EMPLOYMENT LAW
Changes to Overtime and Minimum Wage Exemptions for
Learned and Creative Professionals
October 2004
By Laurel A. Van
Buskirk
August 23, 2004, the effective date for the new U.S.
Department of Labor regulations concerning the white
collar exemptions under the Fair Labor Standards Act
(FLSA) has come and gone. However, many employers are
still struggling with whether “professional”
staff employees are properly classified as exempt from
the overtime and minimum wage requirements of the FLSA.
This article only discusses the recent changes to the
FLSA’s Learned and Creative Professional Exemption.
Employers are reminded that if a position does not satisfy
the learned or creative professional exemption criteria,
the job should be analyzed under the remaining white
collar exemptions, the Administrative, Executive, Outside
Sales or Computer exemptions. The white collar exemptions
can be found at 29
C.F.R. Part 54.
Minimum Salary Increased
As a threshold matter, in order to qualify for the
learned or creative professional exemption, the employee
in question must be compensated on a salary or fee basis.
The minimum weekly salary has increased from $250.00
per week under the old regulations to $455 per week.
If weekly salary is less than $455 per week the professional
exemption requirements can not be satisfied and the
individual is entitled to overtime at time and one-half
for all hours worked over 40 in a given workweek. This
is the case, regardless of whether the employee is otherwise
paid on a salaried basis or an hourly rate.
If the position under consideration meets the minimum
salary requirement of $455 per week, then the position
must be analyzed under the single duties test of the
new regulations. Previously, employers could try to
establish the exemption under a long or short test.
The two test analysis was eradicated by the changes
to the new regulations, and therefore employers are
encouraged to re-evaluate positions which were previously
classified as exempt under the Professional Exemption
to ensure that the classification remains proper under
the new single duties test.
In order to qualify for the professional exemption
an employee will now have to meet all the duties listed
under the single duties test described below, as well
as receive a minimum salary of $455 per week.
New Single Duties Test - Learned Professional Exemption
Under the new single duties test a learned professional
is defined as an employee who: has a primary duty of
the performance of work requiring knowledge of an advanced
type; the advanced knowledge is in a field of science
or learning; and the advanced knowledge is customarily
acquired by a prolonged course of specialized intellectual
instruction. 29 C.F.R. 541.301(a)(1)-(2).
To qualify under the professional exemption, the work
being performed must be predominantly intellectual in
nature and generally require the exercise of discretion
and judgment. Additionally, the work must be in a field
or occupation that customarily requires the completion
of specialized academic training as a standard prerequisite
for entrance into the field or profession. Although
a particular individual may obtain the requisite training
through non-traditional means, in order to qualify for
exempt status, a particular position must customarily
be one which requires a high degree of specialized academic
instruction. 29 C.F.R. 541.301(b)-(d).
Employers should pay particular attention to a new
provision in the learned professional regulations concerning
specific occupations that will only qualify as exempt
work if the individual holds specific academic credentials,
as promulgated by the Department of Labor. The regulations
set forth specific criteria that must be met for the
following occupations to meet the professional exemption:
registered medical technologists, nurses, dental hygienists,
physicians’ assistants, accountants, executive
chefs, sous chefs, athletic trainers, funeral directors,
and embalmers. Employers should pay special attention
to these requirements before classifying persons holding
these positions as exempt under the FLSA.
In addition, the DOL has identified certain positions,
such as paralegals and licensed practical nurses, as
not meeting the Professional exemption criteria in most
instances. 29 C.F.R 541.301(e)(1)-(9).
Employers are encouraged to avoid making decisions
about whether a position can be classified as exempt
based on titles or the fact that the holder of the position
has attained an advanced academic degree. While these
factors may be relevant to the analysis of whether the
professional exemption is applicable, they are not on
their own outcome determinative.
New Test For The Creative Professional Exemption
As with the learned professional exemption, in order
to qualify for the creative professional exemption,
the employee must be compensated at least $455 per week,
on a salary or fee basis. If this salary requirement
is not met, the employee does not qualify as exempt
as a creative professional regardless of his/her duties
and responsibilities.
Provided the minimum salary element of the creative
professional exemption is met, the position must the
be analyzed to determine whether the work being performed
meets the duties test.
The substantive test for the creative professional
did not change substantially from the prior DOL regulations.
To qualify as an exempt creative professional, an employee
must have a primary duty of the performance of work
requiring invention, imagination, originality or talent
in a recognized field of artistic or creative endeavor.
29 C.F.R. 541.302(a).
The new regulations offer employers greater guidance
as to whether certain “creative” positions
meet the requirements of the professional exemption.
29 C.F.R. 541(c). The new regulations still recognize
that the creative professional exemption is generally
be met by actors, musicians, conductors, etc., but they
also place emphasis on the types of occupations in which
exempt-status will be highly fact dependant. Simply
because a position involves creative writing, or artistic
skills does not mean it will meet the requirement of
the creative professional exemption. Employers are reminded
that the new regulations make it clear the criteria
are applied on a case by case basis. As an example,
the new regulations discuss how journalists may, or
may not, be exempt, depending on their actual job duties.
29 C.F.R.
Conclusions
Employers should not ignore this opportunity to re-examine
position classifications from the perspective of whether
or not they meet one of the enumerated exemptions under
the FLSA. The failure to do so, particularly in light
of the U.S. DOL’s increased communication and education
efforts, including multiple on line training tools,
fact sheets and checklists, and a resulting increased
employee awareness about wage and hour issues, increases
the possibility that improper classifications will be
challenged. Now is a good time for employers to scrutinize
how employees are classified under the FLSA, and make
prospective changes with an eye toward saving themselves
from possible trouble down the road.
*Laurel Van Buskirk is admitted in New Hampshire and
Maine.
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