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Amendment to Overtime Regulations

On April 23, 2004, the U.S. Department of Labor finally promulgated new regulations “defining and delimiting the exemptions for executive, administrative, professional, computer and outside sale employees.” These new regulations take effect 120 days from the date they were published in the Federal Register, subject to congressional review pursuant to the Congressional Review Act. There may also be court challenges pursuant to the Administrative Procedures Act.

The new regulations are limited to “white collar” employees. Thus, the new regulations do not apply to “blue collar” workers, for example, production line employees and non-management employees in maintenance and construction. The new regulations also do not apply to police, fire and emergency medical technicians.

Many items remain the same as the overtime regulations previously discussed. For example, there remain the three categories of employees – executive, administrative, and professional – who are not entitled to overtime. There remain two primary tests, the salaries test and the duties test, for determining exempt status. Job titles continue to be an insufficient way of determining whether or not an employee is exempt from overtime.  Definitions like “salary,” “primary duty,” and “discretion and independent judgment” continue to follow the traditional rules.

However, the new regulations update salary levels. The minimum salary to qualify for an exemption from overtime is $455 per week or $23,600 per year. Conversely, the new regulations establish a “highly compensated employee” category in which employees who earn $100,000 per year in base salary, commissions and non-discretionary bonuses are deemed exempt if they customarily and regularly perform one or more of the duties or responsibilities of an executive, administrative or professional employee.