• DOL Issues "Fair Pay" Regulations Revising White Collar Overtime Exemptions
  • April 21, 2004
  • Law Firm: Ford & Harrison LLP - Atlanta Office
  • Today the Department of Labor (DOL) issued its "Fair Pay" regulations, which revise the regulations providing for the white collar exemptions to the Fair Labor Standards Act's (FLSA) minimum wage and overtime requirements. Employees who meet certain duties and salary tests may fall under the executive, administrative, professional, outside sales, or computer associate categories of the white collar exemption. Today's rule marks the first time the salary requirement has been revised in 30 years; the duties tests have not been revised since 1949.

    Under the new rule, workers earning less than $23,600 per year or $455 per week are guaranteed overtime protection regardless of their job duties. The new rule differs from the proposed revisions, which were issued in March 2003, in a number of ways. Following are some highlights of these differences:

    The final rule states that exemptions do not apply to manual laborers or other blue collar workers performing repetitive work, such as non-management production workers, maintenance, and construction workers.

    The exemptions do not apply to police officers, fire fighters, paramedics, emergency medical technicians, and similar public safety employees.

    The "highly compensated" test in the final rule applies only to employees who earn at least $100,000 per year, a $35,000 per year increase over the amount in the proposed revisions.

    The "highly compensated" test in the final rule applies only to employees who receive at least $455 per week on a salary basis.

    The final rule requires that exempt highly compensated employees must customarily and regularly perform exempt duties. Additionally, the final rule differs from the proposed revisions with regard to the specific categories of the exemption:

    Executive:

    • The final rule deletes the special rules applicable to "sole charge" executives.

    • The final rule adds a requirement that employees who own a bona fide 20% equity interest in an enterprise are exempt only if they are actively engaged in the management of the enterprise.

    • The final rule retains the requirement that an exempt executive must have either the authority to hire or fire other employees or must make recommendations about hiring and firing that are given particular weight but provides a new definition of "particular weight."

      Administrative:

      • The final rule eliminates the proposed "position of responsibility" test and the "high level of skill or training" standard for the administrative exemption.

      • The final rule also reinstates the requirement (which was eliminated in the proposed rule) that administrative employees exercise discretion and independent judgment.

        Professional:

        • The final rule states that licensed practical nurses and other similar health care employees do not qualify as exempt professionals and retains the provisions of the existing regulations for registered nurses.

        • The final rule does not make any changes to the educational requirements for the professional exemption. The references to training in the armed forces, attending a technical school, and attending a community college, which were contained in the proposed regulation, have been removed.

        • The final rule provides that work requiring advanced knowledge, one of the three essential elements of the professional primary duties test, is work that is "predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment."

    These are only highlights of the ways in which the final rule differs from the DOL's proposed revisions. We will be issuing a thorough analysis of the new rule shortly.