• Department of Labor Plans to Revise White Collar Overtime Exemptions Under the FLSA
  • October 21, 2003 | Author: Ashley M. Manfull
  • Law Firm: Buckingham, Doolittle & Burroughs, LLP - Akron Office
  • The Department of Labor ("DOL") has issued a proposed rule which is intended to redefine the overtime compensation exemptions for executive, administrative, professional, outside sales, and computer employees (commonly referred to as the "white collar" exemptions). Currently, such employees are exempt from overtime only if their job duties conform to either a "long test" or a "short test." Employers have consistently found these alternative tests to be vague, making it difficult to conclusively establish that an employee is exempt from overtime compensation under the test criteria.

    Recognizing the need for more comprehensible criteria, the DOL has proposed a rule which would combine the "long" and "short" tests into one straightforward test for each white collar exemption. The proposed new test for each white collar occupation is as follows:

      Executive Employees:

      1. Employee must earn a salary of at least $425.00 per week;

      2. Employee's primary duty must consist of the management of the enterprise or a recognized department or subdivision;

      3. Employee must customarily and regularly direct the work of two or more employees;

      4. Employee must have the authority to hire or fire other employees, or make recommendations as to the hiring, firing, promotion or other change of status of other employees which are given particular weight.

      Administrative Employees:

      1. Employee must earn a salary of at least $425.00 per week;

      2. Employee's primary duty must consist of performing office or non-manual work directly related to the management or general business operations of the employer or the employer's customers;

      3. Employee must hold a "position of responsibility" with the employer, defined as (a) performing work of substantial importance or (b) performing work requiring a high level of skill or training.

      Professional Employees:

      1. Employee must earn a salary of at least $425.00 per week;

      2. Employee's primary duty must consist of (a) performing office or non-manual work requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction, but which also may be acquired by alternative means such as an equivalent combination of intellectual instruction and work experience or (b) performing work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.

      Computer Employees:

      1. Employee must earn (a) a salary of $425 per week or (b) $27.63 per hour;

      2. Employee's primary duty must consist of (a) application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional applications; or (b) design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design; or (c) design, documentation, testing, creation or modification of computer related programs related to machine operating systems; or (d) a combination of duties described in (a), (b), and (c), the performance of which requires the same level of skills.

      3. Employee must be employed as a computer systems analyst, computer programmer, software engineer, or other similarly skilled worker in the computer field.

      Outside Sales Employees:

      1. No minimum salary required;

      2. Employee's primary duty must consist of (a) making sales or (b) obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer;

      3. Employee must customarily and regularly be engaged away from the employer's place or places of business.

    While the proposed standard tests make it easier for employers to assess whether an employee's job responsibilities meet the established criteria, the DOL has estimated that more than 1.3 million low-wage workers will likely gain overtime compensation as a result of its proposed rule. Therefore, the new rule, if adopted as proposed, may result in higher labor costs for some employers. More information on the proposed rule may be obtained by accessing the DOL's website at www.dol.gov.