TEN_36-15_Acc.pdf

ETA Advisory File Text

TRAINING AND EMPLOYMENT NOTICE NO. 36-15 DATE May 23 2016 EMPLOYMENT AND TRAINING ADMINISTRATION U.S. DEPARTMENT OF LABOR WASHINGTON D.C. 20210 TO State Workforce Agencies State Workforce Liaisons Affiliate American Job Center Managers Comprehensive American Job Center Managers Community College Presidents All Department of Labor Employment and Training Administration Grantees Department of Labor Employment and Training Administration Regional Administrators Department of Labor Veterans Employment and Training Regional Administrators Rapid Response Coordinators State Apprenticeship Agencies State Directors for Veterans Employment and Training Governors Job Corps Contractors State Labor Commissioners State Labor Market Information Directors State Unemployment Insurance Directors State Veterans Affairs Agency Directors State Workforce Innovation and Opportunity Act Liaisons State Workforce Agencies Administrators State Workforce Administrators Unemployment Insurance State Workforce Administrators Workforce Innovation and Opportunity Act State Workforce Administrators Wagner-Peyser State Workforce Agency Veterans Coordinators Advisory Committee on Apprenticeship Trade Adjustment Assistance Leads Workforce Development Board Local Chairs Workforce Development Board State Chairs Workforce Development Board State Executive Directors Workforce Development Board Local Executive Directors Workforce Information Council State Labor Market Directors FROM PORTIA WU s Assistant Secretary SUBJEC T Department of Labor Wage Hour Division WHD Overtime Final Rule 2 1. Purpose. To announce the publication of the Final Rule Defining and Delimiting the Exemptions for Executive Administrative Professional Outside Sales and Computer Employees under the Fair Labor Standards Act. 2. References. Fair Labor Standards Act FLSA https www.dol.gov whd flsa 3. Background. In 2014 President Obama signed a Presidential Memorandum directing the Department to update the regulations defining which white collar workers are protected by the FLSA s minimum wage and overtime standards. Consistent with the President s goal of ensuring workers are paid a fair day s pay for a hard day s work the memorandum instructed the Department to look for ways to modernize and simplify the regulations while ensuring that the FLSA s intended overtime protections are fully implemented. The Department conducted months of extensive consultations with employers workers and other stakeholders to develop the proposed rule published a Notice of Proposed Rulemaking NPRM in the Federal Register on July 6 2015 80 FR 38515 and invited interested parties to submit written comments on the proposed rule at www.regulations.gov by September 4 2015. The Department received over 270 000 comments in response to the NPRM from a variety of interested stakeholders. The feedback the Department received helped shape the Final Rule which was published in the Federal Register https www.federalregister.gov articles 2016 05 23 2016-11754 defining-and-delimiting- the-exemptions-for-executive-administrative-professional-outside-sales-and on May 23 2016. 4. Department of Labor Wage Hour Division WHD Overtime Final Rule. As a general matter the FLSA requires that employees be paid minimum wage and overtime pay unless an exemption applies. This Final Rule updates the regulations for determining whether white collar salaried employees are exempt from the Fair Labor Standards Act s minimum wage and overtime pay protections. Presently they are exempt if they are 1 paid on a salary basis 2 paid no less than the salary level test currently 455 per week or the equivalent of 23 660 for a full year worker and 3 employed in a bona fide executive administrative or professional capacity as those terms are defined in the Department of Labor s regulations at 29 CFR part 541 . This exemption from the FLSA is sometimes referred to as the white collar or EAP exemption. The salary threshold set in the rule will help identify employees who are entitled to overtime pay when they work long hours. Employees earning under the threshold are entitled to overtime protection while employees earning more than the threshold may be exempt from overtime protection depending on their job duties. The threshold has been updated only once in the last 41 years. The existing salary level is too low to work with the duties test it was paired with and it has since been severely eroded by inflation. To restore the effectiveness of the salary level test the Department is increasing the standard salary level from 455 per week 23 660 for a full-year worker to 913 per week 47 476 for a full-year worker . 3 T here are no changes to the standard duties test for the white collar exemption. For employees with salaries above the salary level employers will continue to use the same test to determine whether or not an employee s duties entitle him or her to overtime pay. This long-awaited update will provide a meaningful boost to workers and help ensure workers are compensated for their work. The final rule will strengthen overtime protections for salaried workers already entitled to overtime and provide greater clarity for workers and employers. The rule will also prevent a future erosion of overtime protections and ensure greater predictability. In order to prevent the salary level requirements from again becoming outdated and ineffective the Department is establishing mechanisms for automatically updating the salary and compensation levels every three years to maintain them at the levels set in this rulemaking. The rule takes effect on December 1 2016. 5. Action Requested. The final rule contains further important details regarding the application of the white collar exemption. All ETA grantees and contractors should familiarize themselves with the final rule by reviewing the attached resources and visiting http www.dol.gov WHD overtime final2016 for additional information and upcoming technical assistance opportunities. 6. Inquiries. Please direct questions to the appropriate ETA regional office. ETA will work with the Wage and Hour Division to answer questions and help grantees and contractors plan for compliance with the rule which takes effect December 1 2016. 7. Attachments. Overview and Summary of Final Rule https www.dol.gov sites default files overtime- overview.pdf WHD Fact Sheet https www.dol.gov WHD overtime final2016 overtime-factsheet.htm Provides a technical overview of the key provisions of the final rule . Guidance for General Private Sector Employers https www.dol.gov whd overtime final2016 general-guidance.pdf Discusses the basics of this exemption and options for implementation. Guidance for Non-Profit Organizations https www.dol.gov whd overtime final2016 nonprofit-guidance.pdf Provides particular guidance on issues that may be of interest to non-profit organizations including guidance on enterprise coverage as it relates to charitable activities. Guidance for Higher Education Institutions https www.dol.gov whd overtime final2016 highered-guidance.pdf Provides specific guidance on the exemptions for teaching academic administrative professionals and other unique provisions of the FLSA for educational institutions. 4 Fact Sheet Overtime Final Rule and State Local Governments https www.dol.gov sites default files overtime-government.pdf Details FLSA provisions specific to state local government employers including topics such as compensatory time and application to legislative branch employees. Fact Sheet 17A Exemption for Executive Administrative Professional Computer Outside Sales Employees Under the Fair Labor Standards Act https www.dol.gov whd overtime fs17a overview.htm Provides a technical overview of the white collar exemption and duties test. Small Entity Compliance Guide to the FLSA s White Collar Exemptions https www.dol.gov whd overtime final2016 smallbusinessguide.pdf Provides detailed information on the salary level tests duties tests and white collar exemptions.