Publications
Design Professional's Practice Bulletin
Volume 7, Number 1 — June 2003
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This Bulletin addresses recent developments affecting Design Professionals as well as business concerns as important as the specific professional and technical issues they face.
Editors: Richard J. Davies, Esquire and Neil P. Clain, Jr., Esquire
Major Changes Proposed to Fair Labor Standards Act (FLSA) Regulations covering Overtime Wages: Addressing the Economic Realities of the 21st Century Workplace
As you may know, the FLSA covers non-exempt employees and requires they be paid wages or salary at the rate of time and one-half for all time worked in excess of 40 hours in any work week. The federal law also provides for several types of employee classifications that are exempt from the overtime provisions of the Act.
For the first time in more than 50 years, the U.S. Department of Labor (DOL) has proposed sweeping new regulations under the FLSA, published in the Federal Register on March 31, 2003, many of which are beneficial to employers. The new regulations are subject to a 90-day public comment period only and could take effect as early as the third/fourth quarter of this year.
Key Features of Proposed Regulations
- For the professional employee exemption, the proposed regulation requires either knowledge of an advanced type in a field of science or learning acquired through course of specialized instruction or the equivalent of knowledge and skills gained through a combination of job experience or military training and course of instruction, thus relaxing the requirement of possessing a bachelor’s degree from a university. The new primary duties for the professional exemption are:
creative professionals (whose primary duty consists of work that is original and creative in character in a recognized field or artistic endeavor and the result of which depends primarily on the invention, imagination or talent of the employee), and
learned professionals (whose primary duty of performing office or non-manual work requiring advanced knowledge in a field of science or learning customarily acquired by either a course of specialized intellectual instruction OR acquired by an equivalent combination of intellectual instruction and work experience (this latter standard recognizes the exempt status “professional” position for an employee who has several years of engineering or architecture study at a university + several years of experience in the field of engineering, even though the employee does not have a bachelor’s degree in engineering or architecture);
- Dramatically changes the salary level for exempt status, increasing it from $155 per week to $425 weekly (or $21,100 annually);
- Modifies the definitions of FLSA’s “white-collar” exemptions for executive, administrative and professional positions by adopting a “primary duty” test in place of the “long test” which restricted exempt employees from devoting more than 20% of their time performing non-exempt duties;
- Permits employers to deduct the salary from exempt employees – without losing their exempt status – for full-day absences for disciplinary reasons due to infractions of workplace conduct rules (e.g., suspensions without pay because of sexual harassment, workplace violence and safety issues), thus treating exempt employees more fairly and uniformly as non-exempt employees who commit such infractions.
- Creates a new “safe harbor” provision, replacing the “window of correction” (where an employer makes an inadvertent impermissible salary deduction of an exempt employee), protecting an employer from losing the exemption for its salaried workforce where it: has a written policy prohibiting improper deductions, notifies employees of that policy, and reimburses employees for any improper deductions, so long as the improper deductions are not repeatedly and willfully violated.
Steps Employers Need to Consider Now
Employers should consider taking the following steps before the proposed regulations become final: 1) conduct an internal wage & hour audit; 2) review existing practices; 3) revise position descriptions; and 4) develop new policies.
Additional information about the proposed FLSA regulations covering overtime wages can be viewed at the DOL’s website: www.dol.gov.
A Note from the Editors: This Bulletin addresses recent developments affecting Design Professionals as well as business concerns as important as the specific professional and technical issues they face.
©2005 Powell, Trachtman, Logan, Carrle & Lombardo, P.C. This bulletin is intended for general information purposes only and does not constitute legal advice. The reader should consult with legal counsel to determine how laws, suggestions and illustrations apply to specific situations.
