When the Department of Labor, whether USDOL or a state agency, issues an Opinion Letter on a certain topic/issue or follows a consistent course of conduct vis-à-vis a particular employer, that employer is allowed to rely on that letter or administrative practice or enforcement policy. The Opinion Letter or consistent practice then acts as a bar against a lawsuit or claims that the employer owes overtime or owes the employee(s) other monies.
The so-called “good faith defense” provides that an employer’s reliance upon an “interpretation”, “ruling”, “approval,” “administrative practice” or “enforcement guidance” by the DOL is a “complete bar” to a lawsuit. Significantly, it does not matter whether the DOL’s interpretation is correct or whether a court subsequently rules that the agency was “wrong” or that the employer would, ostensibly, owe the claimed monies.
The employer must have good faith and cannot shut its eyes to potential problems or concerns in the advice it wishes to follow and claim as a defense. The good faith test, coupled with a reasonable belief that what it is doing is correct, are the linchpins of any such defense.
The good faith defense is consistent with the premise that Courts must give deference to the DOL’s interpretation and enforcement of the laws under its purview. More specifically, when interpreting a statute or regulation that an agency is charged with enforcing, a court will give substantial deference to the agency’s interpretation which will prevail provided it is not plainly unreasonable.
If an employer has been investigated by a DOL (state or federal) and receives a favorable outcome (e.g. decision not to assess overtime or other violations), that is a precious chip that should be saved until it is time to cash it in. That time would be when a lawsuit ensues, seeking the same monies (e.g. overtime) as the agency found were not due.
Trust me, it can work…