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The Department of Labor's new Fair Labor Standards Act (FLSA) (Wage and Hour Regulations) regulations, which went into effect Aug. 23, 2004, are an attempt to modernize pay scales, increase employee coverage, and clarify rules for employers. The salary levels had not been updated since 1975. The Korean War had not yet begun the last time the primary duties regulations were revised, and until last August, the regulations included such anachronistic titles as “legmen,” “straw bosses,” and “key punch operators.” Nevertheless, if one were to judge merely by the sheer number of opinion letters the U.S. Department of Labor (DOL) has issued since the regulations went into effect, it would seem that the new regulations have generated as much confusion as the previous ones. The DOL has issued 31 opinion letters since the effective date of the new regulations, nearly as many opinion letters as for the entire years 2001, 2002, and 2003. This article will summarize the major changes brought about by the FLSA regulations and examine this recent spate of DOL opinion letters. [Ed. Note: Readers can keep up with DOL's writing spate online. See the sidebar below.]
The New Regulations
The DOL's new regulations focus on two areas: the salary basis test and the duties test. The base salary requirement for an exemption has been nearly tripled, and the “highly compensated” test has been increased by $35,000. With regard to duties, various changes have been made to the duties of exempt “white-collar” employees (classified as administrative, professional, computer, and highly compensated). The DOL estimates its new regulations strengthen overtime protection for more than 6.7 million employees, while the “highly compensated” test may remove overtime protection for 107,000 employees who earn more than $100,000 per year.
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