FM Oct 04 PDF - Orlando Chamber of Commerce

Because labor and employment laws are so complex, FirstMonday is presenting a
series of articles by local attorneys to help Chamber Members identify labor issues
and avoid possible pitfalls.
Stop, Look and Listen
Important wage and hour laws implemented.
By Theresa M. Gallion, Esq., Fisher & Phillips LLP
On Aug. 23, 2004, the U.S.
Labor Department’s new regulations
defining the Fair Labor Standards
Act’s executive, administrative,
professional, and outside-sales
exemptions went into effect. The
“white collar” exemption status of
employees will now be controlled
by those revised rules.
The battle over these exemptions
is not over, and employers
will want to stay abreast of what
could be increasingly fast-breaking
developments so that they can
make their views known to senators
and representatives in a timely way;
proponents of the modifications
can certainly be expected to do so.
Any employers who haven’t
already evaluated where they stand
should move ahead with compliance
efforts immediately. Among the best
first steps are:
1. Ensure that you have detailed,
accurate, up-to-date information
about what your exempt or
potentially-exempt employees’
job duties actually are
2. Evaluate whether similar
exemptions from the overtime laws
of other jurisdictions in which you
employ people will or will not be
affected by these changes
3. Look into whether your other pay
practices are in compliance with all
applicable wage and hour laws.
General Observations
The new regulations bumped the
minimum exemption pay threshold
for the executive, administrative,
and professional exemptions to
$455 per week.
The threshold “total annual
compensation” triggering the new
exemption for “highly compensated
employees” is at $100,000. In order to
be an exempt, highly compensated
employee, a person must also receive
a salary or fee basis of at least $455
per week, and their total annual
compensation must be at least
$100,000. These persons must also
perform work that is conducted in
an office or is otherwise non-manual.
The new rules do
contain explicit statements
that these exemptions
do not apply to various
manual laborers or other
“blue collar” workers “no
matter how highly paid
they might be.”
The new regulations
also expressly state that
they do not apply to police officers,
fire fighters, other law-enforcement
personnel, rescue workers, EMTs,
paramedics, and similarly situated
persons “regardless of rank or
pay level.”
Revised Exemptions
The executive exemption has
been modified to require a new
level of authority, specifically the
authority to hire or fire, or to be an
individual whose suggestions and
recommendations as to hiring,
firing, advancement, promotion,
or any other change of employee
status is given particular weight.
The key change with respect to
the administrative exemption is that
the work of persons properly exempt
under this classification must include
the exercise of discretion and independent
judgment with respect to
matters of significance. It’s expected
that the Department of Labor
will take steps to ensure that the
administrative employee exemption
is not over-used.
The primary duty test for
administrative is unchanged, except
that the term “management” is
now “management policies.” Many
observers feel this is an effort to
broaden the administrative exemption,
such that the primary duty is
now being engaged in office or
non-manual work, directly related to
the management polices or general
business operations of the employer
or the employer’s customers.
Several changes were made
in the description of professional
employees. The intent of the
Department of Labor is to ensure
that true professionals perform work
that is predominately intellectual
Theresa M. Gallion
and which must include
the consistent exercise of
discretion and judgment.
This could also include
work requiring invention,
imagination, originality,
or talent in a recognized
field of artistic or
creative endeavor.
Professional employees
continue to include persons who
perform work requiring knowledge
of an advanced type in a field of
science or learning customarily
acquired by a prolonged course of
specialized intellectual instruction.
Other Key Changes
One new rule allows for unpaid
disciplinary suspensions of one or
more full days “imposed in good
faith for infractions of workplace
conduct rules,” but only if imposed
“pursuant to a written policy
applicable to all employees.” It’s
anticipated that an example of this
policy is unpaid suspensions for
violating a sexual harassment policy
or a workplace violence policy.
As most employers know,
exemptions are also dependent
upon being paid on a “salary basis.”
Improper deductions that threaten
the salary basis can also threaten
the exemption. To avoid situations
where the salary basis is adversely
affected, perhaps unintentionally,
the new regulations create a
“safe harbor” if there is a clearly
communicated policy prohibiting
improper pay deductions including
a complaint mechanism, employees
are reimbursed when mistakes
are discovered, and the employer
makes a good-faith commitment
to comply with the salary basis
rules in the future.
Only time will tell the impact of
the new wage and hour regulations.
Cautious employers in Central
Florida should stop long enough to
evaluate the impact of these regulations
on their business practices.
For more, contact Theresa Gallion
at 407-541-0876.
FM OCTOBER 2004 11