On Monday August 23, 2004, new regulations implementing the federal Fair Labor Standards Act (FLSA) became effective. The FLSA governs the federal obligations of employers to pay premium overtime wages to covered employees. In light of California wage and hour law, these regulations will have the most significant impact on public agencies. Although the impact of the new regulations has become a subject of debate, particularly with respect to private employers, public agencies in California that must comply with the FLSA should be aware of how they are impacted by the changes. Some of the more significant changes that are certain to affect several public agencies are as follows:
- The minimum salary requirement to satisfy the salary test has been raised from $155 – $250 per week (or $8,060 – $13,000 per year) to $455 per week (or $23,660 per year)
- The Department of Labor has eliminated the "long" and "short" duties tests for all overtime exemptions in favor of a "standard duties" test for each white-collar exemption (executive, administrative, and/or professional).
- The executive exemption now requires that the employee have the actual authority to hire or fire employees OR the authority to make recommendations as to hiring, firing, promotion and other changes to other employees’ status such that the recommendations are given "particular weight" (now defined as part of the employee’s job duties and done more than occasionally)
- Employers may now suspend for disciplinary reasons (i.e., violation of written workplace rules or policies) exempt employees for a day at a time (rather than on a weekly basis) without running afoul of the FLSA salary test and jeopardizing the exempt status of their employees.
These changes could positively impact employment practices. Accordingly, now is the time to assess the exempt status of employees and the payroll practices so that your agency is in compliance and is able to take advantage of the new regulations.
For assistance in understanding how the new FLSA regulations may affect your agency, and how best to comply with the regulations, please contact Laura Izon Powell, Greg Fisher, or any of our Labor/Employment or Public Agency Attorneys at (916) 321-4500.
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