duties test. Assuming that a worker was paid on a salary basis, the exemptions would be met if a worker passed either a “long” test, which involved a more rigorous set of duties criteria, paired with a lower salary level, or a “short” test, which imposed fewer duties requirements, paired with a higher salary level. In the 1975 update, the last before the 2004 Final Rule, the Department set the long test salary levels at $155 per week for executive and administrative employees and $170 per week for professional employees. The short test salary level was set at $250 per week for all three EAP categories. In 2004, the Department replaced the two-test structure with a single “standard” duties test for each category, which closely resembles the former short test duties requirements, and a single salary level test of $455 per week based on an update of the 1975 long test salary level. The Department also introduced a highly compensated employee (HCE) exemption in the 2004 Final Rule, under which an employee may be exempt if he or she passes a very minimal duties test, receives at least $455 per week paid on a salary basis, and is highly compensated, defined in the 2004 Final Rule as earning total annual compensation, which may include commissions and nondiscretionary bonuses in addition to a salary, of at least $100,000. The HCE duties test is much more abbreviated than the historical short test duties requirements. The premise behind the salary level tests is that employers are more likely to pay higher salaries to workers in bona fide EAP jobs than to workers performing nonexempt duties. A high salary is considered a measure of an employer's good faith in classifying an employee as exempt, because an employer is less likely to have misclassified a worker as exempt if he or she is paid a high wage. Stein Report at 5; Weiss Report at 8. The salary level requirement was created to identify the dividing line distinguishing workers performing truly exempt duties from the nonexempt workers Congress intended to be protected by the FLSA's minimum wage and overtime provisions. Throughout the regulatory history of the FLSA, the Department has considered the salary level test the “best single test” of exempt status. Stein Report at 19. This bright-line test is easily observed, objective, and clear. Id.
duties test. Assuming that a worker was paid on a salary basis, the exemptions would be met if a worker passed either a “long” test, which involved a more rigorous set of duties criteria, paired with a lower salary level, or a “short” test, which imposed fewer duties requirements, paired with a higher salary level. In the 1975 update, the last before the 2004 Final Rule, the Department set the long test salary levels at $155 per week for executive and administrative employees and $170 per week for professional employees. The short test salary level was set at $250 per week for all three EAP categories. In 2004, the Department replaced the two-test structure with a single “standard” duties test for each category, which closely resembles the former short test duties requirements, and a single salary level test of $455 per week based on an update of the 1975 long test salary level. The Department also introduced a highly compensated employee (HCE) exemption in the 2004 Final Rule, under which an employee may be exempt if he or she passes a very minimal duties test, receives at least $455 per week paid on a salary basis, and is highly compensated, defined in the 2004 Final Rule as earning total annual compensation, which may include commissions and nondiscretionary bonuses in addition to a salary, of at least $100,000. The HCE duties test is much more abbreviated than the historical short test duties requirements. The premise behind the salary level tests is that employers are more likely to pay higher salaries to workers in bona fide EAP jobs than to workers performing nonexempt duties. A high salary is considered a measure of an employer's good faith in classifying an employee as exempt, because an employer is less likely to have misclassified a worker as exempt if he or she is paid a high wage. Stein Report at 5; Weiss Report at 8. The salary level requirement was created to identify the dividing line distinguishing workers performing truly exempt duties from the nonexempt workers Congress intended to be protected by the FLSA's minimum wage and overtime provisions. Throughout the regulatory history of the FLSA, the Department has considered the salary level test the “best single test” of exempt status. Stein Report at 19. This bright-line test is easily observed, objective, and clear. Id.
FLSA_Proposed_Rule_Changes_.docx