US Department of Labor logo.jpgLast week, we reminded you that the public comment period on the DOL’s proposed changes to the FLSA white collar exemptions was going to end on Friday, September 4, 2015, and the DOL was not going to extend this comment period despite requests to do so. True to its word, the public comment period came and went without an extension from the DOL. While this should come as no surprise, it will be interesting to see what the DOL does (if anything) with the 264,093 comments the agency received during the 60-day comment period. Many of those submitting comments were business owners, companies, employees, or others with a particular interest in the legislation. With so many comments, it is easy to imagine that the comments ran the full range of the spectrum, from support of the proposed changes to severe criticism. 

That being said, there were a number of employers who commented on the proposed rule’s broad applicability across regions, explaining that differences in the costs of living play a major role in the compensation of employees across the country. Unsurprisingly, the cost of complying with the proposed rule sparked a number of comments from concerned employers. 

Now that the public comment period has ended, the DOL will review the comments it received, and determine whether the agency will make any changes to the final rule before implementing it. We anticipate that the rule, in its final form, will be implemented some time in 2016.

In July, we wrote about the Department of Labor’s proposed changes to the regulations governing the white collar exemptions of the Fair Labor Standards Act. The current regulations governing these exemptions—executive, administrative, and professional—include a salary basis test by which to determine if an employee meets one of these exemptions. The salary basis test currently requires that an exempt employee be paid at least $455 per week (or $23,660 annually). Among other things, the proposed changes to the regulations would increase the salary test to $970 per week (or $50,440 annually) in 2016.

On August 31, 2015, the DOL reported to the House and Senate that it will not extend the 60-day public comment period for the proposed regulations, stating 60 days was sufficient to “produce a quality regulation” when coupled with the feedback received from the Department’s outreach sessions conducted before proposing the rule. As a result, the comment period is scheduled to end Friday, September 4, 2015. This will be the last chance for employers or other interested parties to make comments to be considered by the DOL and which could affect the final rules.

Following the close of the public comment period, employers can expect that the rules will likely go into effect some time in 2016.  Stay tuned.

 

The Illinois Minimum Wage Law (IMWL) generally provides that non-exempt employees must be paid one-and-one-half times their regular rate of pay for all hours worked over 40 in a workweek. However, on July 10, 2015, Governor Rauner signed legislation amending the IMWL as it pertains to public employees who are members of a bargaining unit recognized by the Illinois Labor Relations Board.

The amendment provides that on January 1, 2016, a new exception will go into effect that will exclude from the overtime provisions of the IMWL:

Any employee who is a member of a bargaining unit recognized by the Illinois Labor Relations Board and whose union has contractually agreed to an alternate shift schedule as allowed by subsection (b) of Section 7 of the Fair Labor Standards Act of 1938. 820 ILCS 105/4a(2)(J).

 

In other words, the overtime provisions do not apply if a unionized public employee is covered by a collective bargaining agreement under the following two exceptions:

(1) the agreement limits the employees’ hours to no more than 1,040 hours in a 26-consecutive week period; or  

(2) the agreement provides:   

  • During a specified period of 52 consecutive weeks, an employee will not work more than 2,240 hours;
  • Guarantees an employee a minimum amount of work during the 52-week period, which must fall between either, at the low end of 1,840 hours or 46 weeks at the normal number of hours worked per week (not to total less than 30 hours per week), and 2,080 hours at the high end;
  • That the employee receive compensation at the rate specified in the agreement for all hours worked or guaranteed, and compensation at one-and-one-half times their regular rate for all hours worked over the guaranteed number that are also in excess of 40 in a workweek; and
  • That the employee receives overtime pay at one-and-one-half times the regular rate for all hours in excess of 2,080 hours during the 52-week period.

If the employee works a schedule under one of these two exemptions, the employee must receive compensation for all hours in excess of 12 in a workday or 56 in a workweek at the rate of one-and-one-half times their regular rate of pay.

Obviously, this exception does not apply to all employers. Although this exception has limited application, public employers should consider whether this exemption will potentially provide an avenue for reducing overtime costs.

Whenever I discuss federal law here on the blog, I usually add a disclaimer that reminds employers to check state and local laws before proceeding. With the proliferation of minimum wage increases, minding state and local laws is more important than ever. However, state laws can affect more than just the minimum wage. For instance, recently when answering questions certified to it by a federal district court, the Washington Supreme Court held that—as a matter of Washington state law—employers must pay employees for their rest breaks separately from their piece rate pay. The court further held that Washington law required that employers pay for those rest breaks at the greater of applicable minimum wage or the employee’s regular rate.

The Piece Rate Under the FLSA

We’ll cover the piece rate in more detail in a future post, but for now, it is enough to know that the Fair Labor Standards Act (FLSA) permits employers to pay non-exempt workers for their output, rather than by the hour. To ensure that the “regular rate of pay” complies with the FLSA’s minimum wage requirements, you divide the total weekly earnings by the total number of hours worked in that week. In the agriculture and construction industries, employers frequently pay this “piece rate” for discrete, repeated tasks. For example, rather than paying John $10.00 per hour, Widget Assemblers, Inc. can pay him $0.25 per widget correctly assembled. As long as the regular rate from assembling widgets exceeds the minimum wage, it is lawful under the FLSA. Of course, if John works more than 40 hours in a week assembling widgets, Widget Assemblers, Inc. must compensate him the overtime premium (based on his calculated regular rate that week). Alternatively, so long as the piece rate is enough to yield at least the minimum wage per hour, the company and John could agree beforehand that John will receive 1.5 times the normal piece rate for each piece produced during overtime hours. While this agreement is not technically required to be in writing, getting it in writing is strongly advised.

Piece work is well-suited to industries such as agriculture, construction, manufacturing, transportation, and more because it can benefit both the employer and the worker. The worker has an opportunity to increase his or her income (or to earn the same income in fewer hours) by being more efficient, while the employer can tie labor costs more directly to output.

The Washington Regulatory Quirk

In 2013, two farmworkers filed a class action in federal district court against their employer claiming that its (presumably FLSA-compliant) piece rate wage system deprived them of paid rest breaks that a Washington regulation, WAC 296-131-020(2), required. That regulation mandates that “[e]very employee shall be allowed a rest period of at least ten minutes, on the employer’s time, in each four-hour period of employment.” Of course, in a piece rate compensation system, employees on a break were not producing and therefore not earning their piece rate. According to the employees, “on the employer’s time” meant that an employer must pay a wage separate from the piece rate to compensate employees for the paid break.

Finding no authority from Washington courts as applied to piece rate workers in the roughly 25 years since the regulation was promulgated, the federal court ultimately certified two questions to the Washington Supreme Court: (1) Does a Washington agricultural employer have an obligation under WAC 296-131-020(2) and/or the Washington Minimum Wage Act to separately pay piece-rate workers for the rest breaks to which they are entitled? (2) If the answer is “yes,” how must employers calculate the rate of pay for the rest break time to which piece-rate workers are entitled? 

The parties agreed that employers must provide rest breaks to agricultural employees that agricultural employees are entitled to some form of payment for those breaks, and that to answer the question, the court needed to interpret WAC 296-131-020. The court rejected the employer’s argument that the piece rate was sufficient on its own, even though the practice is blessed by the FLSA. Observing that rest breaks are critical to the health and effectiveness of employees, particularly in agriculture, and that Washington courts had rejected payment schemes that incentivized missing rest breaks at the expense of employee health, the Washington Supreme Court concluded that the regulations reference to “on the employer’s time” would require employers to pay for rest breaks separately from the piece rate. 

On the second question, the court determined that because all hours worked “on the employer’s time” are treated equally, WAC 296-131-020(2) entitles pieceworkers to their regular rate of pay for rest break time. To calculate a pieceworker’s regular rate, employers tally the total piece rate earnings and divide those earnings by the hours the pieceworker actually worked (not including the rest breaks). The court contrasted this computation with the one employers used to assess minimum wage compliance, expressly noting that the paid rest break time is included in the denominator when the question is minimum wage compliance. 

The net effect for Washington employers who weren’t on the losing end of this litigation is not particularly significant in the long run. Washington employers paying employees a piece rate now need to pay rest breaks separately. However, by doing so, either by making the extra payments and absorbing the extra labor costs, or adjusting the piece rate to compensate for the added fees, the additional payment is relatively simple. Washington is not the only state with this particular piece rate requirement. California law imposes a similar requirement as well. 

The case should reinforce for employers that many state law rules and regulations are different and/or far more complex than federal law. It is not enough to rely on the FLSA alone when drafting compensation plans and auditing pay practices.

Thanks to all of our clients and friends for such a great turnout at today’s webinar on the new DOL overtime exemption rules and the Administrator’s Interpretation on independent contractors. In case you missed the webinar, or if you just want to go back and review the materials and recording, you can find both an audio recording of the program and the program materials at http://www.franczek.com/news-events-675.html.

As we mentioned during the webinar, you can find a direct link to the Administrator’s Interpretation here:

http://www.dol.gov/whd/workers/Misclassification/AI-2015_1.htm 

For those of you who attended today, if you have not already done so, please complete the survey below.  We very much value your feedback. Your comments help us as we plan for future events. If you are seeking Illinois MCLE or HRCI credit, you must complete the survey: 

https://www.surveymonkey.com/r/FRWebinar080415 

Whether you attended or not, if you have any questions about the webinar, please do not hesitate to contact Bill Pokorny at wrp@franczek.com.

 

FAQs17489126.jpgRecently, two blog readers asked a question about the use of compensatory (comp) time in the private sector during a discussion about tracking exempt employees’ hours worked. One reader’s company tracked exempt employees’ hours worked, and permitted the employees to “flex” any hours worked in excess of a normal workweek, either later that week or in future weeks on an hour-for-hour basis, subject to work loads and scheduling requirements. Another reader wondered if banking “flex” time would be an illegal use of comp time by a private employer. Let’s debunk that myth: Can you offer comp time, flex time, or some other additional compensated time off to your exempt employees? Yes! This is legal and permitted by the Fair Labor Standards Act (FLSA) regulations.

Continue Reading Can Employers Offer Compensatory Time to Exempt Employees? [Wage & Hour FAQ]

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As we have discussed in the past, to be eligible for one of the “white collar” exemptions (executive, administrative, or professional) or as a highly compensated employee (HCE), Section 541.600 of the FLSA regulations requires employers to compensate employees on a salary basis (currently $455 for white collar exemptions, but likely rising to around $970, and from $100,000 to $122,148 for HCEs), exclusive of board, lodging or other facilities. Under the current and, likely, the new regulations, exempt administrative, professional and highly compensated employees may also be paid that minimum weekly rate on a “fee basis.”

The Fee Basis

What is a “fee basis” for purposes of the regulations? Section 541.605 explains that an employee “will be considered to be paid on a ‘fee basis’ within the meaning of these regulations if the employee is paid an agreed sum for a single job regardless of the time required for its completion.”  Fee basis payments cannot be based on the number of hours or days worked, only the accomplishment of a task.  Does this sound like piecework that other parts of the regulations permit? It should, but with one critical difference outlined in the regulations: Fee basis payments to exempt employees are generally paid “for the kind of job that is unique.”  Piecework payments to non-exempt workers are typically made for an indefinite series of repeated, identical jobs. 

As one common example, many home health care providers make fee basis payments to registered nurses on a “per-visit basis.”  For purposes of our example, assume that the RNs treat patients, devise healthcare protocols, update the patient and the patient’s family regarding the patient’s condition, and, at times, supervise visits made by licensed practical nurses.  In other words, the visits are “the kind of job that is unique,” as required by the regulations (I mention this because not all home health care nurses perform unique duties, and this “uniqueness” issue has been the subject of litigation and DOL opinions in the past).  The RN would receive a certain amount for each visit they complete, as opposed to a salary (perhaps with incentives for the number of visits).  A per visit payment plan could work by paying a nurse an amount such as $50 per visit completed.

To evaluate whether the fee basis payments meet the salary level requirements, you need to know the number of hours that the employee worked on each fee basis job.  Fee basis payments only meet the salary level requirement for an exemption (here, the professional exemption for a registered nurse) if based on the time worked to complete the job, the fee is paid at a rate that would equal at least the current $455 per week if the employee worked 40 hours.

Let’s take two jobs.  In the first job, our nurse works 4 hours for the $50 fee.  In the second job, our nurse works 30 minutes for the same $50 fee.  Would these rates yield enough to meet the salary level for each job?  Job 2’s payment clearly meets the salary level test.  Our nurse received $50 for 30 minutes of work, or the equivalent of $100 per hour.  Over 40 hours, that rate would yield $4,000, which is far more than the current $455/week level or the proposed level.  Job 1, however, is more tricky.  $50 for 4 hours of work equates to $12.50 per hour.  If the nurse had worked 40 hours at that rate, he or she would have received $500.  That is more than the current $455/week level, but not above the proposed level.

Obviously, paying exempt employees on a fee basis gets more difficult with a higher salary level.  At $970 per week, variations in the length of time required to complete a job could more easily take an employee under the threshold, just as in our Job 1 example.  In a future post, we’ll discuss what happens when you “lose” the exemption for an employee because of an inadequate fee basis or, more seriously, due to improper deductions.

Confusion in the DOL’s Proposed Regulations

A couple of eagle-eyed readers noticed that, currently, Section 541.600 of the regulations—the regulation defining the white collar exemptions—states that “Administrative and professional employees may also be paid on a fee basis as defined in § 541.605.”  Critically, readers point out, that sentence is deleted from the new version of Section 541.600.

If that’s the case, it would have a substantial impact on home health care providers, accounting firms and others that rely on paying exempt professional or administrative employees on a fee basis.  Here’s the good news: having looked at the revised regulations, I don’t think that is what the DOL is doing here.  Instead, the DOL appears to be removing redundant language…at least I hope.  The “general rules” for both the administrative and professional employee exemptions (Sections 541.200 and 541.300, respectively) still permit those exempt employees to be “[c]ompensated on a salary or fee basis.”  The fee basis regulation itself, in Section 541.605, is unchanged, too.

However, if I am wrong, and the DOL is not just cleaning up language, it could find grounds to delete the fee basis option from the administrative and professional employees general rules, too.  That would mean that administrative and professional employees paid on a fee basis would lose their exemption under the new regulations. Even if the fee basis option remains, the drastically higher salary threshold could mean greater difficulty in meeting the salary level on each job.  If your business relies on paying exempt professional or administrative employees on a fee basis, take advantage of the public comment period on the new FLSA regulations that runs through September 4, 2015 and ask the DOL to explain why it deleted the sentence from Section 541.605 and outline the impact that the new regulations will have for you on the availability and utility of the fee basis.

The DOL continues to deliver on the promise of its busy summer. This morning, Department of Labor Wage and Hour Division (WHD) Administrator Dr. David Weil announced a new, 15-page Administrator’s Interpretation in a DOL blog post that stressed the FLSA’s expansive definition of employment and reinforced the WHD’s position that most workers qualify as employees under the FLSA. In the run-up to the release of the proposed Fair Labor Standards Act (FLSA) regulations, Dr. Weil announced in a speech at NYU’s law school that his office would soon issue guidance that would “clarify” who qualifies as an independent contractor under the FLSA by providing a “very clear set of criteria.” Although its impact on litigation remains to be seen, the DOL does clearly outline its position that:

most workers are employees under the FLSA’s broad definitions . . .  The very broad definition of employment under the FLSA as ‘to suffer or permit to work’ and the act’s intended expansive coverage for workers must be considered when applying the economic realities factors to determine whether a worker is an employee or an independent contractor.

The Administrator’s Interpretation presents no new sets of “economic realities” criteria, but it does provide clarity: the WHD does not seem to care about the application of the economic realities test. The WHD uses the phrase “economically dependent” 21 separate times in the Interpretation. The document repeatedly steers stakeholders and courts away from the “mechanical application” of economic realities factors and toward this focus on the economic dependence of the worker. Dr. Weil’s blog post drives that point home:

Ultimately, the goal is not simply to tally which factors are met, but to determine whether the worker is economically dependent on the employer (and thus its employee) or is really in business for him or herself (and thus its independent contractor).

The DOL also notes one expanding area of enforcement in footnote 4, highlighting something that we discussed an example of last spring with faux “franchises”: employees increasingly being “labeled something else, such as ‘owners,’ ‘partners,’ or ‘members of a limited liability company.’” The DOL explains that these labels are not important, and that “the determination of whether the workers are in fact FLSA covered employees is also made by applying an economic realities analysis” toward this economic dependence/independence conclusion.

As those of you who follow this blog know, independent contractor definitions impact not just what you traditionally think of as contractors, but also jobs in the “sharing economy,” volunteers, franchisees, state law definitions of “employees,” and even the use of homeless people as wireless hotspots. This employee/independent contractor issue is among the most litigated in wage and hour law, and the DOL’s Administrator’s Interpretation suggests that the WHD prefers to boil the economic realities factors down to this single, “Is the worker economically dependent?” question.

Employers using just in time or other unpredictable scheduling methods or who rely on the “sharing economy” like Uber, Instacart, Postmates, Homejoy, and Handy get another special shout out, in case the “economically dependent” language wasn’t sufficient enough:

Technological advances and enhanced monitoring mechanisms may encourage companies to engage workers not as employees yet maintain stringent control over aspects of the workers’ jobs, from their schedules, to the way that they dress, to the tasks that they carry out. Some employers assert that the control that they exercise over workers is due to the nature of their business, regulatory requirements, or the desire to ensure that their customers are satisfied. However, control exercised over a worker, even for any or all of those reasons, still indicates that the worker is an employee.

Though not expressly identifying its “predictable scheduling” goals or addressing the sharing economy by name, this view—and DOL’s focus on “economic dependence” as a whole—will undoubtedly color the ongoing debates about employee/independent contractor status and the so-called sharing economy. This all-or-nothing dependence is glaring weakness in the FLSA when compared to similar laws in other countries. On this point, I will be presenting a paper in September urging the adoption of a “dependent contractor” classification under the FLSA. In many European countries, this classification sits between employee and independent contractor.  I will share more details over the next couple of months here on the Wage & Hour Insights blog and over at Social Science Research Network (SSRN).

Otherwise, the Administrator’s Interpretation treads familiar ground. The “economic realities” test is not new, and the Interpretation lists the standard six factors in subsections A through F:

  1. Is the work an integral part of the employer’s business?
  2. Does the worker’s managerial skill affect the worker’s opportunity for profit or loss?
  3. How does the worker’s relative investment compare to the employer’s investment?
  4. Does the work performed require special skill and initiative?
  5. Is the relationship between the worker and the employer permanent or indefinite?
  6. What is the nature and degree of the employer’s control?

As the DOL reminds employers, none of these factors is dispositive on its own, but just a guide to answer this “economically dependent” question. 

Unlike the new FLSA regulations, Administrator’s Interpretations do not require any notice and comment period and do not carry the force of law in the way a regulation would, but courts do give these interpretations deference. Administrator’s Interpretations have been few and far between since the DOL first began using them in 2010, and this is one of the few times that the Wage and Hour Division has used one to signal a significant new expansion of the FLSA. We will be watching how the DOL employs this Administrator’s Interpretation in the coming months, and will keep you up to date on any shifts in enforcement or litigation positions at the DOL.

FAQs17489126.jpgAs you undoubtedly know by now, the Department of Labor’s Wage & Hour Division (WHD) finally announced its long-promised proposal to amend the Fair Labor Standards Act (FLSA) Regulations and, in particular, those governing the “white collar” exemption for executive, administrative, and professional employees. For our comprehensive discussion of the changes in the DOL’s Notice of Proposed Rulemaking (NPRM), see our previous coverage on What Changed, What Didn’t, What’s Next for Employers. Over the past two weeks, I have fielded a number of questions from employers and their attorneys about how this regulation will apply to employers. Let’s answer a few: 

Q. In your coverage, you say that the new salary level will be $970 per week, but in the regulations you posted, it says $921 per week. Which is it? Thanks for the clarification. 

The answer is that it is both, in a way. Unlike all prior iterations of the FLSA regulations, the DOL did not set an actual weekly salary amount. Instead, the proposed FLSA rules increase in the minimum weekly salary to a level. The DOL proposes setting the minimum salary level equal to the 40th percentile of weekly earnings for full-time salaried workers, based on Bureau of Labor Statistics (BLS) data. Conveniently for the regulations (I don’t believe in coincidences like this), the BLS began tabulating quarterly research data series on the usual weekly earnings of non-hourly full-time workers in January of this year. In 2013, the BLS’s tabulation says that number equaled $921 per week (or just under $48,000 per year). This is the number that appears in the proposed regulations.

For 2014, the BLS calculated the usual weekly earnings for the 40th percentile as $933 per week ($49,920 per year). By the time the regulations are finalized in 2016, the BLS will have released the 2015 annual totals. In the preamble to the NPRM (see the footnote on pages 7 and 8), the DOL projected that the 2016 level would increase to $970 per week, or $50,440 per year. That’s the headline number you have been seeing in coverage here and elsewhere in the media.

Q. Our school district employs a number of teachers, mostly at entry levels, below $50,000 per year. Do we need to consider raising their salaries?

No. Not every employee is affected by this regulatory change. Obviously, non-exempt workers (whether salaried or paid hourly) are included, but so are other employees. Teachers, for example, are exempt under the “professional” exemption provided in Section 13(a)(1) of the FLSA, but are not subject to the “salary basis” or minimum salary requirements that apply to other professional employees. The same is true of people like me authorized to practice law who are actually practicing law, as well as:

  • Salespeople falling within the “outside salesman” exemption;
  • Employees authorized to practice medicine or any of its branches who are actually engaged in the relevant practice;
  • Employees holding the degree required to practice medicine who are working in a medical internship or residency; and
  • Employees whose work meets the computer-employee exemption requirements who are paid on an hourly basis at a rate of at least $27.63.

The latter category’s hourly rate isn’t changing in the proposed regulations. If you do the math, computer professionals under this exemption already would make well over $50,000.

Q. Can the DOL really make changes to the “duties” test without first offering a proposal for comment?

TL;DR: maybe. As I discussed with media outlets in the past two weeks, one of the less transparent parts of the DOL’s proposal is whatever change to the white collar exemptions’ duties tests the DOL might be contemplating. The NPRM does not contain any proposals for changing these rules, even a “preferred” option for what the executive, administrative, and professional exemptions should look like in the final rule. The salary level proposal is the more common way for agencies to amend regulations: propose preferred terms (or at least their substance) and permit the public to comment. This procedure makes logical sense under the APA. Without some indication of what the DOL wants to do, the public would not get the meaningful opportunity to comment on a proposed regulation that the APA contemplates.

If the DOL decides that the salary level change is not enough and makes changes to these exemptions—still a big “if” at this point, since the DOL’s proposal has reaffirmed “that the salary level is the ‘best single test’ of exempt status”—the use of general questions and information gathering does not at first glance seem to comply with the spirit of the Supreme Court’s recent Perez v. Mortgage Bankers Association decision. That case dealt primarily with agency interpretations, rather than rulemaking, but contained some important reaffirmations about what an agency’s proposed rulemaking must normally include.

The preamble to the DOL’s proposed FLSA rules affirmatively state that the agency “is seeking additional information on the duties tests for consideration in the Final Rule.” Under the Administrative Procedure Act (APA), agencies must provide “either the terms or substance of the proposed rule or a description of the subjects and issues involved.” Clearly, the DOL has not done the former. The NPRM’s requests for information instead fall into the gray area of the APA’s requirement that an agency provide “a description of the subjects and issues involved.” I conclude “maybe” above because while an agency must provide some notice sufficient to apprise the public of the issues involved, the APA does not require agencies to specifically state every regulatory proposal in detail. Which side of the acceptability/ unacceptability line this request for information falls will likely be resolved by litigation if the DOL moves forward with duties test changes without a second intervening proposed rule.

As I mentioned in my post about Perez, at least four justices, if not more, suggested that a broader review of whether to defer to agencies is appropriate. Amending the duties tests might be expedient in the waning days of the Obama administration, but it might open the DOL and other federal agencies to broader limitations on how they promulgate rules and interpret them. Caveat regulator?

Either way, employers cannot assume that APA litigation will save the day on any potential duties test changes in the final rule. The public comment period on the FLSA regulations runs through September 4, 2015. Employers who would be impacted by the DOL’s adoption of California’s duties test rules (or something similar) should file comments now while they have the chance. You still might be blindsided by a final rule, but at least you will have taken the limited opportunity you have to influence the DOL’s thinking on the subject.

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.