New Overtime Regulations Go into Effect August 2004

Earlier this year the United States Department of Labor ("DOL") issued new regulations to the Fair Labor Standards Act ("FLSA") that alter the salary and duties tests used to determine who is eligible to receive overtime pay. These long awaited changes, currently scheduled to take effect on August 23, 2004, are a scaled back version of the original changes proposed by the DOL one year ago.

The changes are expected to cost employers approximately $700 million to implement, but then produce savings of more than $1 billion annually. The original version of the proposed changes was harshly criticized by labor leaders and some legislators, and despite the Department's softening of many provisions, the new rules are likely to be the center of continued controversy.

The new overtime rules also created a new standard duties test to determine whether employees earning between $23,660 and $100,000 per year are entitled to overtime. This revised duties test replaces the long and short duties tests used under the existing rules scheme. Among other things, the new standard duties test imposes new requirements on the executive and administrative exemptions and offers more examples than its predecessor as to what jobs might qualify for an exemption.

CCH has issued an Employment Law Briefing analyzing the significant changes contained in this much-debated measure in clear, easy-to-understand terms.

Highlights of the Briefing include:

  • A chart comparing key provisions of the current and proposed tests
    for executive, administrative and professional employees;
  • An employer "to do" list on implementing the new rules;
  • A discussion of the exempt status of journalists; and
  • A "two-minute history" that provides essential background on the
    original purposes of the Fair Labor Standards Act and a perspective for
    evaluating the proposed changes in light of those purposes.

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