We have been covering the Department of Labor Wage & Hour Division’s (WHD) finally released proposal to amend the Fair Labor Standards Act (FLSA), which was published last week. The Notice of Proposed Rulemaking (NPRM) is lengthy, clocking in at 295 pages, nearly all of which (285+) constitute a preamble. Those 295 pages have plenty of interesting ideas, as we explained in our last post.

However, the last nine or so pages are important, too, because they contain the actual regulatory changes DOL has proposed in the Federal Register (for now). Because the NPRM does not provide an analysis, we have compiled one (H/T Erin Fowler). Bold indicates new language. Strike through language would be removed. We’ll talk about the language in red next week, since coverage of this change has slid largely under the radar.

541.100(a)(1): Compensated on a salary basis as of [EFFECTIVE DATE OF FINAL RULE] at a rate per week of not less than $921 (or $774 per week, if employed in American Samoa by employers other than the Federal government), exclusive of board, lodging or other facilities. As of [DATE TBD] on each subsequent year, compensated on a salary bases at a rate per week of not less than the updated salary rate published annually by the Secretary in the Federal Register at least 60 days earlier (with the rate for American Samoa to be calculated at 84 percent of the updated salary rate, provided that when the highest industry minimum wage for American Samoa equals under the minimum wage under 29 U.S. C. 206(a)(1), exempt employees employed in all industries in American Samoa shall be paid the full salary rate), exclusive of board, lodging or other facilities. 

541.200(a)(1): Same changes 

541.204(a)(1): Same changes, inserted before “exclusive of board, lodging . . .” language that already appears in this section. 

541.300(a)(1): Same changes 

541.600(b): The section 13(a)1) exemption applies to any computer employee who, as of [EFFECTIVE DATE OF FINAL RULE] is compensated on a salary basis or fee basis at a rate per week of not less than $921 (or $774 per week, if employed in American Samoa by employers other than the Federal government), exclusive of board, lodging or other facilities. As of [DATE TBD] on each subsequent year, the section 13(a)(1) exemption applies to any computer employee who is compensated on a salary bases at a rate per week of not less than the updated salary rate published annually by the Secretary in the Federal Register at least 60 days earlier (with the rate for American Samoa to be calculated at 84 percent of the updated salary rate, provided that when the highest industry minimum wage for American Samoa equals under the minimum wage under 29 U.S. C. 206(a)(1), exempt employees employed in all industries in American Samoa shall be paid the full salary rate), exclusive of board, lodging or other facilities. The section 13(a)(17) exemption applies to any computer employee compensated on an hourly basis at a rate of not less than $27.63 an hour. 

541.600:

(a):To qualify as an exempt executive, administrative or professional employee under section 13(a)(1) of the Act, an employee must be compensated on a salary basis as of [EFFECTIVE DATE OF FINAL RULE] at a rate per week of not less than $921 (or $774 per week if employed in American Samoa by employers other than the Federal government), exclusive of board, lodging or other facilities. Administrative and professional employees may also be paid on a fee basis as defined in § 541.605. As of [DATE TBD] on each subsequent year, such employee must be compensated on a salary bases at a rate per week of not less than the updated salary rate published annually by the Secretary in the Federal Register at least 60 days earlier (with the rate for American Samoa to be calculated at 84 percent of the updated salary rate, provided that when the highest industry minimum wage for American Samoa equals under the minimum wage under 29 U.S. C. 206(a)(1), exempt employees employed in all industries in American Samoa shall be paid the full salary rate), exclusive of board, lodging or other facilities.

(b): The required amount of compensation per week may be translated into equivalent amounts for periods longer than one week. The requirement will be met if the employee is compensated biweekly on a salary basis of $[DOUBLE THE 40TH PERCENTILE AMOUNT], semimonthly on a salary basis of $[THE 40TH PERCENTILE AMOUNT, MULTIPLIED BY 52 AND DIVIDED BY 24], or monthly on a salary basis of $[THE 40TH PERCENTILE AMOUNT MULTIPLIED BY 52 AND DIVIDED BY 12]

541.601:

(a): An employee with total annual compensation of at least $122,148 as of [EFFECTIVE DATE OF FINAL RULE] is deemed exempt under section 13(a)91) of the Act if the employee customarily and regularly performs any one or more of the exempt duties or responsibilities of an executive, administrative or professional employee identified in subparts B, C, or D of this part. As of [DATE TBD] on each subsequent year, such employee must be compensated on a salary bases at a rate per week of not less than the updated salary rate published annually by the Secretary in the Federal Register at least 60 days earlier is deemed exempt under section 13(a)(1) of the Act if the employee customarily and regularly performs any one or more of the exempt duties or responsibilities of an executive, administrative or professional employee identified in subparts B, C, or D of this part.

(b)(1): “Total annual compensation” must include at least a weekly amount that is as of [EFFECTIVE DATE OF FINAL RULE] $921 paid on a salary or fee basis. As of [DATE TBD] of each year, ‘total annual compensation” must include a weekly amount that is not less than the updated salary rate published annually by the Secretary in the Federal Register at least 60 days earlier, paid on a salary or fee basis.

(b)(2): Rate changes are applied to examples. 

541.604: Rate changes are applied to examples in (a) and (b) 

541.605(b): Rate changes are applied to examples. 

541.709: The requirement that the employee be paid “on a salary basis” does not apply to an employee in the motion picture producing industry who is compensated, as of [EFFECTIVE DATE OF FINAL RULE], at a base at of at least $1,404 per week (exclusive of board, lodging, or other facilities); and as of [DATE TBD] on each subsequent year, is compensated at a base rate of at least $[MOST RECENTLY EFFECTIVE MOTION PICTURE INDUSTRY BASE RATE INCREASED AT THE SAME RATIO AS THE STANDARD SALARY LEVEL IS INCREASED] (exclusive of board, lodging, or other facilities). Thus, an employee in this industry who is otherwise exempt under subparts B, C, or D of this part, and who is employed at a base rate of at least the applicable current minimum amount a week is exempt if paid a proportionate amount (based on  a week of not more than 6 days) for any week in which the employee does not work a full workweek for any reason. Moreover, an otherwise exempt employee in this industry qualifies for exemption if the employee is employed at a daily rate under the following circumstances:

(a): The employee is in a job category for which a weekly base rate is not provided and the daily rate would yield at least the minimum weekly amount if 6 days were worked; or

(b) The employee is in a job category having the minimum weekly base rate and the daily base rate is at least one-sixth of such weekly base rate.

Doug Hass is an associate at Franczek Radelet and the primary author of Wage & Hour Insights Blog.

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