What changes result from the final FLSA white-collar regulations?

On April 23, 2004, the Department of Labor (DOL) issued final regulations that revise the Fair Labor Standards Act's white-collar exemption rules. The long-awaited regulations, which became effective August 23, 2004, address the criteria for determining exemption from the law's minimum wage and overtime pay provisions.

Among its many provisions, the rules include the following:

• Organizational changes. The text of the final rules is consolidated and streamlined. The DOL minimized redundancies and made the rules more understandable and easier to decipher when applying them to particular factual situations.

• Revised salary minimum. The final rules raise the salary level test, under which white-collar workers automatically qualify for overtime pay. This level increases to $455 per week ($23,660 annually), up from $155 per week (and $170 per week for professionals). The new salary threshold applies to executive, administrative and professional employees; there is no longer a separate salary threshold for professionals.

• No more short and long tests. The previous rules included a short test and a long test for determining exempt status. Under the 2004 regulations, the minimum salary level is referred to as the standard test, and the short and long terminology has been eliminated. For more information about the duties tests, see ¶34,080 .

• Highly compensated employees. The new regulations introduce a provision under which a highly compensated employee may more readily be classified as exempt. If the employee earns at least $100,000 per year and performs office or non-manual work, the employee will be considered exempt if he or she customarily and regularly performs one or more aspects of the exemption tests for executives, administrators or professionals.

• Disciplinary deductions. Under the old regulations, disciplinary deductions could only be made as penalties for infractions of safety rules of major significance and for one or more full workweeks. The 2004 rules allow an employer to suspend an exempt employee without pay for one of more full workdays for serious conduct violations, such as sexual harassment or workplace violence. Such deductions will not jeopardize exempt status.

• Discretion and independent judgment. The DOL retained the discretion and independent judgment language in its final version of the rules. However, the DOL did eliminate, with the demise of the long test, its requirement that exempt employees in all white-collar categories devote not more than 20 percent of their work to nonexempt activities.

• Blue-collar workers. The final regulations clarify that manual laborers and other blue-collar workers are not affected by the new rules. Similarly, police officers, firefighters, paramedics and other emergency service workers are not affected.

To view the full text of the final regulations, refer to Part 541 under the Federal Regulations tab.