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LABOR & EMPLOYMENT LAW — 8/1/08

DOL issues proposed rules to confirm FLSA regs to statutory amendments

The Department of Labor's Wage and Hour Division has issued a proposed rule that would update existing outdated regulatory provisions under the Fair Labor Standards Act (FLSA) to reflect current law.

The FLSA requires covered employers to pay their nonexempt employees a federal minimum wage and overtime premium pay of time and one-half the regular rate of pay for hours worked in excess of forty (40) in a work week. The FLSA also contains a number of exemptions from the minimum wage and overtime pay requirements. Over the years, Congress has amended the FLSA to refine or to add to these exemptions and to clarify the minimum wage and overtime pay requirements.

In this proposed rule, the Department of Labor (DOL) proposes to revise regulations issued pursuant to the Fair Labor Standards Act of 1938 (FLSA) and the Portal-to-Portal Act of 1947 (Portal Act) that have become out of date because of subsequent legislation or court decisions. These proposed revisions will conform the regulations to FLSA amendments passed in 1974, 1977, 1996, 1997, 1998, 1999, 2000, and 2007, and Portal Act amendments passed in 1996. Among them, the DOL seeks to conform its FLSA regulations to the following legislative enactments:

As part of the U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007, Public Law 110-28 (May 25, 2007), Congress increased the FLSA minimum wage in three steps: to $5.85 per hour effective July 24, 2007; to $6.55 per hour effective July 24, 2008; and to $7.25 per hour effective July 24, 2009.

As part of the Small Business Job Protection Act of 1996, Congress amended section 4(a) of the Portal Act, 29 U.S.C. 254(a), to define circumstances under which pay is not required for employees who use their employer's vehicle for home-to-work commuting purposes. The 1996 Act also created a youth opportunity wage at $4.25 per hour under section 6(g) of the FLSA, 29 U.S.C. 206(g).

In 1997, Congress amended section 13(b)(12) of the FLSA, 29 U.S.C. 213(b)(12), to expand the exemption from overtime pay for workers on ditches, canals, and reservoirs where 90% (rather than 100%) of the water is used for agricultural purposes.

In 1998, Congress added section 3(e)(5) to the FLSA, 29 U.S.C. 203(e)(5), to provide that the term "employee" does not include individuals who volunteer solely for humanitarian purposes to private non-profit food banks and who receive groceries from those food banks.

In 1999, Congress added section 3(y) to the FLSA, 29 U.S.C. 203(y), to define an employee who is engaged in "fire protection activities." In 2000, Congress added section 7(e)(8) to the FLSA, 29 U.S.C. 207(e)(8), to treat stock options meeting certain criteria as an additional type of remuneration that is excludable from the computation of the regular rate.

A 1974 amendment to section 13(b)(10)(B) of the FLSA, 29 U.S.C. 213(b)(10)(B), extended an overtime exemption to include any salesman primarily engaged in selling boats and eliminated the overtime exemption previously in subsection (B) for partsmen and mechanics servicing trailers or aircraft. In addition, several appellate courts interpret the overtime exemption for "any salesman, partsman, or mechanic primarily engaged in selling and servicing automobiles" in section 13(b)(10)(A) of the FLSA, 29 U.S.C. 213(b)(10)(A), as including service advisors.

In addition, a number of courts have examined the proper interpretation of the FLSA's compensatory time provisions in section 7(o)(5) concerning public agency employers' obligation to grant employees' requests to use "comp time" within a "reasonable period after making the request if the use of the compensatory time does not unduly disrupt the operations of the public agency." 29 U.S.C. 207(o)(5). The rule revisions would take these court rulings into account.

Finally, the regulations governing the "fluctuating workweek" method of computing half-time overtime pay for salaried nonexempt employees who work variable or fluctuating hours from week to week are in need of clarification and updating to delete outmoded examples and eliminate confusion over the effect of paying bonus supplements and premium payments to affected employees.

Comments. The DOL requests comments on all issues related to this notice of proposed rulemaking. Comments must be received on or before September 11, 2008. Commenters are asked to submit one copy of the comments by only one method. All submissions received must include the agency name and Regulatory Information Number (RIN) identified above for this rulemaking.

Because of delays in receiving mail in the Washington, DC area, commenters should transmit their comments electronically via the federal eRulemaking Portal at http://www.regulations.gov, or submit them by mail early to ensure timely receipt prior to the close of the comment period.

Mail: Wage and Hour Division, Employment Standards Administration, US Department of Labor, Room S-3502, 200 Constitution Avenue, NW., Washington, DC 20210.

Electronic: To comment electronically on federal rulemakings, go to the federal eRulemaking Portal at http://www.regulations.gov, which will allow you to find, review, and submit comments on federal documents that are open for comment and published in the Federal Register. Please identify all comments submitted in electronic form by the RIN docket number (1215-AB13).

Comments received will be posted to http://www.regulations.gov, including any personal information provided.

Text of proposed rule. The proposed rule was published in the Federal Register on Monday, July 28, 2008 (73 FR 43654). The full text of the rule is available at: http://edocket.access.gpo.gov/2008/pdf/E8-16631.pdf.

For more information on this and other topics, consult CCH Employment Practices Guide or CCH Labor Relations.

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