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Claim Your Free Copy of Overtime Primer: Highlights from the New Regulations

The federal DOL overtime regulations go into effect this year. Are you ready?

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This report includes a summary of key changes, including the salary level test and salary basis test.

As a bonus, we've included a handy flowchart to help you determine exemption status under the FLSA.

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August 14, 2001
It's Still Your Grandfather's FLSA
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Employment Policy Foundation, a Washington, D.C.-based nonprofit group that analyzes workplace trends, says the 63-year-old Fair Labor Standards Act needs a an overhaul.

The modern workforce is very different from the one of 1938, when the act took effect, the EPF contends.

The FLSA was designed to stimulate employment by limiting the weekly hours of employees. It was also meant to improve the quality of life for factory workers and establish federal protections for individuals who needed them.

But the Depression-era workplace "is no longer a reality - it has been replaced by one that emphasizes skills, flexibility and knowledge," according to EPF President Ed Potter. "In 1938, relatively few occupations could be called managerial or professional. Today, that has changed dramatically."

He was referring to one of the most difficult to understand aspects of FLSA: the "white-collar exemption," crafted between 1940 and 1954.

Workers are exempt from FLSA coverage if they are employed in an executive, administrative, or professional capacity. One of the problems, Potter said, has been applying the existing regulations to occupations transformed by a more highly educated workforce and technological change.

In 1940, 11.5 percent of the workforce had some college education; 60 years later, 58 percent do. Individuals whose work may appear exempt have instead been determined by regulators and the courts to be non-exempt.

"In 1989, a federal court ruled that a highly experienced multi-media news writer who earned $85,000 a year was non-exempt, primarily because the regulations placed his job into the historically non-exempt category of newspaper print journalists," Potter said.

In the past 60 years, the places where people work and the jobs they do have changed dramatically. Before World War II, more than 33 percent of workers labored in manufacturing. Today, less than 14 percent work in the manufacturing sector.

Meanwhile, the proportion of workers in administrative support positions has increased by 22 percent, from 11.7 percent to 14.3 percent of all occupations since 1940.

Sales workers and service workers also have grown by 22 percent to become nearly one-third of the labor force today. The occupations that have grown the most, however, have been managers and professionals. Today, the proportion of all employees who are managers and professionals has increased by more than 68 percent, so that more than 30 percent work in such positions.

To view EPF's policy backgrounder, click here

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