DOL Proposes to Decodify 450+ FLSA Interpretive Guidance: What Does It Mean for Employers

Takeaways

• DOL Wage and Hour Division plans to remove certain FLSA non-binding interpretive guidance documents from the CFR and relocate them to the agency's internal Field Operations Handbook.
• Guidance on the 7(i) exemption for retail or service establishments and the Motor Carrier Act exemption are among the key interpretive rules affected by the proposal.
• DOL has said it may decide to revise or rescind the affected rules in the future, and it may do so without undertaking formal rulemaking.

Related link

• Federal Register: Proposed Rule: Statements of General Policy or Interpretation Not Directly Related to Regulations

Article

The Wage and Hour Division (WHD) of the Department of Labor (DOL) has proposed moving some regulations governing application of the Fair Labor Standards Act (FLSA) from the Code of Federal Regulations (CFR) to an appendix in DOL's Field Operations Handbook (FOH). The proposal would shed more than 450 separate FLSA regulations (on 229 pages) from the CFR. Many of these regulations are referenced regularly by employers and others are dated and confusing.

The DOL's FOH is a handbook used by DOL investigators when enforcing the FLSA. Portions of the FOH are available on the agency's website.

According to DOL, moving the regulations from the CFR to the FOH is not intended to be a "commentary on the underlying merits" of any provisions that are being relocated. A further merits review may come later, after the transfer has been made.

WHD explained that the current set of FLSA regulations in the CFR contains legislative rules, implemented through the notice-and-comment requirements of the Administrative Procedure Act, which WHD contends have the force of law, and interpretive rules, which WHD admits are non-binding. The interpretive rules include regulations that implement the 7(i) exemption applicable to "retail or service establishments" and regulations governing application of the "motor carrier exemption."

In the proposed rule issued July 2, 2025, the WHD explained it intends to remove all of the interpretive regulations that were never implemented (or amended) after notice and comment. Accordingly, under the proposal, many, but not all, of the interpretive rules would be transferred. Some interpretive regulations, like those governing the "regular rate of pay" (Part 778), "hours of work" (Part 785), and independent contractor status (Part 795), would remain because the regulations (or portions) were previously subject to notice and comment. DOL has indicated separately that it intends to revise the independent contractor regulations but has not issued a proposed rule yet.

WHD stated that separating these "interpretive" rules from "legislative" rules will provide greater clarity to employers and the public. According to WHD, this separation will minimize the risk that courts will misinterpret the rules' legal significance or that employers will feel "compelled" to comply with rules that do not have the force of law. This also will allow, however, DOL to modify the transplanted regulations more easily or simply eliminate them without any further notice and comment. The proposed rule states the DOL "reserves its right to decline additional notice-and-comment for any future changes to content removed from the CFR as a consequence of this rulemaking." That would mean DOL could modify the guidance applicable to the 7(i) exemption or the motor carrier exemption without submitting proposed changes for public comment.

Affected Provisions

Among the most significant provisions of Subpart B slated for removal from the CFR to the FOH are:

• Part 776, the WHD's statement of policy on general coverage under the FLSA and coverage of the construction industry in particular;
• Part 779, an interpretive bulletin addressing application of the FLSA to retail and service establishments (including the 7(i) exemption for certain commissioned employees);
• Part 782, which discusses the overtime exemption for employees covered by the Motor Carrier Act; and
• Part 789, addressing the "hot goods" provision for child labor enforcement and a consumer's ability to rely on written assurances of compliance from a producer of goods in defense of alleged violations.

Implications

Although the proposed removal and transfer of DOL regulations from the CFR to the FOH does not immediately result in any substantive change to the guidance, the transfer suggests DOL soon may revise these provisions, many of which are dated and confusing and could use substantial revision.

Please contact your Jackson Lewis attorney if you have questions about the interpretive rules that WHD proposes to decodify and the impact of these provisions on compliance with the FLSA.