FREQUENTLY ASKED QUESTIONS

Answer: Yes. For the first time, blue collar workers overtime is guaranteed in the rule.

For the first time in the history of the Fair Labor Standards Act, the white collar exemptions explicitly spell out that blue collar workers are not subject to the overtime exemptions. New 541.3(a) of the Departments final rules guarantees the overtime rights of blue collar workers including carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen, construction workers, laborers and non-management production-line employees. New 541.4 also explicitly protects the rights of union members who receive overtime pay pursuant to collective bargaining agreements.

Answer: Yes. The overtime rights of first responders are explicitly guaranteed.

For the first time ever, the Departments final rules describe the various duties performed by police, fire fighters and other first responders to ensure that workers performing such duties are entitled to overtime. The silence of the existing regulations regarding this vital group of workers has resulted in significant litigation. These Americans pay rights have been further damaged by false information spread about the Departments rules such as the distortion that police sergeants will lose overtime protection. To protect police and other first responders from such harmful misrepresentations, the preamble to the final rule, 69 Fed. Reg. at 22129, clarifies that police sergeants are entitled to overtime pay even if they direct the work of other police officers because their primary duty is not management or directly related to management or general business operations; neither do they work in a field of science or learning where a specialized academic degree is a standard prerequisite for employment. Relying on existing case law, the Department included 541.3(b) in the final regulations to clarify that police, fire fighters, paramedics, EMTs, and other first responders are non-exempt and fully entitled to overtime.

Answer: There is no change from current law on the overtime protections for RNs.

The 20-percent time test in the old outside sales exemption was extremely difficult to understand and would require employers to conduct expensive time and motion studies. The change from employees who are employed for the purpose of making outside sales to employees whose primary duty is outside sales is not substantive. The definition of primary duty in the final regulations at 541.700(a) emphasizes that it must be the employees principal, main, major or most important duty, which is at least as strong as the ambiguous for the purpose of language from the old rules. Thus, under both the old and final rules, employees will not be exempt from overtime unless their primary duty is outside sales, and the final rule makes clear that merely assigning some outside sales work to an otherwise non-exempt employee will not make someone an exempt outside salesperson.

Question: Will those who lead teams gain overtime protections?

Answer: Yes. Overtime protection is strengthened for those who lead teams.

Despite a tremendous amount of misinformation being spread regarding team leaders, the fact is the final rule is actually more protective of employees overtime rights than the old rule.

The old rule extends, in 541.205(c), the administrative exemption to a wide variety of persons who either carry out major assignments in conducting the operations of the business, while 541.205(b) exempts those whose work includes advising the management, planning, negotiating, representing the company, purchasing, promoting sales, and business research and control. By contrast, 541.203(c) of the final rule updates this concept with a more modern example, providing that the administrative exemption applies to a white collar employee who leads a team of other employees assigned to complete major projects for the employer, and provides the following examples of the kinds of major assignments which could qualify purchasing, selling or closing all or part of the business, negotiating a real estate transaction or a collective bargaining agreement, or designing and implementing productivity improvements.

The new language, as an example of a qualifying administrative function, still must be applied in the context of the administrative exemptions controlling primary duty test. Thus, an exempt administrative employees primary duty must be office or non-manual work, must be directly related to the management or general business operations of the employer or the employers customers, and must include the exercise of discretion and independent judgment with respect to matters of significance. Thus, team leaders who perform mostly production work and perform only minimal office or non-manual work in their capacity as team leaders, or whose primary duty is not directly related to the management or general business operations of the employer, would not meet the primary duty requirements for the administrative exemption. In addition, to be considered an exempt administrative employee under the final rule, any team leader must have a primary duty which includes the exercise of discretion and independent judgment with respect to matters of significance.

Question: Will working supervisors maintain their overtime pay?

Answer: Yes. Overtime protection is strengthened for working supervisors.

The final regulation makes it more difficult to deny overtime protection to employees based on a job title, as new section 541.2 states that job titles are irrelevant. The final rule adds a new requirement to the executive exemption making it harder for employers to deny overtime protection to working supervisors and low-level managers. Moreover, final 541.106(c) specifically protects the overtime pay of relief supervisors and working supervisors such as those who work on the production line in a manufacturing plant.

The final rules are at least as protective as the old 541.103, which denies overtime to any worker in a department or subdivision who spends more than 50 percent of his time in production or sales work but also has broad responsibilities similar to those of the owner or manager of the establishment, and who supervises other employees, directs the work of warehouse and delivery men, approves advertising, orders merchandise, handles customer complaints, authorizes payment of bills, or performs other management duties as the day-to-day operations require. Final section 541.106 is not only consistent with the old regulations, it is also consistent with current case law which makes clear that the performance of both exempt and nonexempt duties concurrently or simultaneously does not preclude an employee from qualifying for the executive exemption. 69 Fed. Reg. at 22136-37 (citing numerous cases). If the Department adopted another position, workers could lose overtime, not gain it.

The final rules make no change to statutory law regarding computer employees overtime status. In fact, the rules adopt provisions on computer employees as passed most recently by Congress in 1996 under 13(a)(17) of the Fair Labor Standards Act. The Department specifically rejected, 69 Fed. Reg. at 22159, suggestions to list additional computer job titles or duties as exempt beyond those cited in the primary duties test of the statute itself. The final rule at 541.705 specifies that the computer employee exemption[] do[es] not apply to employees training for employment. The final rules on the administrative exemption mirror old 541.205(c)(7) and 541.207(c)(7), which classify systems analysts and computer programmers engaged in the planning, scheduling, and coordination of activities necessary to develop systems for processing data to obtain solutions to complex problems as exempt white-collar workers. The final rules also mirror existing federal case law.

The old 541.2(e)(2) requires that a workers primary duty must be an activity that includes the exercise of discretion and independent judgment, in order to be classified under the short test for the administrative exemption. However, the final rules are more protective of workers overtime rights, because they strengthen the discretion and independent judgment standard by adding the requirement that the discretion be exercised with respect to matters of significance. The old long test language requires the customary and regular exercise of discretion, but that test applies only to employees earning between $8,060 and $13,000 per year all of whom are now guaranteed overtime under the final rule, regardless of their job duties.

Some critics also wrongly contend that the nine examples of learned professional occupations in final 541.301(e) allow employees to be exempt without meeting the duties test. That claim is patently false for a number of reasons. First, some of the examples expressly note that the jobs do not constitute professions falling within the exemption. Second, the examples of professions all of which are exempt under current law expressly note that they generally meet the duties requirements for the learned professional exemptions, thus demonstrating that the tests obviously apply. Third, final rule 541.2 expressly notes that A job title alone is insufficient to establish the exempt status of an employee. The exempt or nonexempt status of any particular employee must be determined on the basis of whether the employees salary and duties meet the requirements of the regulations in this part.

Under final rule 541.604, an employer may provide an exempt employee a guaranteed salary, with the employees actual pay amount computed on an hourly, daily or shift basis, but there must be a reasonable relationship between the guaranteed amount and what is actually received. This reasonable relationship requirement codifies the Wage and Hour Divisions long-standing interpretation of the existing salary basis test (see Field Operations Handbook sec. 22b03), which has been upheld in leading federal court decisions. The preamble to the final rule points out how the reasonable relationship standard would protect employees whose pay amount might be computed on an hourly or shift basis; see 69 Fed. Reg. at 22184.