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FEDERAL OVERTIME RULES
STATUS
On
August 23, 2004, the final rules regarding the "White Collar"
exemptions to the Fair Labor Standards Act (FLSA) took
effect.
ANALYSIS
The
following are highlights of the new overtime rules.
Executive Exemption
To
qualify for the executive employee exemption, all of the
following tests 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
To
qualify for the administrative employee exemption, all of the
following tests 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 must include the exercise of
discretion and independent judgment with respect to matters
of significance.
Professional Exemption
To
qualify for the learned professional employee
exemption, all of the following tests 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 work
requiring advanced knowledge, defined as work which is
predominantly intellectual in character and which includes
work requiring the consistent exercise of discretion and
judgment;
-
The advanced knowledge must be in a field of science or
learning; and
-
The advanced knowledge must be customarily acquired by a
prolonged course of specialized intellectual instruction.
-
To qualify for the creative professional employee
exemption, all of the following tests 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 work
requiring invention, imagination, originality, or talent in
a recognized field of artistic or creative endeavor.
Computer Employee Exemption
To
qualify for the computer employee exemption, the following
tests must be met:
-
The employee must be compensated either on a salary
or fee basis (as defined in the regulations) at a rate not
less than $455 per week or, if compensated on an
hourly basis, at a rate not less than $27.63 an hour;
-
The employee must be employed as a computer systems analyst,
computer programmer, software engineer, or other similarly
skilled worker in the computer field performing the duties
described below;
The
employee's primary duty must consist of:
1) The application of systems analysis techniques and
procedures, including consulting with users to determine
hardware, software, or system functional specifications;
2) The design, development, documentation, analysis, creation,
testing or modification of computer systems or programs,
including prototypes, based on and related to user or system
design specifications;
3) The design, documentation, testing, creation, or
modification of computer programs related to machine operating
systems; or
4) A combination of the aforementioned duties, the performance
of which requires the same level of skills.
Outside Sales Exemption
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
Highly compensated employees performing office or non-manual
work and 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 identified
in the standard tests for exemption.
Blue Collar Workers
The
exemptions provided by FLSA Section 13(a) (1) apply only to
"white collar" employees who meet the salary and duties tests
set forth in the Part 541 regulations. The exemptions do not
apply to manual laborers or other "blue collar" workers who
perform work involving repetitive operations with their hands,
physical skill, and energy. FLSA-covered, non-management
employees in production, maintenance, construction and similar
occupations such as carpenters, electricians, mechanics,
plumbers, iron workers, craftsmen, operating engineers,
longshoremen, construction workers, and laborers are entitled
to minimum wage and overtime premium pay under the FLSA, and
are not exempt under the Part 541 regulations no matter how
highly paid they might be.
Police,
Fire Fighters, Paramedics & Other First Responders
The
exemptions also do not apply to police officers, detectives,
deputy sheriffs, state troopers, highway patrol officers,
investigators, inspectors, correctional officers, parole or
probation officers, park rangers, fire fighters, paramedics,
emergency medical technicians, ambulance personnel, rescue
workers, hazardous materials workers, and similar employees,
regardless of rank or pay level, who perform work such as
preventing, controlling or extinguishing fires of any type;
rescuing fire, crime, or accident victims; preventing or
detecting crimes; conducting investigations or inspections for
violations of law; performing surveillance; pursuing,
restraining, and apprehending suspects; detaining or
supervising suspected and convicted criminals, including those
on probation or parole; interviewing witnesses; interrogating
and fingerprinting suspects; preparing investigative reports;
or other similar work.
Other Laws & Collective Bargaining Agreements
The
FLSA provides minimum standards that may be exceeded, but
cannot be waived or reduced. Employers must comply, for
example, with any federal, state, or municipal laws,
regulations, or ordinances establishing a higher minimum wage
or lower maximum workweek than those established under the
FLSA. Similarly, employers may, on their own initiative or
under a collective bargaining agreement, provide a higher
wage, shorter workweek, or higher overtime premium than
provided under the FLSA. While collective bargaining
agreements cannot waive or reduce FLSA protections, nothing in
the FLSA or the Part 541 regulation relieves employers from
their contractual obligations under such bargaining
agreements.
More information on this ruling can be found
here..
OUTLOOK
The
new rules are here to stay.
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