggests that merely needing to plan to perform work, such as client calls, during a commute may be enough to make the commute compensable—even if the employee does not actually perform that work on a particular day. The scope and application of that point is unclear.

Finally, WHD clarifies that time spent receiving pages is usually “incidental” and does not start the continuous workday because “the minimal time it takes to receive each page before [the employee’s] workday begins is not compensable hours worked.”

Conclusion

These letters represent substantial effort by WHD to explain when time spent commuting to and from work is compensable. Employers should pay attention and seek advice of counsel with respect to any areas of uncertainty. They should also watch for additional guidance, because DOL and WHD may later expand, narrow, or clarify the positions taken here.

Please feel free to reach out to your favorite Seyfarth attorney to discuss. Our team is closely monitoring the DOL’s opinion letter programs and is available to provide guidance tailored to our clients’ particular circumstances and realities.

Seyfarth Synopsis: The Fifth Circuit recently confirmed that a hybrid compensation arrangement (combining a fixed salary with variable day-rate pay) can qualify as “salary basis” under the Fair Labor Standards Act (“FLSA”). This decision reaffirms that, if done properly, employers can satisfy the salary basis test even when variable pay makes up the bulk of an employee’s total compensation.

Several years ago, the Supreme Court considered whether a day-rate employee earning almost $1,000 a day was paid on a “salary basis” under the FLSA. In concluding that he was not, the Supreme Court considered how the employee’s pay was calculated, not merely the frequency of distribution. Recently, the Fifth Circuit issued an important decision clarifying how employers can meet the salary basis test. The Fifth Circuit held that, if an employer calculates a guaranteed salary on a weekly (or less frequent) basis, the employer can provide additional compensation without meeting the reasonable relationship test and without losing the salary basis.

Case Background

In Guilbeau v. Schlumberger Tech. Corp., the employer, Schlumberger, paid a portion of its oilfield employees under a hybrid compensation model, comprising of a fixed, predetermined biweekly salary plus variable day rates based on days the employees actually worked. The employees sued under the FLSA claiming they were owed overtime pay. Their core argument was that, because so much of their total compensation fluctuated with days worked, they were effectively day-rate—not salaried—employees, and therefore ineligible for the FLSA’s highly compensated employee (“HCE”) overtime exemption. The district court agreed and denied summary judgment for Schlumberger, but the Fifth Circuit reversed.

To qualify for the HCE exemption, as well as other “white collar” exemptions, an employer must prove that its employees are paid on a “salary basis.” There are two regulatory pathways:

  • 29 C.F.R. § 541.602(a) (“Section 602(a)”) governs employees with a guaranteed, predetermined weekly (or less frequent) salary that does not vary with hours or days worked. This pathway has no cap on the ratio of total pay to guaranteed pay.
  • 29 C.F.R. § 541.604(b) (“Section 604(b)”) governs employees whose compensation is fundamentally computed on a daily or hourly basis. This pathway imposes a “reasonable relationship” test, which is more restrictive and requires that the employee’s total pay generally not exceed 1.5 times the guaranteed amount.

The stakes were high. If Section 604(b) applied, Schlumberger would lose because the ratio of total pay to guaranteed pay was 5.9-to-1—far exceeding the 1.5-to-1 ceiling. Conversely, Schlumberger would win if Section 602(a) applied, which does not have a ratio cap.

The Decision

The Fifth Circuit held that Section 602(a) governs. The analysis was straightforward: Because Schlumberger’s employees received a genuine, predetermined salary (i.e., paid on a biweekly basis, without any reductions for quality or quantity of work), the threshold requirements of Section 602(a) were satisfied. The fact that employees also received substantial variable day-rate pay on top of that salary was immaterial. The Court further explained that another regulation—29 C.F.R. § 541.604(a)—supports this outcome by expressly stating that employers may provide “additional compensation without losing the exemption or violating the salary basis requirement” so long as the employer guarantees at least the minimum weekly-required amount paid on a salary basis. Accordingly, the Court emphasized that the analysis turns on the nature of the guaranteed salary—not the nature of the variable pay stacked on top of it. Pointing to its own recent decisions, as well as consistent decisions from the Third, Tenth, and Eleventh Circuits, the Court reaffirmed that a genuine non-deductible salary anchors the inquiry and that additional day-rate compensation does not disturb the exemption’s applicability.

The Fifth Circuit distinguished its decision in Gentry v. Hamilton-Ryker IT Sols., LLC. There, the plaintiffs’ guaranteed pay was equal to eight hours of wages. The Gentry court explained that, although guaranteed, the pay was nonetheless based on an hourly computation. Therefore, the court held that Section 604(b) and its reasonable relationship test applied. In contrast, Schlumberger calculated the guaranteed pay on a biweekly basis, so Section 602(a) applied. The Fifth Circuit’s decision emphasizes the technical nature of the regulations, and the importance of ensuring that the guaranteed salary actually be calculated on a weekly or less frequent basis, not merely paid by the week.

Employer Considerations

Following the Fifth Circuit’s decision, employers should consider the following points:

  1. Hybrid pay structures can work, but the salary must be genuine. The Court’s holding confirms what most wage-and-hour practitioners have long known: variable day-rate pay, even when it dominates total compensation, does not undermine an otherwise valid salary-basis arrangement. However, this decision emphasizes that the guaranteed component must be a true, predetermined salary and not a thinly disguised hourly backstop.
  2. Document the salary component carefully. Offer letters, employment agreements, and payroll records should clearly reflect the fixed nature of the guaranteed salary and how the salary is calculated. Ambiguity about pay structure invites litigation.
  3. Monitor regulatory thresholds. The HCE exemption’s minimum compensation thresholds are subject to change. Employers should ensure their compensation structures remain compliant as those thresholds evolve.

By: Phillip J. Ebsworth and Natalie C. Kreeger

Seyfarth Synopsis: The Fourth Appellate District affirmed the trial court’s broad discretion to reduce PAGA civil penalties, holding that courts may use “any reasonable method” to reduce penalties and are not bound by any single calculation method — whether per pay period, per employee, or otherwise — and upheld the application of a 0.70 multiplier to the lodestar attorney fee amount when calculating a fee award.

In Taduran, the plaintiff brought a PAGA action against his former employer alleging overtime wage, rest period, wage statement, and recordkeeping violations under the Labor Code. Liability was established through summary adjudication and stipulation on all four claims, leaving the amount of civil penalties as the sole triable issue. Plaintiff argued penalties totaled approximately $55.9 million at the statutory maximum, while Defendant urged significant reductions based on the technical nature of the violations and minimal harm. The trial court awarded $515,965 in total civil penalties (i.e. <1% of requested penalties) and applied a modifier of 0.70 to the lodestar, awarding $733,440 in attorney fees against the approximately $1.57 million sought based on a requested 1.5 multiplier.

The Fourth District held that Labor Code section 2699, subdivision (e)(2) authorizes a court to award a “lesser amount” than the maximum civil penalty where, based on the facts and circumstances of the case, the maximum award would be “unjust, arbitrary and oppressive, or confiscatory.” The court rejected Plaintiff’s argument that reductions must be applied on a per pay period basis, finding that trial courts retain full discretion to use “any reasonable method” — including a percentage, per pay period, or per employee basis. On attorney fees, the court upheld the 0.70 negative multiplier, finding the trial court properly considered the straightforward nature of the claims and the significant disparity between the amount sought and recovered. The court noted that in representative actions such as PAGA claims, the percentage of recovery relative to the amount sought may properly support a negative multiplier.

The decision serves as an important reminder for employers that trial courts have broad flexibility in fashioning PAGA penalty reductions without being locked into any single methodology and that attorney fee awards will consider the nature of the claims and any disparity between the amount sought and recovered.

By: Christina Jaremus, Alex Simon, and Noah Finkel

Seyfarth Synopsis: The Fourth Circuit tapped back in right where it left off in its late 2024 decision in Stafford v. Bojangles’ Restaurants, Inc. There, it reversed class certification in a wage-and-hour class action involving shift managers at the southern-style fast-food chain who alleged they were required to perform various off-the-clock tasks (Seyfarth’s analysis of Bojangles is available here). On June 15, 2026, in Overby v. Anheuser-Busch, LLC, the Fourth Circuit doubled down on its skepticism of overbroad wage-and-hour classes, vacating a Rule 23 class of brewery workers alleging unpaid pre- and post-shift work.  The Fourth Circuit’s message is familiar but sharper: high-level “common questions” and sweeping class definitions won’t survive where the underlying work realities vary.

The Setup: A “Uniform Policy” Case—On Paper

Plaintiffs—hourly employees at an Anheuser-Busch brewery—claimed the company failed to pay for pre- and post-shift work, including the donning and doffing of personal protective equipment, securing and putting away tools, COVID screening (for a time), and shift change meetings.

They pointed to the company’s policy of generally paying employees only for scheduled shift hours as well as mandatory health and safety requirements in effect during the COVID-19 pandemic until February 2022. Plaintiffs pursued state-law Rule 23 claims under the Virginia Wage Payment Act and Virginia Overtime Wage Act alongside an FLSA collective. The district court certified a sweeping class of all non-exempt employees at the Williamsburg brewery during the relevant time period. Plaintiffs argued this was all driven by a uniform compensation practice, in their view, a single brewing process applied across the workforce. The district court framed the common question at a high level: whether Anheuser-Busch failed to pay for mandatory pre- and post-shift work in violation of Virginia law. But the Fourth Circuit found that theory… a bit over-carbonated and ultimately tough to swallow.

The Holding: Flat Beer for the Plaintiffs’ Class Theory; Certification Vacated (and Bojangles Reinforced)

The Fourth Circuit vacated the class certification order, holding that the district court misapplied Rule 23’s commonality and predominance requirements by:

  • Defining the common question “at too high a level”;
  • Ignoring “substantial variance” across employees; and
  • Certifying an overbroad, effectively circular class.

The opinion repeatedly invokes Bojangles, emphasizing that generalized policy-based theories cannot paper over workplace variability. “Relying solely on overly generalized company policies will typically defeat class-action certification because these formulations too often disguise the dissimilarity of prospective class members.  The present case epitomizes this exact trap. In defining the common question at too high a level, the district court failed to observe the myriad variations in employees’ circumstances.” In short, the plaintiffs’ theory might have looked cohesive at first pour—but it couldn’t withstand a closer inspection.

Key Reasoning: Why This Class Went Flat

1. “Common Question” Framed Too Abstractly

The district court asked whether Anheuser-Busch failed to pay for required off-shift work. But the Fourth Circuit found that question functionally circular—it assumes what must be proven. Writing for the Court, Judge Wilkinson labeled this kind of high-altitude framing “semantic gerrymandering”: “One can always frame a question in such an abstract manner as to elicit a common response. But such semantic gerrymandering does not reflect the duties and obligations inherent in Rule 23.”

In an important doctrinal note, the panel reiterated that “commonality is a subfactor of predominance.” As applied here, answering the certified common question would have required the district court to first make individualized determinations, e.g., did the employee actually perform pre- or post-shift work at all?  Was it required by the company?  Did it occur outside the shift?  

As the panel put it, “These questions have no common answer; they involve more particularized engagement with the record and reveal significant variation amongst prospective class members”—not exactly a recipe for a classwide keg.

2. The Record Was Fermenting with Variability

The court identified what it called “three different flavors” of variation that skunked predominance, including:

  • Whether tasks were performed at all. Not all employees attended shift change meetings or performed the same duties. Not all employees worked during the period in which the company mandated COVID-19 health policies.
  • Where/when tasks occurred.  Did the employee don and doff protective equipment at home, on-site, or during the shift? The Fourth Circuit noted that putting on work boots before leaving the house generally isn’t compensable, and that some donning and shift change meetings occurred during shift hours — meaning Anheuser-Busch had already paid for them.
  • Differences across roles and departments.  PPE requirements and practices and job duties varied by position.

This variability meant liability would devolve into employee-by-employee mini-trials and was not suited for a clean classwide pour or even a consistent flight.

3. Legal Variability (Often Overlooked)

Adding another wrinkle, the governing law wasn’t consistent across the class. Specifically, Virginia’s overtime law materially changed in July 2022. Due to the relevant lookback period, some workers were subject to pre-amendment law, others post-amendment, and some both. That alone required individualized legal analysis before even reaching liability. So even if the facts aligned (they didn’t), the legal framework didn’t.  That’s not a single brew—it’s multiple recipes on entirely different taps.

4. Overbroad (and “Circular”) Class Definition

The certified class “effectively encompasses all hourly employees at the brewery, with no caveat whatsoever,” regardless of whether they performed any uncompensated work, were subject to the same policies, and/or were subject to the same legal standards. The Fourth Circuit called this out as a “circular class definition” that presumes liability and masks differences, a label that promises more than what’s actually in the glass.

5. Damages Couldn’t Save It

Although individualized damages issues alone do not defeat certification, the court made clear that common liability must be established before reaching the damages phase. Statistical proof (a Tyson Foods approach) only works where underlying conduct is sufficiently uniform.

A Notable Side Pour: FLSA Collective Untouched

The Fourth Circuit dismissed the appeal as to the FLSA collective decertification issue, declining to extend Rule 23(f) review to that question. That leaves a familiar tension in that the Rule 23 class did not hold up, but the collective action under the FLSA remains on tap and still flowing, at least for now.

Practical Takeaways: What Employers Should Tap Into

Bojangles Is Now Fully on Draft. First the chicken, now the beer: Overby confirms that Bojangles is not a one-off. The Fourth Circuit is actively policing overgeneralized “policy” theories, abstract common questions, and failure to grapple with record-level variability.

Let the Variability Ferment. Even where a company has centralized pay practices, shared onboarding, or safety requirements, those facts alone won’t carry certification if actual work practices diverge. The winning strategy (again) centered on evidence that employees differed in tasks performed, timing and location of work, and job duties and departments. Employers should expect courts to demand this granular showing at the class certification stage. Employers also are well-advised not to overlook legal variability. Changes in statutes, regulations, and time periods relevant to a law can also independently defeat predominance even if the facts were uniform (although they were not in Overby).

Class Definitions Need to Be Crisp, Not Cloudy. Hazy, sweeping class definitions that track liability theories and include workers who have no plausible claim will draw scrutiny as “circular” and overbroad.  The court floated subclasses as a potential path forward—but emphasized that each subclass must independently satisfy Rule 23.

Bottom Line: Bojangles fired up the kettle, and Overby kept the wort boiling. The Fourth Circuit is sending a consistent signal: Rule 23 certification in wage-and-hour cases requires more than a shared theory of underpayment—it demands genuinely common proof. Where liability hinges on who did what, when, and under which rules, the class action model starts to lose its kick and may go flat before it ever reaches the bar.

By: Kyle D. Winnick and Andrew Simon

Seyfarth Synopsis: The District of New Jersey held that performers on a streaming platform are employees under New Jersey law despite being independent contractors under the Fair Labor Standards Act (“FLSA”), underscoring how the so-called “ABC” test more narrowly defines independent contractors.

In a significant decision highlighting the stringent nature of New Jersey’s ABC test—and its impact on the relationship between online platforms and content creators—the U.S. District Court for the District of New Jersey held that performers on an adult streaming platform were employees under New Jersey’s ABC test, despite qualifying as independent contractors under the FLSA’s “economic realities” test.

The case involved a class action lawsuit brought by adult performers on a streaming platform against its parent company (the “Platform”) under the FLSA, the New Jersey Wage and Hour Law, and the New Jersey Wage Payment Law. Plaintiffs alleged that they were improperly classified as independent contractors and, as a result, were denied full pay and benefits. Performers on the Platform livestreamed content and were free to set their own schedules and rates, as well as perform on competitors’ websites. The Platform required performers to sign “Performer Agreements,” which stated that they were independent contractors and imposed certain rules, with violations potentially resulting in suspension or termination of their accounts.

The FLSA Economic Realities Test:

Plaintiffs’ FLSA claims were analyzed under the six-factor economic realities test, which requires balancing the factors to determine whether the relationship reflects employment or independent contractor status. The court emphasized that no single factor is dispositive and that the analysis must consider the totality of the circumstances.

Applying this test, the court concluded that the performers “function[ed] as independent contractors rather than statutory employees entitled to FLSA protections.” Although three factors weighed in favor of independence and three in favor of employment, the court gave particular weight to the performers’ control over the timing, pricing, and location of their streams, as well as their ability to stream simultaneously on competing platforms.

 The New Jersey ABC Test:

The court evaluated the remaining state law claims under New Jersey’s ABC test. This three-part test examines whether: (A) the individual is free from the employer’s control or direction; (B) the individual performs work outside the employer’s usual course or place of business; and (C) the individual is customarily engaged in an independently established trade, occupation, profession, or business.

Unlike the multi-factor economic realities test, the ABC test is a conjunctive test requiring the employer to satisfy all three prongs to rebut the presumption of employment. The court emphasized the “rigid” and “unyielding” nature of this standard.

While the court found that the performers exercised sufficient control over their work so that the Platform could satisfy Prong A, it held that the Platform failed to establish Prong B. Specifically, the court concluded that the performers’ work was not outside the Platform’s usual course or place of business. The court found that “Performers [were] integral to Defendants’ business, rendering operations impossible without them.” Additionally, the court adopted a broad interpretation of “place of business,” holding that the Platform’s business “is not bounded by brick-and-mortar walls” but extends to its proprietary digital infrastructure. As a result, the performers operated within the Platform’s place of business.

Because failure to satisfy even one prong of the ABC test is dispositive, the court held that an employment relationship existed and declined to analyze Prong C.

Key Takeaways

This decision highlights the significant differences between the FLSA’s economic realities test and New Jersey’s “rigid” and “unyielding” ABC test. It also demonstrates how the same set of facts can yield different outcomes under these standards, as well as the challenges employers face in meeting their burden under New Jersey law. The ruling may have far-reaching implications for online companies operating in New Jersey and in other jurisdictions that utilize an ABC test.

By: Petersen D. Walrod, Christina Jaremus, and Brett C. Bartlett

Seyfarth Synopsis: On May 28, 2026, the U.S. Department of Labor (DOL) published four new opinion letters, covering situations including: (1) whether an exempt worker may perform non-exempt work; (2) whether a bonus structured as a percent of total earnings needs to include an overtime “true up”; (3) whether time spent traversing an employer’s premises to eat off site is compensable; and (4) whether an employer’s timekeeping practice of rounding, while also permitting pre-shift activities, was lawful.

The DOL’s opinion letter program aims to help employers and businesses make sense of the FLSA’s rules and regulations, and how they apply to specific factual situations. This program is clearly a priority for the current DOL. In the press release announcing the (re-)launch[1] of the DOL’s opinion letter program, now Acting Secretary Keith Sonderling commended opinion letters as “an important tool in ensuring workers and businesses alike have access to clear, practical guidance.”[2] Many employers and businesses agree, and stakeholders should welcome the recent launch of four new opinion letters.

The newly issued opinion letters cover the following issues:

  • 2026-05: An exempt employee can perform additional work in a secondary, non-exempt role without altering their exempt status under the FLSA.
  • 2026-06: A quarterly bonus that is a percentage of the business’s total earnings provides for the simultaneous payment of overtime compensation due on the bonus, and no further overtime payments are required.
  • 2026-07: Time spent traversing an employer’s premises during a meal period remains part of a bona fide meal period under 29 C.F.R. § 785.19.
  • 2026-08: A hospital’s practice of permitting early clocking-in, rounding, and permitting pre-shift work on various activities, likely resulted in at least some uncompensated working time.

The DOL’s Opinion Letter Program

Given the accelerated pace of DOL opinion letter activity in 2026, employers, businesses and other stakeholders should take a moment to size up the DOL’s opinion letter program as a whole.

The DOL’s opinion letter program allows members of the regulated community, including organizations, employers, and businesses as well as workers, to request the DOL’s opinion on the application of the law to a specific factual scenario. DOL opinion letters, and in particular, opinion letters issued by the Wage and Hour Division (WHD), the sub-agency of the DOL that enforces the FLSA, carry several benefits:

  • WHD opinion letters signal the enforcement policies and priorities of the WHD, a well-resourced enforcement agency with the broadest scope of any wage and hour agency in the country.
  • WHD opinion letters also have legal significance in certain situations, because they can constitute a “written administrative regulation, order, ruling, approval, or interpretation” that may entitle an employer to the protection of 29 U.S.C. § 259.
  • WHD opinion letters are “available as reasoned analyses at least on par with a law review article or an unpublished judicial decision.”[3]

In short, opinion letters clarify the law and enforcement environment for stakeholders. They are well worth paying attention to. They also represent a priority for the DOL’s current administration in general, and in particular, for now Acting Secretary Keith Sonderling, who as mentioned previously, is a proponent of the opinion letter program, and has extensive experience with the WHD in particular.

With the release of the four most recent letters, the total for 2026 increases to eight, bringing the cumulative total for the current Administration to thirteen. This indicates an accelerating pace, although the WHD in President Trump’s second term is still far short of matching the nearly 80 opinion letters that WHD issued in his first term.

WHD 2026-05

Question Presented: May an exempt Nursing Professional Development Specialist pick up shifts as a non-exempt Staff Nurse, even when those shifts account for up to 38% of hours worked in certain weeks?

Conclusion: The DOL concluded that an exempt employee may perform additional non-exempt work—such as in a secondary role—without losing their exempt status, so long as certain conditions are met.

Key Reasoning: The key takeaway is that the primary duty test remains the central focus, rather than the proportion of time spent on non-exempt tasks. The employee must continue to satisfy the salary basis test, and their primary duty must consist of exempt work. The DOL noted that while time spent can inform the analysis, time alone is not determinative, though spending over 50% of time on exempt work generally supports exemption. Additionally, salaried employees may receive extra compensation without losing exempt status, provided they are guaranteed at least the minimum required weekly salary under 29 C.F.R. § 541.604(a).

Takeaways:  The analysis is fact-specific, as the opinion itself emphasizes that its conclusions are based on the particular “circumstances presented.” Accordingly, employers must carefully evaluate each situation to ensure it is analogous before relying on the guidance. Employers should ensure that the employee’s most important responsibilities continue to be exempt work, even if they spend a meaningful portion of time performing non-exempt duties, and that they satisfy all other requirements for any particular exemption.

WHD 2026-06

Question Presented: Does a quarterly payment that constitutes a “percentage of total earnings” bonus that provides for the simultaneous payment of any overtime compensation due on the bonus comply with the FLSA’s overtime provisions?

Conclusion: The DOL concluded that a quarterly bonus calculated as a percentage of total earnings—including both straight-time and overtime—can satisfy overtime obligations without requiring a separate “true-up” recalculation, provided it is properly structured.

Key Reasoning: Under the FLSA, the default rule is that most non-discretionary bonuses must be included in the employee’s “regular rate of pay,” which typically requires employers to go back and recalculate overtime for the period the bonus covers. However, 29 C.F.R. § 778.210 creates an exception for bonuses based on a percentage of total earnings, so long as the percentage applies uniformly to both straight-time and overtime pay. In that circumstance, the overtime premium is already embedded in the bonus calculation. In the example analyzed by the DOL in its letter, employees receive a share of a bonus pool based on their proportion of pay to total company earnings, which inherently incorporated overtime into the calculation and satisfied the requirement that overtime be compensated “simultaneously.” The DOL noted that total earnings must include both straight-time and overtime pay, while excluding items not part of the regular rate, such as discretionary bonuses, gifts, expense reimbursements, or benefit contributions.

Takeaways: The DOL emphasized, however, that this structure must genuinely reflect overtime compensation and cannot be used to disguise underpayment, requiring a careful analysis of whether the formula truly accounts for overtime pay. The DOL also noted that a bonus pool that uses a metric other than the percent of gross sales revenue for the quarter would potentially comply with 778.210, including a “methodology tied to the employer’s quarterly profits or available financial assets.”

WHD 2026-07

Question Presented: Must an employer consider time an employee spends traveling off-site voluntarily for a meal when determining whether the meal period is compensable under 29 C.F.R. § 785.19?

Conclusion: The DOL concluded that the meal period was non-compensable because it met all the criteria of a bona fide meal period: it was at least 30 minutes in length, employees were fully relieved from duty, the time was uninterrupted, and it could be entirely used for personal purposes on or off-site.

Key Reasoning: The opinion letter addresses whether a 30-minute unpaid meal period becomes compensable work time when employees at a secured facility lose a portion of that break if they choose to leave the premises. In the scenario presented, employees worked at a large facility with controlled entry and exit points and parking located a considerable distance from work areas. While the employer provided a full 30-minute uninterrupted meal period, employees who elected to leave the premises had to spend 5–10 minutes walking to parking and additional time passing through security checkpoints, leaving only 10–15 minutes for an off-site meal. The DOL evaluated this issue under 29 C.F.R. § 785.19, which requires that a meal period be a bona fide break during which the employee is completely relieved from duty for personal purposes. The agency determined that the employer satisfied its obligations by offering a full, uninterrupted 30-minute break during which employees were entirely relieved of duty and free to remain on-site without restriction or time loss. The fact that employees could voluntarily leave the premises did not alter the analysis, even though doing so reduced the amount of usable break time due to walking and security procedures. The DOL viewed this lost time as incidental to the employee’s personal choice, not as employer-imposed restrictions. It also rejected any requirement that off-site meal periods be practically feasible or free from inconvenience, emphasizing that the FLSA guarantees only a genuine opportunity for relief from work, not an optimal or flexible off-site experience.

Takeaways: The analysis underscores that compensability hinges on employer-imposed restrictions, not employee preferences or voluntary choices. However, the opinion suggests that a different outcome could arise if the employer required employees to perform duties during the break, prohibited meaningful use of the time (outside of the minimal restrictions present in this example such as passing through security), or regularly interrupted the meal period. In such cases, the break might no longer qualify as bona fide, highlighting the importance of ensuring that employees remain fully relieved from duty during meal periods.

WHD 2026-08

Question Presented: Does a rounding policy that rounds clock-in times to the scheduled start time, and late clock-outs backward to the scheduled end time result in the adequate payment of compensable time, where employees engage in pre-shift and post-shift activities at times?

Conclusion: The DOL determined that certain pre-shift activities that employees engaged in were integral and indispensable to employees’ principal duties, making them compensable and marking the start of the continuous workday.

Key Reasoning: The factual scenario involves a large public hospital with approximately 18,000 non-exempt employees who are permitted to clock in up to seven minutes early and/or may clock out late due to bottlenecks at the timeclock. The hospital’s system rounds early clock-ins forward to the scheduled start time and late clock-outs backward to the scheduled end time. Many employees who clocked in early also begin performing job-related tasks—such as clinical preparation—immediately after clocking in early, resulting in work being performed before the scheduled shift without corresponding compensation. Significantly, the employer’s policy also prohibited employees from clocking out before the end of their shift. Accordingly, the example did not present a scenario of neutral rounding in which, for example, employees might lose time due to their hours being rounded up at the start of the shift, while gaining equal or more time at the end of the day if they clocked out early and their time was then rounded forward to the scheduled shift end. Under the FLSA’s “hours worked” standard, employers must pay for all work they “suffer or permit,” including work outside scheduled hours if the employer knows or should know it is occurring. Once employees begin principal work activities, all subsequent time until the end of the workday is generally compensable. The DOL also found that the employer either knew or should have known that employees were performing work before their scheduled shifts and allowed the practice to continue, thereby triggering an obligation to compensate that time.

Takeaways:  The key takeaway for employers is that all work performed must be paid regardless of scheduled hours, and even facially neutral policies—such as rounding or early clock-in allowances—can create liability if implemented in a way that permits or perpetuates off-the-clock work. Notably, the DOL also determined that the de minimis doctrine was deemed inapplicable because the pre-shift work appeared to be regular, recurring, and measurable (if the hospital honored their actual versus rounded start time), rather than sporadic or administratively difficult to track. And, the DOL concluded that the hospital’s rounding practices were not neutral in practice due to the policies described above and systematically undercounted compensable time and always benefited the employer. This raised risks of both minimum wage and overtime violations. In contrast, end-of-shift rounding may be permissible if employees are not performing work after their shift end time and the extra time is only compromised of time spent waiting in line to clock-out.

Conclusion

As noted above, the release of these four additional letters brings the cumulative total for the current Administration to thirteen, reflecting an accelerating pace of opinion letter issuance. Stakeholders should therefore anticipate a continued increase in opinion letter activity and, where appropriate, consider pursuing requests when a strong opportunity arises.

Seyfarth attorneys are closely monitoring the DOL’s opinion letter programs and are available to provide guidance on how the DOL’s opinions shape the law, and impact businesses and workers.

[1] Opinion letter issuance has ebbed and flowed across presidential administrations. For example, some administrations (e.g., Obama-era) suspended or replaced them with broader guidance (Administrator’s Interpretations). More recent years (e.g., Biden-era) saw very limited issuance of opinion letters. The current Administration is actively utilizing the DOL opinion letter program and did so during Trump’s first term, as did the Bush administration.

[2] https://www.dol.gov/newsroom/releases/osec/osec20250602.

[3] Keith E. Sonderling & Bradford J. Kelley, The Sword and the Shield: The Benefits of Opinion Letters by Employment and Labor Agencies, 86 Mo. L. Rev. 1171 at 1190 (2022). The reader should note that this analysis was co-authored by Acting Secretary Sonderling.