U.S. DOL Issues Opinion Letters on FMLA and Wage and Hour Issues

On January 5, 2026, the U.S. Department of Labor (DOL) issued opinion letters on bonus pay, FMLA leave, and other wage and hour issues. A DOL opinion letter (we’ll refer to them throughout as a “DOL Op') is a written interpretation explaining how a specific federal labor law (like the FLSA or FMLA) applies to a particular circumstance. Opinion letters technically are not law, but they do provide important guidance on the DOL’s position on certain issues.

Of particular importance is the first opinion, DOL Op FLSA 2026-1, concerning converting an exempt employee to non-exempt. Reclassification of an exempt employee to non-exempt often arises when an employer realizes that the company has misclassified the employee or when the employee’s attendance becomes unacceptable.

DOL OP FLSA 2026-1: Does the FLSA Permit an Employer to Reclassify an Exempt Employee as Non-Exempt?



Question: A Licensed Clinical Social Worker had been classified as exempt by her employer. Following an internal company restructuring, the employer reclassified the employee to non-exempt. Can the employer do this?

Answer: Yes. Reclassification from exempt to non-exempt is permissible under the FLSA. It is the employer, not the employee, who claims the exemption.

FMLA 2026-2: Can FMLA Leave Time be Used for Time Traveling to and From Appointments?

Question: An employee requested intermittent leave to attend medical appointments for a serious health condition and presented a medical certification in which the physician certified that the appointments will occur once per month for 45 minutes. The employee states he needs one hour to travel to or from the appointments, but the medical certification does not address travel time. Can FMLA leave time be used for travel? 

Answer: Yes. An employee may use FMLA leave to travel to and from these appointments. Additionally, the health provider does not need to provide an estimate of the employee’s travel time for the medical certification to be complete under the FMLA. 

FMLA 2026-1: How to Calculate FMLA Leave Use for Workplace Closures

Question: How should an employer calculate an employee’s leave use when a workplace closes for part of a week while the employee is out on FMLA leave?

The inquiry posed to the DOL was how less than a full week’s school closure due to inclement weather impacts the amount of leave the school employee is recorded as using under the FMLA.

Answer: It depends on whether the employee is taking continuous leave or reduced schedule/intermittent leave. 

If the worker has requested intermittent or reduced-schedule leave, the law prohibits the employer from reducing the employee’s FMLA beyond the amount of leave actually taken. 

For example, if an eligible employee needs FMLA leave each Tuesday afternoon for physical therapy, but the school is closed all day on Tuesday due to inclement weather and the employee is not required to report for duty, the employer school should not deduct time for that day from the employee’s FMLA entitlement.

If, instead, an employee is using continuous leave for a full workweek, the closure has no impact on the employee’s FMLA leave usage, and the employer may deduct a full week’s worth of leave from the employee’s FMLA leave entitlement.

For example, if the employee was on FMLA leave for Monday through Friday of a week, but the school is closed on Tuesday, the employee would use a full week of FMLA leave despite not being required to report to work on Tuesday.

The specific reasons for the closure and whether or not it was planned would not change this analysis.

FLSA 2026-2: Whether “Safety, Job, Duties, and Performance” Bonuses Can be Excluded from Overtime Calculations.

Question: A waste management company offers a bonus plan for drivers that included a base hourly rate plus a bonus tied to safety, job, performance, and completion of duties. The bonuses are based on a formula, and once certain criteria are met, the employee automatically earns the bonus. Should the bonus be included in the employee’s regular rate of pay for calculating overtime?

Answer: Yes. Non-discretionary bonuses must be included in the employee’s regular rate of pay when calculating overtime. Non-discretionary bonuses are payments that are promised or expected and tend to be dependent on the quality, quantity or efficiency of production or hours worked.

Discretionary bonuses can be excluded from the employee’s regular rate of pay when calculating overtime. Discretionary bonuses are payments that an employee does not have reason to expect and that are made at the sole discretion of the employer in recognition of services.

The “Safety, Job, Duties, and Performance” bonus was a non-discretionary bonus:

• The bonus was part of a predetermined pay plan with established criteria and formulas that employees understood and could reasonably expect to earn based on performance.

• Because the employer set the criteria and bonus formulas in advance, it abandoned discretion over both eligibility and amount — a key element that distinguishes non-discretionary bonuses from truly discretionary payments that can be excluded under the FLSA.

• As a result, these incentive bonus must be factored into the regular rate when computing overtime.

Guidance for Employers

For employers that offer performance-based, attendance, safety or other incentive bonuses, the opinion letter underscores the importance of evaluating whether those bonuses are non-discretionary and, therefore, included in regular rate calculations. Failing to include such bonuses can result in underpayment of overtime wages, potential back pay liability, and penalties.

If your organization wants certain bonuses excluded from the regular rate, those bonus plans must meet the strict criteria for discretionary bonuses. This typically means bonuses should not be promised in advance, formulas should not be set ahead of time, and eligibility should be truly at the employer’s sole discretion.

Clear documentation of how bonus plans are structured, how they are communicated to employees, and how they are administered becomes vital evidence in demonstrating compliance with the FLSA.

Laws that Took Effect January 1, 2026

Connecticut Sick Day Law Expanded to Next Round of Smaller Employers

As a reminder, employers with 11 or more employees are now covered under Connecticut’s expanded Sick Day Law effective January 1, 2026.

Under the Sick Day Law:

• Both exempt and non-exempt, hourly employees are covered.

• An employee accrues 1 hour of sick time for every 30 hours worked, up to 40 hours per year.

• Employees can carry up to 40 hours of unused Sick Time into the following year. 

• Employees are eligible for Sick Time on the 120th calendar day of employment.

• Sick Time may be taken for:

• The employees own illness, injury, health condition, preventative care, or diagnosis, or for that of a family member.

• The employee’s mental health wellness day.

• Family violence or sexual assault, care, counseling, services, or relocation or participation in a court proceeding.

• Closures due to public health emergencies or because the employee or the employee’s family member poses a health risk due to communicable disease.

• Employers may not require advanced notice of the need for leave from the employee or require documentation substantiating the need for leave.

• Employers must provide written notice to employees of their rights under the law on January 1, 2026, or, for new hires, at the time of hire.

• Employers must also display a poster of employees rights under the Sick Day Law in a conspicuous place.

• Employers must maintain records of accrued and used leave time for 3 years.

Minimum Wage Increased

Minimum wage is now $16.94, up from $16.35. It will increase each January 1st, indexed to the federal Employment Cost Index.

This change will raise the cap on FMLA payments, which are fixed at 60 times the Connecticut minimum wage ($1,016,40). 

Enhanced Premium Tax Credits Expired December 31st

Affordable Care Act Enhanced Premium Tax Credits expired on December 31, 2025. 

Enhanced Premium Tax Credits (PTCs)—established under the American Rescue Plan Act of 2021 and extended in the Inflation Reduction Act of 2022—temporarily expanded eligibility for lower health insurance premiums to individuals whose income exceeds 400% of the federal poverty level. The credits also reduced the maximum household contribution (resulting in larger subsidy amounts) at all eligible income levels through December 31, 2025.

For employees who waive or are not eligible for group coverage through their employers, the expiration of the enhanced PTCs will result in higher premiums for several populations. For example, a family of four with a household income of $45,000 with a $0 premium in 2025 will see their premiums increase to $1,607 a year.

A 60-year-old couple with an annual income at about $85,000 could pay a yearly premium of $22,600 in 2026, or about a quarter of their annual income, instead of 8.5% of their income (as established under enhanced PTCs).