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DOL/WHD RIN: 1235-AA11 Publication ID: Fall 2015 
Title: Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees 

The Department proposes to update the regulations governing which executive, administrative, and professional employees (white collar workers) are entitled to the Fair Labor Standards Act’s minimum wage and overtime pay protections. Key provisions of the proposed rule include: (1) setting the standard salary level required for exemption at the 40th percentile of weekly earnings for full-time salaried workers (projected to be $970 per week, or $50,440 annually, in 2016); (2) increasing the total annual compensation requirement needed to exempt highly compensated employees to the annualized value of the 90th percentile of weekly earnings of full-time salaried workers ($122,148 annually); and (3) establishing a mechanism for automatically updating the salary and compensation levels going forward to ensure that they will continue to provide a useful and effective test for exemption. The Department last updated these regulations in 2004, which, among other items, set the standard salary level at not less than $455 per week.

Agency: Department of Labor(DOL)  Priority: Economically Significant 
RIN Status: Previously published in the Unified Agenda Agenda Stage of Rulemaking: Final Rule Stage 
Major: Yes  Unfunded Mandates: Private Sector 
CFR Citation: 29 CFR 541   
Legal Authority: 29 U.S.C. 213(a)(1) (Fair Labor Standards Act)   
Legal Deadline:  None

Statement of Need:

On March 13, 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. 79 FR 18737 (Apr. 3, 2014). Consistent with the President's goal of ensuring workers are paid a fair day's pay for a fair 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.


Summary of the Legal Basis:

There are a number of exemptions from the FLSA's minimum wage and overtime requirements. Section 13(a)(1) of the FLSA, codified at 29 U.S.C. 213(a)(1), exempts from both minimum wage and overtime protection "any employee employed in a bona fide executive, administrative, or professional capacity . . . or in the capacity of outside salesman (as such terms are defined and delimited from time to time by regulations of the Secretary, subject to the provisions of [the Administrative Procedure Act] . . .)." The FLSA does not define the terms "executive,'' "administrative,'' "professional,'" or "outside salesman.'' Pursuant to Congress' grant of rulemaking authority, the Department in 1938 issued the first regulations at 29 CFR part 541, defining the scope of the section 13(a)(1) exemptions. Because Congress explicitly delegated to the Secretary of Labor the power to define and delimit the specific terms of the exemptions through notice and comment rulemaking, the regulations so issued have the binding effect of law. See Batterton v. Francis, 432 U.S. 416, 425 n.9 (1977).


Alternatives were listed in the Department’s NPRM published in the Federal Register July 6, 2015 (80 FR 38516).


Anticipated Costs and Benefits:

Detailed analysis of the costs and benefits is included in the Department’s NPRM published in the Federal Register July 6, 2015 (80 FR 38516).



Risks were discussed in the NPRM published in the Federal Register July 6, 2015 (80 FR 38516).


Action Date FR Cite
NPRM  07/06/2015  80 FR 38516   
NPRM Comment Period End  09/04/2015 
Final Rule  07/00/2016 
Regulatory Flexibility Analysis Required: Yes  Government Levels Affected: Federal, Local, State, Tribal 
Small Entities Affected: Businesses, Governmental Jurisdictions, Organizations  Federalism: No 
Included in the Regulatory Plan: Yes 
RIN Data Printed in the FR: Yes 
Agency Contact:
Mary Ziegler
Assistant Administrator, Office of Policy, Wage and Hour (WHD)
Department of Labor
Wage and Hour Division
200 Constitution Avenue NW., Room S-3502, FP Building,
Washington, DC 20210
Phone:202 693-0406
Fax:202 693-1387

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