April 21, 2004 Department of Labor Issues Labor & Group Attorneys Final Changes to Regulations Gary J. Lesneski, Chair After months of political debates and Third, the regulations also establish for Frederick J. Rohloff delays, the U.S. Secretary of Labor Elaine the first time a “ cap” on overtime. L. Chao on Tuesday announced the final Highly compensated employees performing Neal L. Schonhaut regulations governing overtime eligibility office or non-manual work who are paid at for “white-collar” workers under the Fair least $100,000 per year are exempt from Joel Schneider Labor Standards Act (FLSA”). According the overtime requirements of the FLSA, Peter L. Frattarelli to Secretary Chao, “The department’s new even if they only perform one duty that rules guarantee and strengthen overtime is exempt. John P. Quirke rights for more American workers than ever before.” Dubbed the “FairPay” rule, these Fourth, the new regulations also create David A. Rapuano regulations mark the first significant revi- a several categories of workers who will sions to “white-collar” overtime exemptions almost always be entitled to overtime. Susan S. Hodges in nearly 50 years. The new FairPay rule will “Blue collar” workers, such as carpenters, take effect on August 18, 2004. electricians, and other employees Melissa Wheatcroft performing manual labor are now entitled In the new federal regulations, there are to minimum and overtime pay Tracy A. Wolak several major changes and revisions. First, regardless of how highly paid they may be. Melissa R. Lock the regulations raise the minimum salary In addition, police officers, fire fighters, level for exempt white collar employees to paramedics, EMTs and other similar crime Stephanie G. Colman $455 per week from $155 per week. So, or emergency workers are also basically under the new rules, full-time workers guaranteed overtime when they perform Vanessa A. Worm earning $23,660 or less are essentially their ordinary duties. guaranteed overtime, regardless of their Sarah Middleton duties. Despite this major overhaul of the federal regulations, New Jersey employers are only Second, the new rule amends the tests affected by two of the major changes. This currently used to determine whether an is because the FLSA allows states to pass The new regulations also provide several individual is an exempt from overtime laws that are more protective of employees’ other changes that may impact specific as an administrative, professional, or rights—and New Jersey has done so. The industries or particular employment executive employee. The new regulation two primary changes that will impact New practices. For further information about eliminates the cumbersome 20% limitation Jersey employers are: (1) the new $23,660 the Fair Labor Standards Act and the on non-exempt duties. Instead, the test annual threshold, which is FairPay rule, including how these may takes the math out of the equation and slightly higher than New Jersey’s existing affect your business, please contact a now focuses on a more practical question: rate of $20,800; and (2) the new “blue member of the Labor and Employment are the “primary duties” of the employee collar” exclusions. All of the changes will Department at (856) 795-2121 or (908) in question exempt duties? affect employers in Pennsylvania and other 788-9700. surrounding states.

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