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Federal Overtime Regulations Overhauled!!
Diane Dennis Enterprises © June 2004 http://www.thecontractorsgroup.com/articles/overtime-rules-h1.html

The United States Department of Labor (USDOL) has recently overhauled federal overtime regulations, and they've put together a website referred to as the FairPay Website, designed to help employers understand the Department's new FairPay rules that serve to strengthen overtime protections.

The new FairPay rules are designed to
strengthen overtime rights for 6.7 million American workers.
The effective date of the new regulations is August 23, 2004.

The USDOL website has many seminars available for viewing online, designed to help employers learn more about the new "white collar" regulations.

They also have a PowerPoint presentation that you can download and customize to your business and use for your own training event(s)! Click on the link above and when you get there look for the link labeled "Seminar Download" in the right-hand column.

Now of course, as is the case with just about any regulation, there are exemptions. If your employees qualify for the exemption(s) then by all means take those exemptions, but watch out for some heavy consequences if you take an exemption that your employees are not qualified for.

While this article cannot be taken as legal advice, it can be used as a good starting point in determining whether or not your employees qualify for any overtime exemptions or not.

Blue-Collar Workers

According to the "Fact Sheet #17I:  Blue-Collar Workers and the Part 541 Exemptions Under the Fair Labor Standards Act (FLSA)"
(Available at: http://www.dol.gov/esa/regs/compliance/whd/fairpay/fs17i_blue_collar.htm):

Most employees in the United States are supposed to be paid overtime pay, at one and one-half times the regular rate of pay (at least), for all hours worked over 40 in a work week; this is a federal requirement.

However, Section 13(a)(1) of the FLSA provides an exemption from overtime pay for employees employed as bona fide executive, administrative, professional and outside sales employees, as well as certain computer employees. Section 13(a)(17) also carries exemptions for certain computer employees.

To qualify for exemption, your employee(s) must A) meet certain "tests" regarding their job duties and B) be paid on a salary basis at not less than $455 per week.

MOST IMPORTANT:

The exemptions provided by FLSA Section 13(a)(1) do NOT apply to manual laborers or other “blue-collar” workers who perform work involving repetitive operations with their hands, physical skill and energy.

These non-exempt “blue-collar” employees, who gain the skills and knowledge required for performance of their routine manual and physical work through apprenticeships and on-the-job training, are entitled to overtime premium pay under the FLSA, and are NOT exempt under Section 13(a)(1) of the FLSA nor the regulations at 29 CFR Part 541, (no matter how highly paid they might be).

These non-exempt “blue-collar” employees fall under production, maintenance, construction and similar occupations such as carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen, construction workers and laborers.

White-Collar Workers

According to the "Fact Sheet #17A titled "Exemption for Executive, Administrative, Professional, Computer & Outside Sales Employees Under the Fair Labor Standards Act (FLSA)"
(Available at: http://www.dol.gov/esa/regs/compliance/whd/fairpay/fs17a_overview.htm)

Important: Job titles do not determine exempt status!!

To qualify for exemption, "white-collar" employees generally must meet certain "tests" regarding their job duties and be paid on a salary basis at not less than $455 per week.

Following is some general info on the exemptions for executive, administrative, professional, computer, and outside sales employees... Please see the fact sheets located at the USDOL website for more detailed information on the specific exemptions.

Executive Exemption (more detailed info)
To qualify for the executive employee exemption, all of the following "tests" or requirements must be met:

• The employee must be compensated on a salary basis (as defined in the regulations) at a rate not less than $455 per week;
• The employee’s primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise;
• The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and
• The employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.

Administrative Exemption (more detailed info)
To qualify for the administrative employee exemption, all of the following "tests"/requirements must be met:

• The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week;
• The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and
• The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

White-Collar Workers (Continued)

Outside Sales Exemption (more detailed info)
To qualify for the outside sales employee exemption, all of the following tests must be met:

• The employee’s primary duty must be making sales (as defined in the FLSA), or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and
• The employee must be customarily and regularly engaged away from the employer’s place or places of business

Highly Compensated Employees (more detailed info)
Highly compensated employees who are:

• Performing office or non-manual work and
• Are being paid total annual compensation of $100,000 or more (which must include at least $455 per week paid on a salary or fee basis)

are exempt from the FLSA IF they customarily and regularly perform at least one of the duties of an exempt Executive, Administrative, or Professional employee as identified (above) in the standard tests for exemption.

Other Laws & Collective Bargaining Agreements

The standards that the FLSA provides are minimum standards that cannot be waived or reduced by laws, regulations, ordinances, etc. These standards may however be exceeded by laws, regulations, ordinances, etc..  If there's a difference in the standards then the stricter standards must be followed.

In addition, employers may, on their own initiative or under a collective bargaining agreement, provide a higher wage, shorter work week, or higher overtime premium than required under the FLSA.

Collective bargaining agreements CANNOT waive or reduce FLSA protections. Similarly, the FLSA (and the 29 CFR Part 541 regulation) does NOT relieve employers from their contractual obligations under those collective bargaining agreements.

I hope you've found this article informative. As mentioned at the beginning (of this article), while this article cannot be taken as legal advice, it can be used as a good starting point in determining whether or not your employees qualify for overtime exemptions or not.

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