Description
After more than 50 years, the U.S. Department of Labor (“DOL”) has issued new regulations revising the federal overtime exemption standards. The final regulations govern employers in virtually all industries. They define the “white collar exemptions” from the federal minimum wage and overtime rules for executive, administrative, professional, computer, and outside sales employees. They establish three tests that employees ordinarily must meet to be exempt. They also encourage employers to review their payroll practices and establish written policies that take advantage of a new “safe harbor” rule.
In this publication, Attorney Richard J. Simmons of the law firm of Sheppard, Mullin, Richter & Hampton LLP, reviews the breadth of the new rules and the updated exemption tests. The publication offers valuable insights into the critical features of the regulations, their relationship with California laws, and their impact on employers throughout the country. Among the subjects discussed in the publication are the following:
- Overview Of Regulations
- Executive Exemption
- Administrative Exemption
- Professional Exemption
- Salary Basis Standards
- Clarification Of Standards
- Salary Level Test
- Summary Of Changes
- Outside Sales Employee Exemption
- Exemption For Highly Paid Employees
- Computer Employee Exemptions
- Safe Harbor Rules
- Significance In California
- Key Definitions And Concepts
Table Of Contents
SECTION 1 INTRODUCTION
(a) Summary Of Key Changes
(b) Relevance Of State laws And Collective Bargaining Agreements
(c) The Clarification And Confirmation Of Existing Principles
(d) Blue Collar Workers
(e) Relevance Of Job Titles
SECTION 2 OVERVIEW OF REGULATIONS
SECTION 3 THE EXECUTIVE EXEMPTION
(a) The Executive Exemption Tests
(b) Examples of Management Activities
(c) The “Two Or More Employees” Standard
(d) Multi-tasking And Performing “Concurrent Duties”
(e) The “Particular Weight” Standard
(f) The Business Owner Rule
SECTION 4 THE ADMINISTRATIVE EXEMPTION
(a) The Administrative Exemption Tests
(b) The “Directly Related To Management Or General Business Operations” Standard
(c) The “Discretion And Independent Judgment” Standard
(d) Examples Of Administrative Employees
SECTION 5 THE PROFESSIONAL EXEMPTION
(a) The Professional Exemption Tests
(b) Learned Professionals
(c) Creative Professionals
(d) Other Bona Fide Professionals
SECTION 6 THE COMPUTER EMPLOYEE EXEMPTIONS
(a) Introduction
(b) Professional Exemption Standards For Salaried vs. Hourly Employees
(c) The Availability Of The Executive And Administrative Exemptions
SECTION 7 THE OUTSIDE SALES EMPLOYEE EXEMPTION
(a) The Outside Sales Employee Tests
(b) Away From The Employer’s Place Of Business
(c) The New Primary Duty Standard
SECTION 8 THE SALARY TESTS
(a) The General Standard
(b) The Salary Level Test
(c) Highly Compensated Employees
(d) At-A-Glance Review Of Salary Levels
(e) The Salary Basis Rules
(f) The Fee Basis Standard
(g) State Law Standards
SECTION 9 KEY DEFINITIONS AND CONCEPTS
(a) The “Primary Duty” Standard
(b) The “Customarily And Regularly” Standard
(c) “Directly And Closely Related Duties” Are Regarded As Exempt
(d) Effect Of Emergencies
(e) The Recharacterization Of “Occasional Tasks” As Exempt
(f) The Ability To Combine Or Tack Exemptions
(g) Trainees
(h) Use Of Manuals And Established Procedures
SECTION 10 THE AUTHORITY OF STATES TO MATCH OR EXCEED THE FEDERAL PROTECTIONS
(a) The Similarities Between The California And Federal Laws Underscore The Relevance Of The New Regulations
(b) The Key Distinctions Between The California And Federal Exemptions
(c) The Significance Of The New Federal Regulations
SECTION 11 PAYROLL COSTS AND EMPLOYER OPTIONS
APPENDIX A DEPARTMENT OF LABOR REGULATIONS DEFINING AND DELIMITING THE EXEMPTIONS FOR EXECUTIVE, ADMINISTRATIVE, PROFESSIONAL, OUTSIDE SALES AND COMPUTER EMPLOYEES (Issued April 23, 2004; Effective August 23, 2004) (29 C.F.R. Part 541)
APPENDIX B DEPARTMENT OF LABOR PROPOSED REGULATIONS (March 31, 2003)
APPENDIX C CALIFORNIA WAGE ORDER 5-2001
APPENDIX D PROVISIONS OF FEDERAL REGULATIONS IN 29 C.F.R. PART 541 INCORPORATED BY REFERENCE WITHIN IWC’S 2000 WAGE ORDERS
About The Author
Richard J. Simmons is a Partner in the law firm of Sheppard, Mullin, Richter & Hampton LLP in Los Angeles. He represents employers in various employment law matters involving litigation throughout the country and general advice regarding state and federal wage and hour laws, employment discrimination, wrongful discharge, employee discipline and termination, employee benefits, affirmative action, union representation proceedings, and arbitrations. Mr. Simmons received his B.A., summa cum laude, from the University of Massachusetts, where he was a Commonwealth Scholar and graduated in the Phi Kappa Phi Honor Society. He received his J.D. from Berkeley Law at the University of California at Berkeley where he was the Editor-in-Chief of the Industrial Relations Law Journal, now the Berkeley Journal of Employment and Labor Law.
Mr. Simmons argued the only case before the California Supreme Court that produced a victory for employers and business in 2018. He was recently recognized as the Labor and Employment Attorney of the Year by the Los Angeles Business Journal and was inducted into the Employment Lawyers Hall of Fame. He has lectured nationally on wage and hour, employment discrimination, wrongful termination, and other employment and labor relations matters. He is a member of the National Advisory Board to the Berkeley Journal of Employment and Labor Law, published by Berkeley Law at the University of California at Berkeley. He was also appointed by the California Industrial Welfare Commission as a member of three Minimum Wage Boards for the State of California.
