CC SR 20160606 08 - Dept of Labor Exempt Status EmployeesRANCHO PALOS VERDES CITY COUNCIL
AGENDA REPORT
AGENDA DESCRIPTION:
MEETING DATE: 06/06/2016
AGENDA HEADING: Regular Business
Consideration and possible action to express support for S. 2707 and H.R. 4773
regarding Department of Labor rules for exempt -status employees.
RECOMMENDED COUNCIL ACTION:
(1) Consider whether or not to direct Staff to prepare letters supporting S. 2707
and H.R. 4773 regarding Department of Labor rules for exempt -status
employees.
FISCAL IMPACT: None
Amount Budgeted: N/A
Additional Appropriation: N/A
Account Number(s): N/A
ORIGINATED BY: Kit Fox, AICP, Senior Administrative Analyst
REVIEWED BY: Gabriella Yap, Deputy City Manager'J;4-
APPROVED BY: Doug Willmore, City Manager..'r
ATTACHED SUPPORTING DOCUMENTS:
A. Overtime Final Rule article, fact sheet and guidance for State and local
agencies (page A-1)
B. S. 2707 and H.R. 4773 (page B-1)
BACKGROUND AND DISCUSSION:
As the City Council is aware, management -level and supervisory positions at the City
are exempt from the requirement for overtime pay, which is common in many
government organizations. With the completion of the City's Classification and
Compensation Study and the approved of the Memorandum of Understanding with the
Rancho Palos Verdes Employees' Association in 2015, a number of senior -level non-
management positions in the City were reclassified as exempt under the Fair Labor
Standards Act (FLSA). Currently, the bottom of the lowest salary range for an FLSA-
exempt, full-time City position is $65,775.
On July 6, 2015, the U.S. Department of Labor (DOL) published a Notice of Proposed
Rulemaking regarding the criteria defining exempt -status employees under the FLSA.
The DOL's final rule was published on May 18, 2016, and includes the following major
provisions:
1
Sets the standard salary level at the 40th percentile of earnings of full-time
salaried workers in the lowest -wage Census Region, currently the South ($913
per week; $47,476 annually for a full -year worker).
Sets the total annual compensation requirement for highly -compensated
employees (HCEs), subject to a minimal duties test, to the annual equivalent of
the 90th percentile of full-time salaried workers nationally ($134,004).
Establishes a mechanism for automatically updating the salary and
compensation levels every three (3) years to maintain the levels at the above
percentiles, and to ensure that they continue to provide useful and effective tests
for exemption.
The effective date of the DOL's final rule is December 1, 2016. A summary and fact
sheet are provided as Attachment A.
In response to the proposed DOL rulemaking, the U.S. Senate and the House of
Representatives introduced identical bills that would nullify the final rule if passed
(S. 2707 and H.R. 4773, respectively, which are included as Attachment B). Both bills
were introduced on March 17, 2016; S. 2707 was heard by the Senate Committee on
Small Business and Entrepreneurship in May 11, 2016, while H.R. 4773 was referred to
(but not yet heard by) the House Committee on Education and the Workforce.
Mayor Dyda has asked for the City Council to consider formally supporting S. 2707 and
H.R. 4773. As mentioned above, the bottom of the lowest salary range for an FLSA-
exempt, full-time City position is $65,775, which is nearly thirty-eight percent (38%)
higher than the new $47,476 salary threshold for executive, administrative and
professional (EAP) employees. Also, since this salary threshold is benchmarked to
salaries in the lowest -wage Census Region, it is likely that the prevailing salaries for
EAP City employees will remain above the new DOL threshold due to the higher cost of
living in Southern California, even with the proposed triennial adjustments.
Furthermore, as discussed in the DOL's guidance to State and local agencies, the final
rule is expected to have little or no impact. As such, Staff believes that it is unlikely that
the new DOL rule will have any direct effect upon the City's payroll costs.
It is possible that some businesses based in the City might be adversely affected by this
change in overtime rules. If the City Council so desires, Staff can prepare draft letters in
support of S. 2707 and H.R. 4773—focusing upon the impacts upon private
businesses—for the City Council's review and consideration.
ALTERNATIVES:
The following alternative actions are available for the City Council's consideration:
1. Direct Staff to prepare support letters for S. 2707 and H.R. 4773.
2. Do not direct Staff to prepare support letters for S. 2707 and H.R. 4773.
2
5/27/2016 Final Rule: Overtime- Wage and Hour Division (WHD) - U.S. Department of Labor
United States Department of Labor
Wage and Hour Division
Wage and Hour Division (WHD)
Final Rule: Overtime
Defining and Delimiting the Exemptions for Executive, Administrative, Professional,
Outside Sales and Computer Employees under the Fair Labor Standards Act
. ` On May 18, 2016, President Obama and Secretary
Perez announced the publication of the Department
of Labor's final rule updating the overtime
- regulations, which will automatically extend
overtime pay protections to over 4 million workers
within the first year of implementation. This long-
awaited update will result in a meaningful boost to
many workers' wallets, and will go a long way
t toward realizing President Obama's commitment to
ensuring every worker is compensated fairly for
their hard work.
In 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. Consistent with the President's goal of ensuring workers are paid a fair day's pay for a hard
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.
The Department published a Notice of Proposed Rulemaking (NPRM) in the Federal Register on July 6, 2015 (80
FR 38515) and invited interested parties to submit written comments on the proposed rule at
www.regulations.gov by September 4, 2015. The Department received over 270,000 comments in response to the
NPRM from a variety of interested stakeholders. The feedback the Department received helped shape the Final
Rule.
Key Provisions of the Final Rule
The Final Rule focuses primarily on updating the salary and compensation levels needed for Executive,
Administrative and Professional workers to be exempt. Specifically, the Final Rule:
1. Sets the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest -
wage Census Region, currently the South ($913 per week; $47,476 annually for a full -year worker);
2. Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a
minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally
($134,004); and
3. Establishes a mechanism for automatically updating the salary and compensation levels every three years
to maintain the levels at the above percentiles and to ensure that they continue to provide useful and
effective tests for exemption.
Additionally, the Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and
incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.
https://www.dol.gov/whd/overtime/fiinal2016/ A-1 1/2
5/27/2016 Final Rule: Overtime - Wage and Hour Division (WHD) - U.S. Department of Labor
The effective date of the final rule is December 1, 2016. The initial increases to the standard salary level
(from $455 to $913 per week) and HCE total annual compensation requirement (from $100,000 to $134,004 per
year) will be effective on that date. Future automatic updates to those thresholds will occur every three years,
beginning on January 1, 2020.
Informational Webinars on the Overtime Final Rule Register Here
Additional Information
■ Final Rule
■ Overtime Overview
■ Questions and Answers
■ Fact Sheet: Overtime Final Rule (PDF)
■ Guidance for Employers
■ General Guidance for Private Employers
■ Small Business Guide to White Collar Exemptions
■ Guidance for Non -Profits
■ Fact Sheet
■ Non -Profit Guidance
■ Guidance for Higher Education
■ Fact Sheet
■ Guidance for Higher Education Employers
■ NIH statement on overtime rule and postdoctoral researchers
■ Huffington Post: "Fair Pay for Postdocs" - Dr. Francis Collins, Director, NIH and Secretary Perez
■ Guidance for States and Local Governments
■ Fact Sheet
■ Comparison Table: Current Regulations, Proposed Rule, and Final Rule
■ State -by -State Breakdowns of Workers Affected by DOL's Final Overtime Regulation
■ DOL Overtime Page
■ Overtime NPRM Page
■ Blog Posts
■ Non -Enforcement policy for providers of Medicaid -funded services for individuals with intellectual or
developmental disabilities in residential homes and facilities with 15 or fewer beds
https://www.dol.gov/whd/overtime/fiinal2016/ A-2 2/2
U.S. Department of Labor
Wage and Hour Division WHO
U.S. wage and Hour DiOsion
(May 2016)
Fact Sheet: Final Rule to Update the Regulations Defining and Delimiting the
Exemption for Executive, Administrative, and Professional Employees
In 2014, President Obama directed the Department of Labor to update and modernize the regulations governing
the exemption of executive, administrative, and professional ("EAP") employees from the minimum wage and
overtime pay protections of the Fair Labor Standards Act ("FLSA" or "Act"). The Department published a
notice of proposed rulemaking on July 6, 2015, and received more than 270,000 comments. On May 18, 2016,
the Department announced that it will publish a Final Rule to update the regulations. The full text of the Final
Rule will be available at the Federal Register Site.
Although the FLSA ensures minimum wage and overtime pay protections for most employees covered by the
Act, some workers, including bona fide EAP employees, are exempt from those protections. Since 1940, the
Department's regulations have generally required each of three tests to be met for the FLSA's EAP exemption
to apply: (1) the employee must be paid a predetermined and fixed salary that is not subject to reduction
because of variations in the quality or quantity of work performed ("salary basis test"); (2) the amount of salary
paid must meet a minimum specified amount ("salary level test"); and (3) the employee's job duties must
primarily involve executive, administrative, or professional duties as defined by the regulations ("duties test").
The Department last updated these regulations in 2004, when it set the weekly salary level at $455 ($23,660
annually) and made other changes to the regulations, including collapsing the short and long duties tests into a
single standard duties test and introducing a new exemption for highly compensated employees.
This Final Rule updates the salary level required for exemption to ensure that the FLSA's intended overtime
protections are fully implemented, and to simplify the identification of overtime -protected employees, thus
making the EAP exemption easier for employers and workers to understand and apply. Without intervening
action by their employers, it extends the right to overtime pay to an estimated 4.2 million workers who are
currently exempt. It also strengthens existing overtime protections for 5.7 million additional white collar
salaried workers and 3.2 million salaried blue collar workers whose entitlement to overtime pay will no longer
rely on the application of the duties test.
* Key Provisions of the Final Rule *
The Final Rule focuses primarily on updating the salary and compensation levels needed for EAP workers to be
exempt. Specifically, the Final Rule:
Sets the standard salary level at the 40th percentile of earnings of full-time salaried workers in the
lowest -wage Census Region, currently the South, which is $913 per week or $47,476 annually for a
full -year worker;
2. Sets the total annual compensation requirement for highly compensated employees (HCE) subject to
a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers
nationally, which is $134,004; and
3. Establishes a mechanism for automatically updating the salary and compensation levels every three
years to maintain the levels at the above percentiles and to ensure that they continue to provide
useful and effective tests for exemption.
Additionally, the Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses
and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.
The Final Rule makes no changes to the duties tests.
Effective Date
The effective date of the Final Rule is December 1, 2016. The initial increases to the standard salary level
(from $455 to $913 per week) and HCE total annual compensation requirement (from $100,000 to $134,004 per
year) will be effective on that date. Future automatic updates to those thresholds will occur every three years,
beginning on January 1, 2020.
Standard Salary Level
The Final Rule sets the standard salary level at the 40th percentile of weekly earnings of full-time salaried
workers in the lowest -wage Census Region, currently the South ($913 per week, equivalent to $47,476 per year
for a full -year worker).
The standard salary level set in this Final Rule addresses our conclusion that the salary level set in 2004 was too
low given the Department's elimination of the more rigorous long duties test. For many decades the long duties
test—which limited the amount of time an exempt employee could spend on nonexempt duties and was paired
with a lower salary level—existed in tandem with a short duties test—which did not contain a specific limit on
the amount of nonexempt work and was paired with a salary level that was approximately 130 to 180 percent of
the long test salary level. In 2004, the long and short duties tests were eliminated and the new standard duties
test was created based on the short duties test and was paired with a salary test based on the long test.
The effect of the 2004 Final Rule's pairing of a standard duties test based on the short duties test (for higher
paid employees) with a salary test based on the long test (for lower paid employees) was to exempt from
overtime many lower paid workers who performed few EAP duties and whose work was otherwise
indistinguishable from their overtime -eligible colleagues. This has resulted in the inappropriate classification of
employees as EAP exempt who pass the standard duties test but would have failed the long duties test.
The Final Rule's salary level represents the most appropriate line of demarcation between overtime -protected
employees and employees who may be EAP exempt and works appropriately with the current duties test, which
does not limit non -EAP work.
The Department also is updating the special salary level for employees in American Samoa (to $767 per week)
and the special "base rate" for employees in the motion picture industry (to $1,397 per week).
HCE Total Annual Compensation Requirement
The Final Rule sets the HCE total annual compensation level equal to the 90th percentile of earnings of full-
time salaried workers nationally ($134,004 annually). To be exempt as an HCE, an employee must also receive
at least the new standard salary amount of $913 per week on a salary or fee basis and pass a minimal duties test.
The HCE annual compensation level set in this Final Rule brings this threshold more in line with the level
established in 2004 and will avoid the unintended exemption of large numbers of employees in high -wage areas
who are clearly not performing EAP duties.
2
Automatic Updating
The Final Rule includes a mechanism to automatically update the standard salary level requirement every three
years to ensure that it remains a meaningful test for distinguishing between overtime -protected white collar
workers and bona fide EAP workers who may not be entitled to overtime pay and to provide predictability and
more graduated salary changes for employers. Specifically, the standard salary level will be updated to
maintain a threshold equal to the 40th percentile of weekly earnings of full-time salaried workers in the lowest -
wage Census Region. Similarly, the Final Rule includes a mechanism for automatically updating the HCE
compensation level to maintain the threshold equal to the 90th percentile of annual earnings of full-time salaried
workers nationally. The Final Rule will also automatically update the special salary level test for employees in
American Samoa and the base rate test for motion picture industry employees. The Department will publish all
Updated rates in the Federal Register at least 150 days before their effective date, and also post them on the
Wage and Hour Division's website.
Regularly updating the salary and compensation levels is the best method to ensure that these tests continue to
provide an effective means of distinguishing between overtime -eligible white collar employees and those who
may be bona fide EAP employees. Experience has shown that these earning thresholds are only effective
measures of exempt status if they are kept up to date.
Inclusion of Nondiscretionary Bonuses and Incentive Payments
For the first time, employers will be able to use nondiscretionary bonuses and incentive payments (including
commissions) to satisfy up to 10 percent of the standard salary level. Such payments may include, for example,
nondiscretionary incentive bonuses tied to productivity and profitability. For employers to credit
nondiscretionary bonuses and incentive payments toward a portion of the standard salary level test, the Final
Rule requires such payments to be paid on a quarterly or more frequent basis and permits the employer to make
a "catch-up" payment. The Department recognizes that some businesses pay significantly larger bonuses;
where larger bonuses are paid, however, the amount attributable toward the standard salary level is capped at 10
percent of the required salary amount.
The Final Rule continues the requirement that HCEs must receive at least the full standard salary amount each
pay period on a salary or fee basis without regard to the payment of nondiscretionary bonuses and incentive
payments, and continues to permit nondiscretionary bonuses and incentive payments (including commissions)
to count toward the total annual compensation requirement. The Department concludes that permitting
employers to use nondiscretionary bonuses and incentive payments to satisfy the standard salary amount for
HCEs is not appropriate because employers are already permitted to fulfill almost two-thirds of the total annual
compensation requirement with commissions, nondiscretionary bonuses, and other forms of nondiscretionary
deferred compensation.
Duties Tests
The Final Rule is not changing any of the existing job duty requirements to qualify for exemption. The
Department expects that the standard salary level set in this Final Rule and automatic updating will work
effectively with the duties test to distinguish between overtime -eligible workers and those who may be exempt.
As a result of the change to the salary level, the number of workers for whom employers must apply the duties
test to determine exempt status is reduced, thus simplifying the exemption. Both the standard duties test and the
HCE duties test remain unchanged.
For additional information, visit our Wage and Hour Division Website: www.waj!ehour.dol.2ov and/or
call our toll-free information and helpline, available 8 a.m. to 5 p.m. in your time zone,
1-866-4-USWAGE (1-866-487-9243).
This publication is for general information and is not to be considered in the same light as official statements of
position contained in the regulations.
U.S. Department of Labor
Frances Perkins Building
200 Constitution Avenue, NW
Washington, DC 20210
4
1-866-4-USWAGE
TTY: 1-866-487-9243
Contact Us
4 MBNT op
Ot90P
UNITED STATES DEPARTMENT OF LABOR
STATES of
Overtime Final Rule and State and
Local Governments
State and local governments: The Fair Labor
Standards Act ("FLSA") has long applied to state and
local governments. The FLSA and the Department's
regulations, however, contain some unique provisions
applicable only to public sector workers, notably the
permitted use of compensatory time off, under certain
conditions. These provisions will help state and local
governments adapt to the overtime final rule.
Overtime Final Rule: The Department of Labor's
final overtime rule updates the salary level required
for the executive, administrative, and professional
("white collar") exemption to ensure that the FLSA's
intended overtime protections are fully implemented,
and it provides greater clarity for white collar workers
and their employers, including for state and local
governments. The rule also will lead to better work -life
balance for many workers, and it can benefit employers
by increasing productivity and reducing turnover.
The final rule updates the salary threshold under which
most white collar workers are entitled to overtime
to equal the 40th percentile of weekly earnings of
full-time salaried workers in the lowest wage Census
region, currently the South. The final rule raises the
salary threshold from $455 a week ($23,660 for a full -
year worker) to $913 a week ($47,476 for a full -year
worker) effective December 1, 2016.
The FLSA and State and Local Governments
Neither the FLSA nor the Department's regulations
provide a blanket exemption from overtime require-
ments for state and local governments, nor for public
sector workers. However, the FLSA contains several
provisions unique to state and local governments,
including compensatory time ("comp time").
Comp time: Pursuant to an agreement with employees
or their representatives, state or local government
agencies may arrange for their employees to earn comp
time instead of cash payment for overtime hours. Any
comp time arrangement must be established pursuant
to the applicable provisions of a collective bargaining
agreement, memorandum of understanding, any
other agreement between the public agency and
representatives of overtime -protected employees, or
an agreement or understanding arrived at between the
employer and employee before the performance of the
work. This agreement may be evidenced by a notice
to the employee that compensatory time off will be
given in lieu of overtime pay (for example, providing
the employee a copy of the personnel regulations).
The comp time must be provided at a rate of one -and -
one -half hours for each overtime hour worked. For
example, for most state government employees, if
they work 44 hours in a single workweek (4 hours of
overtime), they would be entitled to 6 hours (1.5 times
4 hours) of compensatory time off. When used, the
comp time is paid at the regular rate of pay.
Most state and local government employees
may accrue up to 240 hours of comp time. Law
enforcement, fire protection, and emergency response
personnel, as well as employees engaged in seasonal
activities (such as employees processing state tax
returns) may accrue up to 480 hours of comp time. An
employee must be permitted to use comp time on the
date requested unless doing so would "unduly disrupt"
the operations of the agency.
Fire and police small -agency exemption: xemption: The FLSA also
provides an exemption from overtime protection for fire
protection or law enforcement employees, if they are
employed by an agency that employs fewer than five fire
protection or law enforcement employees, respectively.
A-7
"Work periods" rather than "workweeks" for fire
protection or law enforcement employees: Employees
engaged in fire protection or law enforcement may be
paid overtime on a "work period" basis, rather than the
usual 40 -hour workweek of the FLSA. A "work period"
may be from 7 consecutive days to 28 consecutive
days in length. Overtime compensation is required
when an employee's hours worked in the work period
exceed the maximum hours outlined in a formula in
the Department's regulations. For example, for a law
enforcement employee who works a 14 -day work
period, the Department's regulations provide that she
must receive overtime compensation after working 86
hours in the work period. See FLSA Fact Sheet #7 and
Fact Sheet #8 for more information.
Impact Is Limited by Other Rules and Exemptions:
Many employees of state and city governments won't
be affected by the final rule:
• Hourly workers: The new threshold will have no im-
pact on the pay of workers paid hourly. Generally, all
hourly workers—including those employed by state
and local government—are entitled to overtime pay
or comp time regardless of how much they make if
they work more than 40 hours. Nothing in the new
rule changes that.
• Workers with regular workweeks of 40 or fewer hours:
To the extent that many salaried white-collar staff in
state and local government have office jobs where
they work no more than 40 hours, the changes to
the overtime rules will have no effect on their pay.
Additionally, for law enforcement and fire protection
employees who regularly work hours that conform
to the longer work periods permitted for such em-
ployees, the changes will also not impact their pay.
• Workers who fail the duties test: Salaried workers who
do not primarily perform executive, administrative,
or professional duties are not eligible for the white
collar overtime exemption and therefore are not
affected by the final rule. Those employees already
should be getting paid overtime for any hours they
work over 40 in one week (or the applicable work
period maximum for fire protection and law en-
forcement employees), as long as comp time is not
available.
• Highly compensated workers: White collar workers
who fail the standard duties test but are"highly
compensated"—earn more than $134,004 in a
year—are almost all ineligible for overtime under
the highly compensated employee exemption,
which has a minimal duties test. This exemption
would cover some high-level managers in state and
local government. (You can see more information on
HCE duties in WHD Fact Sheet #17H.)
• Police and fire employees in small agencies: Fire
protection or law enforcement employees in public
agencies with fewer than five fire protection or law
enforcement employees respectively will continue
to be exempt from overtime.
• Elected officials, their policymaking appointees, and
their personal staff and legal advisors who are not
subject to civil service laws: These state and local
government employees are not covered by the FLSA
and will not be impacted by the rule.
• Legislative branch employees who are not subject to
civil service laws: These state and local government
employees are not covered by the FLSA and will not
be impacted by the rule.
• Public employees who have a comp time arrangement:
By agreement, public sector employers can satisfy
their overtime obligation by providing comp time
rather than paying a cash overtime premium. State
and local government employers may continue to
use comp time to satisfy their overtime obligations
to employees who have not accrued the maximum
number of comp time hours.
State and Local Government Employers
Have Discretion to Choose Between Several
Options for Complying with the Final Rule
The Department does not dictate what option
employers should use to comply with the revised
regulations. In fact, many options are available to
employers for complying with the new salary threshold.
These options include:
• Raise salaries: For workers whose salaries are close to
the new threshold and who pass the duties test, em-
ployers may choose to raise these workers'salaries to
meet the new threshold and maintain their exempt
status.
• Pay overtime above a salary: State and local gov-
ernment employers also can continue to pay new-
ly -eligible employees a salary and pay overtime, or
provide comp time for overtime hours in excess of
40 per week. The law does not require that newly
overtime -eligible workers be converted to hourly
pay status. This approach works for employees who
2. OVERTIME FINAL RULE AND STATE AND LOCAL GOVERNMENTS
A-8
usually do not work overtime, but have occasional
"spikes" or periods that require overtime hours. State
and local government employers can either plan
and budget the extra pay during those periods or
provide comp time.
o For an employee who works a fixed schedule that
rarely varies, the employer may simply keep a
record of the schedule and indicate the number of
hours the worker actually worked only when the
worker varies from the schedule.
o For an employee with a flexible schedule, an
employer does not need to require an employee
to sign in each time she starts and stops work. The
employer must keep an accurate record of the
number of daily hours worked by the employee.
So an employer could allow an employee to just
provide the total number of hours she worked
each day, including the number of overtime hours,
by the end of each pay period.
• Evaluate and realign employee workload: Employers
can limit the need for employees to work overtime
by ensuring that workloads are distributed to re-
duce overtime, that staffing levels are appropriate
for the workload, and that workers are managing
their time well.
• Utilize comp time: State and local government em-
ployers—unlike private sector employers—can pro-
vide comp time rather than cash overtime payments
in appropriate circumstances.
3. OVERTIME FINAL RULE AND STATE AND LOCAL GOVERNMENTS
A-9
AUTHENTICATED
INFORMATION
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114Tx CONGRESS So2707
2D SESSION
To require the Secretary of Labor to nullify the proposed rule regarding
defining and delimiting the exemptions for executive, administrative, pro-
fessional, outside sales, and computer employees, to require the Secretary
of Labor to conduct a full and complete economic analysis with improved
economic data on small businesses, nonprofit employers, Medicare or
Medicaid dependent health care providers, and small governmental juris-
dictions, and all other employers, and minimize the impact on such
employers, before promulgating any substantially similar rule, and to
provide a rule of construction regarding the salary threshold exemption
under the Fair Labor Standards Act of 1938, and for other purposes.
IN THE SENATE OF THE UNITED STATES
MARCH 17, 2016
Mr. SCOTT (for himself and Mr. ALEXANDER) introduced the following bill;
which was read twice and referred to the Committee on Health, Edu-
cation, Labor, and Pensions
A SILL
To require the Secretary of Labor to nullify the proposed
rule regarding defining and delimiting the exemptions
for executive, administrative, professional, outside sales,
and computer employees, to require the Secretary of
Labor to conduct a full and complete economic analysis
with improved economic data on small businesses, non-
profit employers, Medicare or Medicaid dependent health
care providers, and small governmental jurisdictions, and
all other employers, and minimize the impact on such
employers, before promulgating any substantially similar
2
rule, and to provide a rule of construction regarding
the salary threshold exemption under the Fair Labor
Standards Act of 1938, and for other purposes.
1 Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 SECTION 1. SHORT TITLE.
4 This Act may be cited as the "Protecting Workplace
5 Advancement and Opportunity Act".
6 SEC. 2. FINDINGS.
7 Congress finds the following:
8 (1) The proposed rule of the Department of
9 Labor entitled "Defining and Delimiting the Exemp-
10 tions for Executive, Administrative, Professional,
11 Outside Sales and Computer Employees" (80 Fed.
12 Reg. 38516 (July 6, 2015)) provides a minimum sal -
13 ary requirement that would be -
14
(A) a
113
percent increase during the first
15
year after
the
final rule takes effect from the
16 salary threshold in effect on February 29,
17 2016; and
18 (B) an increase that would set the Federal
19 minimum salary threshold 20 percent higher
20 than the minimum salary threshold under any
21 State law effective on the date of enactment of
22 this Act.
•S 2707 IS
B-2
11
1 (2) The Secretary significantly underestimated
2 the cost of compliance with the July 6, 2015, pro -
3 posed rule. Public comments calculate such rule will
4 impose financial and non-financial costs substan-
5 tially higher than those estimated by the Depart -
6 ment.
7 (3) According to the Office of Advocacy of the
8 Small Business Administration, the initial regulatory
9 flexibility analysis of the July 6, 2015, proposed rule
10 required under section 603 of title 5, United States
11 Code, failed to adequately identify the number of
12 small entities affected by such rule and failed to ad -
13 dress how such rule would affect regions with lower
14 costs of living and differences in certain industries.
15 On September 4, 2015, the Office of Advocacy of
16 the Small Business Administration submitted com-
17 ments to the Secretary regarding such rule, includ-
18 ing recommendations to -
19 (A) reanalyze "the economic impact of this
20 rule on small businesses", to "provide a more
21 accurate estimate of the small entities impacted
22 by this proposal", and to "include an analysis
23 of industry sub -sectors, regional differences,
24 and revenue sizes";
•S 2707 IS
B-3
11
1 (B) reanalyze "the number of small non -
2 profit organizations and small governmental ju-
3 risdictions . . . that are affected by this rule
4 and the economic impact of this rule on these
5 entities"; and
6 (C) provide greater transparency with re -
1 spect to "compliance cost data" and to "utilize
8 data provided in the comment process to accu-
9 rately estimate the human resources and finan-
10 cial management costs of this regulation".
11 (4) The Secretary did not consider the potential
12 impact of the July 6, 2015, proposed rule on work -
13 place flexibility. Public comments address concerns
14 that employees who are reclassified from exempt to
15 nonexempt employees may no longer be able to par -
16 ticipate in workplace flexibility arrangements and
17 programs.
18 (5) The Secretary did not analyze the potential
19 impact of the July 6, 2015, proposed rule on compa-
20 nies that operate in multiple States with different
21 costs of living and different salary scales, and the
22 costs and unique complications for these employers
23 associated with reclassifying thousands of employees
24 in multiple States.
•S 2707 IS
B-4
5
1 (6) The July 6, 2015, proposed rule automati-
2 cally updates the salary threshold on an annual basis
3 for purposes of defining employees subject to the ex -
4 emption under section 13(a)(1) of the Fair Labor
5 Standards Act of 1938 (29 U.S.C. 213(a)(1)) for all
6 subsequent years, contrary to the requirement under
7 such section that the definitions applicable for the
8 exemption shall be "defined and delimited from time
9 to time by regulations of the Secretary". The Sec -
10 retary does not have the authority to increase the
11 salary threshold on an annual or other basis without
12 conducting notice and comment rulemaking with re -
13 spect to each change in accordance with section 553
14 of title 5, United States Code.
15 (7) Although not proposed in the July 6, 2015,
16 proposed rule, the Secretary indicated that changes
17 to the duties tests may be included in the final rule,
18 without providing for notice and comment regarding
19 the specific proposed revisions.
20 SEC. 3. DEFINITIONS.
21 In this Act:
22 (1) DEPARTMENT.—The term "Department"
23 means the Department of Labor.
24 (2) JULY 6, 2015, PROPOSED RULE.—The term
25 "July 6, 2015, proposed rule" means the proposed
•S 2707 IS
B-5
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Lei
rule of the Department of Labor entitled "Defining
and Delimiting the Exemptions for Executive, Ad-
ministrative, Professional, Outside Sales and Com-
puter Employees" (80 Fed. Reg. 38516 (July 6,
2015)) or the final rule with respect to such pro-
posed rule.
(3) MEDICARE OR MEDICAID DEPENDENT
HEALTH CARE PROVIDER.—The term "Medicare or
Medicaid dependent health care provider" means an
employer who derives more than 50 percent of its
revenue from payments under the Medicare program
under title XVIII of the Social Security Act, a State
plan under the Medicaid program under title XIX of
such Act, or both.
(4) SECRETARY.—The term "Secretary" means
the Secretary of Labor.
(5) SMALL BUSINESS; SMALL ENTITY; SMALL
GOVERNMENT JURISDICTION; SMALL ORGANIZA-
TION.—The terms "small business", "small entity",
"small government jurisdiction", and "small organi-
zation" have the meanings given such terms in sec-
tion 601 of title 5, United States Code.
(6) SUBSTANTIALLY SIMILAR RULE.—The term
"substantially similar rule" means any rule or pro-
posed rule that is a reissuance of the July 6, 2015,
•S 2707 IS
ll
1 proposed rule in substantially the same form as such
2 rule, or is the issuance of a new rule or proposed
3 rule that is substantially the same as the July 6,
4 2015, rule, including any rule that implements the
5 provisions of section 13 (a) (1) of the Fair Labor
6 Standards Act of 1938 (29 U.S.C. 213(a)(1)).
7 SEC. 4. CONDITIONS PRECEDENT FOR SUBSTANTIALLY
8 SIMILAR RULES.
9 (a) ENFORCEMENT. -
10 (1) IN GENERAL.—Beginning on the date of en -
11 actment of this Act, the July 6, 2015, proposed rule
12 shall cease to have any force or effect.
13 (2) FINAL. RULE.—In the case that the July 6,
14 2015, proposed rule is a final rule on the date of en -
15 actment of this Act -
16 (A) the Secretary shall not enforce the
17 final rule based on conduct occurring before
18 such date of enactment;
19 (B) an employee shall not have any right
20 of action against an employer for the employ -
21 er's failure to comply with the final rule at any
22 time prior to such date of enactment;
23 (C) any regulations that were amended by
24 such final rule shall be restored and revived as
25 if the final rule had never taken effect; and
•S 2707 IS
B-7
1 (D) nothing in this Act shall be construed
2 to create a right of action for an employer
3 against an employee for the recoupment of any
4 payments made to the employee prior to the
5 date of enactment of this Act that were in com-
6 pliance with such final rule.
7 (b) CONDITIONS FOR SUBSTANTIALLY SIMILAR
8 RULES. -
9 (1) IN GENERAL.—The Secretary may promul-
10 gate any substantially similar rule, subject to para -
11 graph (3), only if the Secretary has completed each
12 action required under paragraph (2).
13 (2) REQUIREMENTS FOR SUBSTANTIALLY SIMI-
14 LAR RULES.—The actions required under this para -
15 graph are the following:
16 (A) The Secretary shall conduct an anal -
17 ysis of the impact of the substantially similar
18 rule, including an initial regulatory flexibility
19 analysis under section 603 of title 5, United
20 States Code and assessments under clauses (i)
21 through (iii) of section 6(a)(3)(C) of Executive
22 Order 12866 (5 U.S.C. 601 note, relating to
23 regulatory planning and review) to be provided
24 to the Administrator of the Office of Informa-
•S 2707 IS
B-8
9
1 tion and Regulatory Affairs in accordance with
2 such section, and that -
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
(i) accurately identifies the number of
affected small entities by using specific
data points from the most recent publica-
tion of the Statistics of U.S. Businesses by
the Bureau of the Census;
(ii) addresses regional, State, county
(if applicable), metropolitan, and non -
metropolitan salary and cost of living dif-
ferences;
(iii) provides an analysis of any sub-
stantially similar rule, which shall include
the percentile of full-time salaried workers
affected, and such analysis shall be
disaggregated by—
(I) State;
(II) industry subsector;
(III) small organizations;
(N) small government jurisdic-
tions, including further disaggregation
by school district;
(V) nonprofit organizations;
(VI) Medicare or Medicaid de-
pendent health care providers; and
•S 2707 IS
B-9
ME
1
(VII) small businesses;
2
(iv) provides an analysis of manage -
3
ment and human resource costs for all em -
4
ployers, including costs associated with
5
changing human resource systems, reclas-
6
sifying employees, and extra hours spent
7
scheduling employees;
8
(v) provides an analysis of the impact
9
on lower -wage industries, including by geo-
10
graphic area;
11
(vi) provides an analysis of all non-fi-
12
nancial costs, including impact on employ -
13
ment, workplace flexibility, employee ben -
14
efit structure for exempt and nonexempt
15 workers, career advancement opportunities,
16 new business formation, business termi-
17 nation, and loss of market share to foreign
18 competition; and
19 (vii) includes a complete description of
20 any significant alternative as described in
21 section 603(c) of title 5, United States
22 Code, to the substantially similar rule.
23 (B) The Secretary shall publish not less
24 than one small entity compliance guide under
25 section 212 of the Small Business Regulatory
•S 2707 IS
B-10
11
1 Enforcement Fairness Act of 1996 (5 U.S.C.
2 601 note) to assist small entities in complying
3 with the substantially similar rule.
4 (C) The Secretary shall provide notice of
5 the substantially similar rule in the Unified
6 Agenda of Federal Regulatory and Deregula-
7 tory Actions, compiled by the Regulatory Infor-
8 mation Service Center of the General Services
9 Administration.
10 (D) The Secretary shall ensure that the ef-
11 fective date for any final rule with respect to
12 the substantially similar rule shall not be less
13 than 1 year after the publication of such final
14 rule in the Federal Register.
15 (E) The Secretary shall comply with the
16 notice and comment requirements under section
17 553 of title 5, United States Code, and provide
18 a comment period of not less than 120 days.
19 (3) AUTOMATIC UPDATES. Any substantially
20 similar rule promulgated by the Secretary shall not
21 contain any automatic updates to the salary thresh -
22 old for purposes of the exemption under section
23 13(a)(1) of the Fair Labor Standards Act of 1938
24 (29 U.S.C. 213(a)(1)), in accordance with section 5.
•S 2707 IS
B-11
I')
1 SEC. 5. RULE OF CONSTRUCTION.
2 The requirement under section 13 (a) (1) of the Fair
3 Labor Standards Act of 1938 (29 U.S.C. 213(x)(1)) that
4 the definitions applicable for the exemption under such
5 section be "defined and delimited from time to time by
6 regulations of the Secretary" shall be construed to -
7 (1) require the Secretary to issue a new rule
8 through notice and comment rulemaking in accord -
9 ance with section 553 of title 5, United States Code,
10 for each change in any salary threshold under such
11 section 13 (a) (1) proposed by the Secretary; and
12 (2) exclude any rule that would result in
13 changes to any salary threshold under such section
14 for multiple time periods, including through any
15 automatic updating procedure.
16 SEC. 6. REQUIREMENTS FOR DUTIES TESTS.
17 The Secretary may not promulgate any final rule that
18 includes any provision revising any of the duties tests pro -
19 `sided in part 541 of title 29, Code of Federal Regulations
20 (or any successor regulation), for exemption under section
21 13(a)(1) of the Fair Labor Standards Act of 1938 (29
22 U.S.C. 213(a)(1)) unless specific regulatory text for the
23 provision was proposed in the proposed rule.
C7
•S 2707 IS
B-12
AUTHENTICATED
INFORMATION
NF
U.ORMMATIOO ATIO NT
INFN
GPO
I
114TH CONGRESS He
�
2D SESSION 4773
To require the Secretary of Labor to nullify the proposed rule regarding
defining and delimiting the exemptions for executive, administrative, pro-
fessional, outside sales, and computer employees, to require the Secretary
of Labor to conduct a full and complete economic analysis with improved
economic data on small businesses, nonprofit employers, Medicare or
Medicaid dependent health care providers, and small governmental juris-
dictions, and all other employers, and minimize the impact on such
employers, before promulgating any substantially similar rule, and to
provide a rule of construction regarding the salary threshold exemption
under the Fair Labor Standards Act of 1938, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH 17, 2016
Mr. WALSERG (for himself and Mr. KLiNE) introduced the following bill;
which was referred to the Committee on Education and the Workforce
A SILL
To require the Secretary of Labor to nullify the proposed
rule regarding defining and delimiting the exemptions
for executive, administrative, professional, outside sales,
and computer employees, to require the Secretary of
Labor to conduct a full and complete economic analysis
with improved economic data on small businesses, non-
profit employers, Medicare or Medicaid dependent health
care providers, and small governmental jurisdictions, and
all other employers, and minimize the impact on such
employers, before promulgating any substantially similar
rule, and to provide a rule of construction regarding
B-13
2
the salary threshold exemption under the Fair Labor
Standards Act of 1938, and for other purposes.
1 Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 SECTION 1. SHORT TITLE.
4 This Act may be cited as the "Protecting Workplace
5 Advancement and Opportunity Act".
6 SEC. 2. FINDINGS.
7 Congress finds the following:
8 (1) The proposed rule of the Department of
9 Labor entitled "Defining and Delimiting the Exemp-
10 tions for Executive, Administrative, Professional,
11 Outside Sales and Computer Employees" (80 Fed.
12 Reg. 38516 (July 6, 2015)) provides a minimum sal -
13 ary requirement that would be
14 (A) a 113 -percent increase during the first
15 year after the final rule takes effect from the
16 salary threshold in effect on February 29,
17 2016; and
18 (B) an increase that would set the Federal
19
minimum
salary threshold 20 -percent
higher
20
than the
minimum salary threshold
under any
21 State law effective on the date of enactment of
22 this Act.
23
(2)
The Secretary
significantly underestimated
24
the cost
of compliance
with the July 6, 2015, pro -
.HR 4773 IH
B-14
11
1 posed rule. Public comments calculate such rule will
2 impose financial and nonfinancial costs substantially
3 higher than those estimated by the Department.
4 (3) According to the Office of Advocacy of the
5 Small Business Administration, the initial regulatory
6 flexibility analysis of the July 6, 2015, proposed rule
7 required under section 603 of title 5, United States
8 Code, failed to adequately identify the number of
9 small entities affected by such rule and failed to ad -
10 dress how such rule would affect regions with lower
11 costs of living and differences in certain industries.
12 On September 4, 2015, the Office of Advocacy of
13 the Small Business Administration submitted com-
14 merits to the Secretary regarding such rule, includ-
15 ing recommendations to -
16 (A) reanalyze "the economic impact of this
17 rule on small businesses", to "provide a more
18 accurate estimate of the small entities impacted
19 by this proposal", and to "include an analysis
20 of industry sub -sectors, regional differences,
21 and revenue sizes";
22 (B) reanalyze "the number of small non -
23 profit organizations and small governmental ju-
24 risdictions . . . that are affected by this rule
.HR 4773 IH
B-15
11
1 and the economic impact of this rule on these
2 entities"; and
3 (C) provide greater transparency with re -
4 spect to "compliance cost data" and to "utilize
5 data provided in the comment process to accu-
6 rately estimate the human resources and finan-
7 cial management costs of this regulation".
8 (4) The Secretary did not consider the potential
9 impact of the July 6, 2015, proposed rule on work -
10 place flexibility. Public comments address concerns
11 that employees who are reclassified from exempt to
12 nonexempt employees may no longer be able to par -
13 ticipate in workplace flexibility arrangements and
14 programs.
15 (5) The Secretary did not analyze the potential
16 impact of the July 6, 2015, proposed rule on compa-
17 nies that operate in multiple States with different
18 costs of living and different salary scales, and the
19 costs and unique complications for these employers
20 associated with reclassifying thousands of employees
21 in multiple States.
22 (6) The July 6, 2015, proposed rule automati-
23 cally updates the salary threshold on an annual basis
24 for purposes of defining employees subject to the ex -
25 emption under section 13(a)(1) of the Fair Labor
.HR 4773 IH
B-16
5
1 Standards Act of 1938 (29 U.S.C. 213(a)(1)) for all
2 subsequent years, contrary to the requirement under
3 such section that the definitions applicable for the
4 exemption shall be "defined and delimited from time
5 to time by regulations of the Secretary". The Sec -
6 retary does not have the authority to increase the
7 salary threshold on an annual or other basis without
8 conducting notice and comment rulemaking with re -
9 spect to each change in accordance with section 553
10 of title 5, United States Code.
11 (7) Although not proposed in the July 6, 2015,
12 proposed rule, the Secretary indicated that changes
13 to the duties tests may be included in the final rule,
14 without providing for notice and comment regarding
15 the specific proposed revisions.
16 SEC. 3. DEFINITIONS.
17 In this Act:
18 (1) DEPARTMENT.—The term "Department"
19 means the Department of Labor.
20 (2) JULY 6, 2015, PROPOSED RULE.—The term
21 "July 6, 2015, proposed rule" means the proposed
22 rule of the Department of Labor entitled "Defining
23 and Delimiting the Exemptions for Executive, Ad -
24 ministrative, Professional, Outside Sales and Com -
25 puter Employees" (80 Fed. Reg. 38516 (July 6,
.HR 4773 IH
B-17
Lei
1 2015)) or the final rule with respect to such pro -
2 posed rule.
3 (3) MEDICARE OR MEDICAID DEPENDENT
4 HEALTH CARE PROVIDER.—The term "Medicare or
5 Medicaid dependent health care provider" means an
6 employer who derives more than 50 percent of its
7 revenue from payments under the Medicare program
8 under title XVIII of the Social Security Act, a State
9 plan under the Medicaid program under title XIX of
10 such Act, or both.
11 (4) SECRETARY.—The term "Secretary" means
12 the Secretary of Labor.
13 (5) SMALL BUSINESS; SMALL ENTITY; SMALL
14 GOVERNMENT JURISDICTION; SMALL ORGANIZA-
15 TION.—The terms "small business", "small entity",
16 "small government jurisdiction", and "small organi-
17 zation" have the meanings given such terms in sec -
18 tion 601 of title 5, United States Code.
19 (6) SUBSTANTIALLY SIMILAR RULE.—The term
20 "substantially similar rule" means any rule or pro -
21 posed rule that is a reissuance of the July 6, 2015,
22 proposed rule in substantially the same form as such
23 rule, or is the issuance of a new rule or proposed
24 rule that is substantially the same as the July 6,
25 2015, rule, including any rule that implements the
.HR 4773 IH
B-18
ll
1 provisions of section 13(x)(1) of the Fair Labor
2 Standards Act of 1938 (29 U.S.C. 213(a)(1)).
3 SEC. 4. CONDITIONS PRECEDENT FOR SUBSTANTIALLY
4 SIMILAR RULES.
5 (a) ENFORCEMENT.
6 (1) IN GENERAL.—Beginning on the date of en -
7 actment of this Act, the July 6, 2015, proposed rule
8 shall cease to have any force or effect.
9 (2) FINAL RULE.—In the case that the July 6,
10 2015, proposed rule is a final rule on the date of en -
11 actment of this Act -
12 (A) the Secretary shall not enforce the
13 final rule based on conduct occurring before
14 such date of enactment;
15 (B) an employee shall not have any right
16 of action against an employer for the employ -
17 er's failure to comply with the final rule at any
18 time prior to such date of enactment;
19 (C) any regulations that were amended by
20 such final rule shall be restored and revived as
21 if the final rule had never taken effect; and
22 (D) nothing in this Act shall be construed
23 to create a right of action for an employer
24 against an employee for the recoupment of any
25 payments made to the employee prior to the
.HR 4773 IH
B-19
8
1 date of enactment of this Act that were in com-
2 pliance with such final rule.
3 (b) CONDITIONS FOR SUBSTANTIALLY SIMILAR
4 RULES. -
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
(1) IN GENERAL.—The Secretary may promul-
gate any substantially similar rule, subject to para-
graph (3), only if the Secretary has completed each
action required under paragraph (2).
(2) REQUIREMENTS FOR SUBSTANTIALLY SIMI-
LAR RULES.—The actions required under this para-
graph are the following:
(A) The Secretary shall conduct an anal-
ysis of the impact of the substantially similar
rule, including an initial regulatory flexibility
analysis under section 603 of title 5, United
States Code, and assessments under clauses (i)
through (iii) of section 6(a)(3)(C) of Executive
Order 12866 (5 U.S.C. 601 note, relating to
regulatory planning and review) to be provided
to the Administrator of the Office of Informa-
tion and Regulatory Affairs in accordance with
such section, and that—
(i) accurately identifies the number of
affected small entities by using specific
data points from the most recent publica-
.HR 4773 IH
1
N
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
.HR 4773 IH
9
tion of the Statistics of U.S. Businesses by
the Bureau of the Census;
(ii) addresses regional, State, county
(if applicable), metropolitan, and non -
metropolitan salary and cost -of -living dif-
ferences;
(iii) provides an analysis of any sub-
stantially similar rule, which shall include
the percentile of full-time salaried workers
affected, and such analysis shall be
disaggregated by—
(I) State;
(II) industry subsector;
(III) small organizations;
(IV) small government jurisdic-
tions, including further disaggregation
by school district;
(V) nonprofit organizations;
(VI) Medicare or Medicaid de-
pendent health care providers; and
(VII) small businesses;
(iv) provides an analysis of manage-
ment and human resource costs for all em-
ployers, including costs associated with
changing human resource systems, reclas-
B-21
SI"
1
sifying employees, and extra hours spent
2
scheduling employees;
3
(v) provides an analysis of the impact
4
on lower -wage industries, including by geo-
5
graphic area;
6
(vi) provides an analysis of all non -
7
financial costs, including impact on em -
8
ployment, workplace flexibility, employee
9
benefit structure for exempt and non -
10
exempt workers, career advancement op -
11
portunities, new business formation, busi-
12
ness termination, and loss of market share
13
to foreign competition; and
14
(vii) includes a complete description of
15 any significant alternative as described in
16 section 603(c) of title 5, United States
17 Code, to the substantially similar rule.
18 (B) The Secretary shall publish not less
19 than one small entity compliance guide under
20 section 212 of the Small Business Regulatory
21 Enforcement Fairness Act of 1996 (5 U.S.C.
22 601 note) to assist small entities in complying
23 with the substantially similar rule.
24 (C) The Secretary shall provide notice of
25 the substantially similar rule in the Unified
.HR 4773 IH
B-22
11
1 Agenda of Federal Regulatory and Deregula-
2 tory Actions, compiled by the Regulatory Infor-
3 mation Service Center of the General Services
4 Administration.
5 (D) The Secretary shall ensure that the ef-
6 fective date for any final rule with respect to
7 the substantially similar rule shall not be less
8 than 1 year after the publication of such final
9 rule in the Federal Register.
10 (E) The Secretary shall comply with the
11 notice and comment requirements under section
12 553 of title 5, United States Code, and provide
13 a comment period of not less than 120 days.
14 (3) AUTOMATIC UPDATES. any substantially
15 similar rule promulgated by the Secretary shall not
16 contain any automatic updates to the salary thresh -
17 old for purposes of the exemption under section
18 13(x)(1) of the Fair Labor Standards Act of 1938
19 (29 U.S.C. 213(x)(1)), in accordance with section 5.
20 SEC. 5. RULE OF CONSTRUCTION.
21 The requirement under section 13 (a) (1) of the Fair
22 Labor Standards Act of 1938 (29 U.S.C. 213(a)(1)) that
23 the definitions applicable for the exemption under such
24 section be "defined and delimited from time to time by
25 regulations of the Secretary" shall be construed to—
.HR 4773 IH
B-23
12
1 (1) require the Secretary to issue a new rule
2 through notice and comment rulemaking in accord -
3 ance with section 553 of title 5, United States Code,
4 for each change in any salary threshold under such
5 section 13 (a) (1) proposed by the Secretary; and
6 (2) exclude any rule that would result in
7 changes to any salary threshold under such section
8 for multiple time periods, including through any
9 automatic updating procedure.
10 SEC. 6. REQUIREMENTS FOR DUTIES TESTS.
11 The Secretary may not promulgate any final rule that
12 includes any provision revising any of the duties tests pro -
13 vided in part 541 of title 29, Code of Federal Regulations
14 (or any successor regulation), for exemption under section
15 13(a)(1) of the Fair Labor Standards Act of 1938 (29
16 U.S.C. 213(x)(1)) unless specific regulatory text for the
17 provision was proposed in the proposed rule.
.HR 4773 IH
B-24