DATE: January 26, 2004

CONTACT: Karen L. Dyck , Marketing Director
(612) 373-8478, by email to kdyck@felhaber.com

For Immediate Release

MINNEAPOLIS, MINNESOTA -- On January 22, Congress freed the revisions of the federal Wage and Hour regulations from political bondage by passing the Congressional Omnibus Spending bill. The effective date of the amendments is still unknown but it will almost certainly be set on or before mid-summer.

The new regulations mostly address the tests for exemption from the minimum wage and overtime requirements. They pave the way for simpler decisions on whether an employee is exempt, and they enhance the likelihood that an exemption will apply. Here are the highlights:

• Administrative exemption - instead of the difficult-to-apply "discretion and independent judgment" test, this exemption will now depend on whether the employee holds a "position of responsibility," i.e. performing work of "substantial importance or requiring a high level of skill or training." Actual lists of qualifying work will be included in the regulations.
• Professional exemption - the required educational component previously had to come from school. Now, learning and skills acquired on the job can be considered.
• Computer Professional exemption - the discretion and independent judgment test gives way to a more specific list of required duties. A blended exemption for technical employees performing exempt functions also appears.

The new regulations also modify the second part of the exemption test - the need for a salary:

• The new minimum weekly earning requirement increases from $250.00 per week to $425.00 (or $22,100.00 per year). If an employee performs exempt duties but does not make at least the required amount in salary, exemption will not apply.
• Any employee earning a salary of at least $65,000 who performs non-manual work will be exempt if the employee has any identifiable executive, administrative or professional function. These need not be primary duties, and the employee does not need to meet all the requirements of a particular test to meet the "highly compensated employee" exemption.
• The new regulations allow for full-day disciplinary deductions from pay, as opposed to the current version, which permit deductions only for safety-related disciplinary actions.
• The new regulations make it tougher to lose exempt status. Now, it may be lost only where there is a "pattern or practice" of improper deductions, and then only for those employees working for the manager responsible for the practice.

We'll provide a more complete update in a special edition of "Labor & Employment Report" in a few weeks.

Founded in Saint Paul in 1943, Felhaber, Larson, Fenlon and Vogt, P.A. has offices in Minneapolis and Saint Paul. With over 55 attorneys, the firm serves clients in the areas of corporate and commercial law, employee benefits, employment law, estate planning, health care, intellectual property, labor law representing management, litigation, real estate, transportation law, and workers' compensation.