[Congressional Record Volume 168, Number 157 (Wednesday, September 28, 2022)]
[Senate]
[Pages S5148-S5162]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   NOTICE OF ADOPTION OF SUBSTANTIVE REGULATIONS AND SUBMISSION FOR 
                         CONGRESSIONAL APPROVAL

         U.S. Congress, Office of Congressional Workplace Rights,
                              Washington, DC., September 28, 2022.
     Hon. Patrick J. Leahy,
     President Pro Tempore of the Senate,
     Washington, DC.
       Dear Mr. President: Section 304(b)(3) of the Congressional 
     Accountability Act of 1995 (CAA), 2 U.S.C. 1384(b)(3), 
     requires that, with regard to substantive regulations under 
     the CAA, after the Board of Directors (Board) of the Office 
     of Congressional Workplace Rights (OCWR) has published a 
     general notice of proposed rulemaking as required by 
     subsection (b)(1), and received comments as required by 
     subsection (b)(2), the Board shall adopt regulations and 
     shall transmit notice of such action together with a copy of 
     such regulations to the Speaker of the House of 
     Representatives and the President pro tempore of the Senate 
     for publication in the Congressional Record on the first day 
     on which both Houses are in session following such 
     transmittal.''
       The OCWR Board has adopted the proposed regulations in the 
     Notice of Adoption of Substantive Regulations and Transmittal 
     for Congressional Approval that accompany this transmittal 
     letter. The Board requests that the accompanying Notice be 
     published in both the House and Senate versions of the 
     Congressional Record on the first day on which both Houses 
     are in session following receipt of this transmittal. The 
     Board also requests that Congress approve the proposed 
     Regulations, as further specified in the accompanying Notice.
       Any inquiries regarding the accompanying Notice should be 
     addressed to Teresa James, Acting Executive Director of the 
     Office of Congressional Workplace Rights, 110 Second Street, 
     SE, Room LA-200, Washington, DC 20540-1099; telephone: 202-
     724-9250; email: OCWR[email protected].
           Sincerely,
                                           Barbara Childs Wallace,
                                  Chair of the Board of Directors.
       Attachment.

 FROM THE BOARD OF DIRECTORS OF THE OFFICE OF CONGRESSIONAL WORKPLACE 
                                 RIGHTS

  NOTICE OF ADOPTION OF REGULATIONS AND TRANSMITTAL FOR CONGRESSIONAL 
                                APPROVAL

     Procedural Summary:
     Issuance of the Board's Initial Notice of Proposed 
         Rulemaking.
       On or about April 26, 2022, the Board of Directors (Board) 
     of the Office of Congressional Workplace Rights (OCWR) issued 
     a Notice of Proposed Rulemaking in the Congressional Record 
     at 168 Cong. Rec. S2157-S2169 (daily ed.), and at 168 Cong. 
     Rec. H4498-H4508 (daily ed.). The Notice of Proposed 
     Rulemaking was prompted by the promulgation by the Secretary 
     of Labor in 2004, 2016, 2019, and 2020, of amended 
     regulations regarding the overtime pay requirements of the 
     FLSA.
     Why did the Board propose these new Regulations?
       Section 203(c)(2) of the CAA, 2 U.S.C. 1313(c)(2), requires 
     that the Board of Directors propose substantive regulations 
     implementing the FLSA overtime requirements that are ``the 
     same as substantive regulations promulgated by the Secretary 
     of Labor to implement the statutory provisions . . . except 
     insofar as the Board may determine, for good cause shown and 
     stated together with the regulation, that a modification of 
     such regulation would be more effective for

[[Page S5149]]

     the implementation of the rights and protections under this 
     section.''
     What procedure followed the Board's initial Notice of 
         Proposed Rulemaking?
       The April 26, 2022 Notice of Proposed Rulemaking included a 
     thirty day comment period, which began on April 26, 2022. The 
     OCWR received four comments to the proposed substantive 
     regulations from stakeholders. The Board of Directors has 
     reviewed these comments, made a number of changes to the 
     proposed substantive regulations in response to the comments, 
     and has adopted the amended regulations.
     What is the effect of the Board's ``adoption'' of these 
         substantive regulations?
       Adoption of these substantive regulations by the Board of 
     Directors does not complete the promulgation process. 
     Pursuant to section 304 of the CAA, 2 U.S.C. 1384, the 
     procedure for promulgating such substantive regulations 
     requires that: (1) the Board of Directors issue proposed 
     substantive regulations and publish a general notice of 
     proposed rulemaking in the Congressional Record (the April 
     26, 2022 Notice); (2) there be a comment period of at least 
     30 days after the date of publication of the general notice 
     of proposed rulemaking; and (3) after consideration of 
     comments by the Board of Directors, that the Board adopt 
     regulations and transmit notice of such action together with 
     the regulations and a recommendation regarding the method for 
     Congressional approval of the regulations to the Speaker of 
     the House and President pro tempore of the Senate for 
     publication in the Congressional Record. This Notice of 
     Adoption of Substantive Regulations and Submission for 
     Congressional Approval completes the third step described 
     above.
     What are the next steps in the process of promulgation of 
         these regulations?
       Pursuant to section 304(b)(4) of the CAA, 2 U.S.C. 
     1384(b)(4), the Board of Directors is required to ``include a 
     recommendation in the general notice of proposed rulemaking 
     and in the regulations as to whether the regulations should 
     be approved by resolution of the Senate, by resolution of the 
     House of Representatives, by concurrent resolution, or by 
     joint resolution.'' The Board of Directors recommends that 
     the procedure used by Congress to approve these overtime 
     exemption regulations: that the House of Representatives 
     approve the ``H'' version of the regulations by resolution; 
     that the Senate approve the ``S'' version of the regulations 
     by resolution; and that the House and Senate approve the 
     ``C'' version of the regulations applied to the other 
     employing offices by a concurrent resolution.
     Are there regulations covering overtime exemptions currently 
         in force under the CAA?
       Yes, however, they are woefully outdated. Unless and until 
     the House of Representatives and the Senate approve the 
     regulations adopted by the OCWR Board, all employing offices 
     and covered employees continue to be required to follow the 
     existing Part 541 Regulations, which were adopted by the 
     Board of Directors and approved by the House of 
     Representatives and the Senate in 1996.
     If approved by Congress, will these regulations completely 
         replace the existing Part 541 overtime exemption 
         regulations applicable under the CAA?
       Yes, and they will provide the modernization necessary to 
     properly remunerate Legislative Branch employees for overtime 
     consistent with the Executive Branch and the private sector.
     The Board's Responses to Comments
       As the result of the April 26, 2022 Notice of Proposed 
     Regulations, and the ensuing 30 day comment period, the 
     Office received four comments from interested parties. Not 
     surprisingly, a common theme among the comments was the 
     difficulty in applying the Fair Labor Standards Act to real-
     life occupations within the legislative branch. Commenters 
     requested that the Board add descriptive examples that 
     discuss specific positions and opine on whether those 
     positions should or should not be classified as exempt or 
     non-exempt. Commenters recognized that these exempt status 
     determinations are fact specific and often require complex 
     analysis. For this reason, the Board remains unconvinced that 
     including specific position titles plucked from Congressional 
     employment would serve the legislative branch community. Many 
     legislative branch employees share common job titles but 
     nevertheless have different duties in actuality. These 
     employees, and their employing offices, would not benefit 
     from improper classification through rulemaking.
       There exists a body of law which addresses the application 
     of these exceptions in the context of government employees. 
     See e.g., Wage and Hour Division (WHD) Opinion Letter 
     FLSA2020-9, https://www.dol.gov/sites/dolgov/files/WHD/
opinion-letters/FLSA/2020_06_25_09_FLSA.pdf (last viewed 
     on 8/29/22). For example, the Department of Labor has applied 
     the exemption as it relates to a government press officer. 
     Id.
       One commenter notified the Board that the U.S. Supreme 
     Court granted certiorari in Helix Energy Solutions Group v. 
     Hewitt, __ S.Ct.__, 2022 WL 1295708 (May 2, 2022) to address 
     ``highly compensated employee'' regulations. The commenter 
     suggests that any decision rendered by the Supreme Court 
     could impact the application of the proposed regulations. The 
     Board acknowledges that a decision in Helix Energy Solutions 
     Group v. Hewitt may impact the application of 541.601 and 
     541.604. Nevertheless, a decision is likely more than a year 
     away and the Board does not wish to further delay the 
     adoption of these regulations. The Board will revisit these 
     regulations consistent with any relevant U.S. Supreme Court 
     decision and future Department of Labor amendments.
       The Board has reviewed all comments, and has deliberated 
     regarding the question whether comments establish ``good 
     cause'' pursuant to section 203(c)(2) of the CAA, 2 U.S.C. 
     1313(c)(2), for varying the Office of Congressional Workplace 
     Rights proposed regulations from the Department of Labor 
     regulations. The following discussion outlines the comments, 
     and the Board's response to them.
     What changes to the regulations as proposed on April 26, 2022 
         have been made by the Board in response to comments 
         received from interested parties?
       The Board has made many changes in response to comments 
     received from interested parties. First, the Board agrees 
     that good cause exists to modify these regulations in several 
     respects to further reflect the legislative branch's unique 
     workplace. Several commenters applauded this Board's decision 
     to eliminate references that have no application to 
     Congressional employees. However, they requested that the 
     Board tailor the Proposed Regulations even further. The Board 
     has heeded this request and in large part removed additional 
     private sector terminology and replaced it with language 
     specific to legislative branch employees and employing 
     offices. Second, a commenter recommended departing from the 
     effective date maintained within the Department of Labor 
     regulations so that the regulations, once applied to the 
     legislative branch, are not deemed retroactive. The Board 
     agrees that good cause exists to modify these regulations so 
     that they are not deemed retroactive. Third, a commenter 
     asked that the Board include in deleted sections the words 
     ``Intentionally Left Blank'' or renumber those sections that 
     remain so that they are consecutively numbered for 
     typographical clarity. The Board agrees with this suggestion 
     and has included the word ``Reserved'' for Department of 
     Labor sections and subsections that are being eliminated. 
     Additional changes are explained below by section.
       Sec. 541.0: Commenters correctly pointed out that a 
     principal statutory authority for adoption of these 
     regulations was not included in the language of the proposed 
     regulation itself. Therefore, one commenter proposed to add 
     the words ``and applies to covered employees by virtue of 
     section 225(e)(1) of the CAA, as amended, 2 U.S.C. 
     1361(e)(1)'' before the end of each sentence. The Board 
     concurs with this recommendation; therefore, the proposed 
     language was added as authority for the promulgation of these 
     overtime exemption rules.
       Sec. 541.3: At least one commenter requested the removal of 
     ``deputy sheriffs, state troopers, highway patrol officers . 
     . . correctional officers, parole or probation officers, park 
     rangers, fire fighters'' and ``or fight fires'' to further 
     tailor the regulations to reflect legislative branch 
     terminology. Police officers, detectives and investigators 
     are already referenced in the regulation. Thus, the Board 
     agrees that the example of deputy sheriffs, state troopers, 
     highway patrol officers, correctional officers, and parole 
     and probation officers--positions that are not present within 
     the legislative branch--are additional law enforcement 
     positions that are unhelpful by analogy. However, the Board 
     does not find good cause to remove ``park rangers'', ``fire 
     fighters,'' or individuals who ``fight fires.'' The park 
     rangers' functions may serve employing offices by analogy. 
     With respect to fire fighters and fighting fires, although 
     the legislative branch presently relies on the District of 
     Columbia's fire department, it is reasonably foreseeable that 
     fire fighters or individuals whose main duty is to prevent 
     fires may be employed by the legislative branch. Therefore, 
     the Board finds good cause to remove the examples of deputy 
     sheriffs, state troopers, highway patrol officers, 
     correctional officers, and parole or probation officers, but 
     not park rangers, fire fighters, and individuals who fight 
     fires. Similarly, the commenter requested that ``customers'' 
     be replaced with ``constituents'' to further tailor the 
     regulations to reflect legislative branch terminology. The 
     Board recognizes that the word ``customers'' is not 
     inherently governmental. Nevertheless, the Board believes 
     that ``constituents'' is too narrow. Thus, the Board finds 
     good cause to modify the word ``customers'' with ``customers, 
     constituents or stakeholders''. Another commenter requested 
     that ``enterprise'' be modified to ``employing office'' to 
     further tailor the regulations to reflect legislative branch 
     terminology. Although Section 541.1 defines ``enterprise'' to 
     mean ``employing office,'' the Board concurs with this 
     recommendation.
       Section 541.4: Several commenters pointed out that the 
     proposed section maintained an erroneous requirement that 
     employing offices must comply with ``. . . State or municipal 
     laws, regulations, or ordinances establishing a higher 
     minimum wage or lower maximum workweek than those established 
     under the FLSA'' as applied via the CAA. The Board concurs 
     with the comment. That requirement has been deleted from the 
     proposed regulation.
       Sec. 541.100: At least one commenter requested that 
     ``enterprise'' be modified to

[[Page S5150]]

     ``employing office'' to further tailor the regulations to 
     reflect legislative branch terminology. Although Section 
     541.1 defines ``enterprise'' to mean ``employing office,'' 
     the Board concurs with this recommendation.
       Sec. 541.101: A commenter asked the Board to either 
     identify that the section was removed or renumber the 
     sections thereafter for typographical clarity. The Board will 
     include the word ``Reserved'' after the headings of removed 
     sections.
       Sec. 541.103: At least one commenter requested that 
     ``enterprise'' be modified to ``employing office'' to further 
     tailor the regulations to reflect legislative branch 
     terminology. Although Section 541.1 defines ``enterprise'' to 
     mean ``employing office,'' the Board concurs with this 
     recommendation. Similarly, the commenter requested that 
     ``establishment'' be modified to ``location'' to further 
     tailor the regulations to reflect the legislative branch 
     terminology. The Board concurs with this recommendation as 
     well.
       Sec. 541.200: One commenter requested that ``customers'' be 
     replaced with ``constituents'' to further tailor the 
     regulations to reflect legislative branch terminology. The 
     Board recognizes that the word ``customers'' is not 
     inherently governmental. Nevertheless, the Board believes 
     that ``constituents'' is too narrow. Thus, the Board finds 
     good cause to modify the word ``customers'' with ``customers, 
     constituents or stakeholders''.
       Sec. 541.201: At least one commenter requested that 
     ``business'' be modified to further tailor the regulations to 
     reflect legislative branch terminology. Although Section 
     541.1 defines ``business'' and ``company'' to mean 
     ``employing office,'' the Board concurs with all of these 
     recommendations. Similarly, one commenter requested that 
     ``customers'' be replaced with ``constituents'' to further 
     tailor the regulations to reflect legislative branch 
     terminology. The Board recognizes that the word ``customers'' 
     is not inherently governmental. Nevertheless, the Board 
     believes that ``constituents'' is too narrow. Thus, the Board 
     finds good cause to modify the word ``customers'' with 
     ``customers, constituents or stakeholders''.
       Sec. 541.202: At least one commenter requested that 
     ``business'', when used as a noun and not an adjective, 
     ``company'', ``credit manager'', ``large corporation'', 
     ``management consultant'', ``large company'', and ``client'' 
     be modified to further tailor the regulations to reflect 
     legislative branch terminology. Although Section 541.1 
     defines ``business'' and ``company'' to mean ``employing 
     office,'' the Board concurs with all of these 
     recommendations.
       Sec. 541.203: Multiple commenters questioned whether 
     Congress had insurance adjusters (541.203(a)) and comparison 
     shoppers (541.203(i)), or whether Congressional employees 
     could be deemed ``[e]mployees in the financial services 
     industry generally'' (541.203(b)). The Board agrees that the 
     example of insurance adjusters is not applicable directly to 
     any employing office. However, insurance adjusters' 
     investigative functions may serve employing offices by 
     analogy to evaluate the administrative exemption. Similarly 
     the Board believes that employees in financial services 
     generally, as opposed to the financial services industry, is 
     a function that may be applicable directly or by analogy for 
     employing offices to analyze whether employees are covered by 
     the administrative exemption. Lastly, the Board agrees that 
     the comparison shoppers example is neither applicable 
     directly or by analogy to any employing office. Therefore, 
     the Board finds good cause to modify 541.203(a) to 
     ``employees who investigate claims'', remove the word 
     ``industry'' in 541.203(b), and reserve all of 541.203(i). In 
     addition, at least one commenter asked that certain words or 
     phrases, such as but not limited to ``business owner,'' 
     ``purchasing and selling'', ``executive of a large 
     business,'' and ``company,'' be modified to legislative 
     branch terminology in all of the remaining subsections. The 
     Board agrees with these modifications generally, if not 
     verbatim.
       Sec. 541.303: One commenter recommends omitting ``teachers 
     of kindergarten or nursery school pupils'' because, in the 
     legislative branch, the daycare providers are not required to 
     hold advanced degrees or required to graduate from a 
     prolonged course of specialized instruction. In addition, the 
     commenter recommends including salary requirements when 
     evaluating whether a teacher should be included in the 
     professional exemption. The Board does not believe good cause 
     has been established for such a substantial departure from 
     the Department of Labor regulations. Department of Labor Fact 
     Sheet #46, ``Daycare Centers and Preschools Under the Fair 
     Labor Standards Act (revised July 2009), explains that 
     nursery school teachers are exempt if their primary duty is 
     ``teaching, tutoring, instructing or lecturing''. However, 
     ``preschool employees whose primary duty is to care for the 
     physical needs of the facility's children would ordinarily 
     not meet the requirement for exemption as teachers''. https:/
     /www.dol.gov/agencies/whd/fact-sheets/46-flsa-daycare. 
     Whether an exemption applies is fact specific and should be 
     decided through adjudication and not through rulemaking.
       Sec. 541.402: One commenter requested that ``customers'' be 
     replaced with ``constituents'' to further tailor the 
     regulations to reflect legislative branch terminology. The 
     Board recognizes that the word ``customers'' is not 
     inherently governmental. Nevertheless, the Board believes 
     that ``constituents'' is too narrow. Thus, the Board finds 
     good cause to modify the word ``customers'' with ``customers, 
     constituents or stakeholders''.
       Subpart F: A commenter asked the Board to either identify 
     that the section was removed or renumber the sections 
     thereafter for typographical clarity. The Board will include 
     the word ``Reserved'' after the headings of removed sections.
       Sec. 541.601: A commenter recommended departing from the 
     Department of Labor's effective dates in Section 
     541.601(a)(1), 541.601(a)(2), and 541.601(b)(2) so that the 
     regulations are not deemed retroactive. The Board finds good 
     cause to amend this language so that there is no ambiguity 
     regarding retroactivity. In addition, the Board agrees that 
     good cause exists to further modify 541.601(b)(2) by 
     eliminating references to commissioned sales to further 
     reflect the legislative branch's unique workplace.
       Sec. 541.602: At least one commenter requested that 
     ``business'' be modified to further tailor the regulations to 
     reflect legislative branch terminology. Although Section 
     541.1 defines ``business'' to mean ``employing office,'' the 
     Board concurs with this recommendation. Similarly, a 
     commenter pointed out that the proposed section maintained an 
     erroneous requirement that employing offices may deduct for 
     benefits received under State laws. The Board concurs with 
     the comment.
       Sec. 541.603: At least one commenter requested that 
     ``company'' be modified to further tailor the regulations to 
     reflect legislative branch terminology. Although Section 
     541.1 defines ``company'' to mean ``employing office,'' the 
     Board concurs with this recommendation.
       Sec. 541.606: Commenters recommended maintaining the 
     original language. The Board agrees with the concern that 
     incorporating by reference all of Part 531's interpretation 
     of ``board, lodging, or other facilities'' is overbroad and 
     cumbersome. One commenter recommended creating a definition 
     specific to legislative branch employees, including transit 
     benefits in the definition of board, lodging or other 
     facilities. The Board notes that private sector employees are 
     also eligible for transit benefits but the Department of 
     Labor did not include it in its regulation. The Board does 
     not find good cause to stray from the original regulation.
       Sec. 541.607: A commenter asked the Board to either 
     identify that the section was removed or renumber the 
     sections thereafter for typographical clarity. The Board will 
     include the word ``Reserved'' after the headings of removed 
     sections.
       Sec. 541.702: Raising the same concern as addressed in Sec. 
     541.202, at least one commenter requested that ``credit 
     manager'', ``employer'', and ``customers'' be modified to 
     further tailor the regulations to reflect legislative branch 
     terminology. Although ``employing office'' can be readily 
     understood from the term ``employer,'' the Board concurs with 
     all of these recommendations since the example of ``credit 
     manager'' is not applicable directly to any employing office.
       Sec. 541.706: At least one commenter requested that the 
     example of a ``mine superintendent'' be eliminated, and the 
     terms ``establishment'' and ``industry'' be modified to 
     further tailor the regulations to reflect legislative branch 
     terminology. The Board recognizes that there is no position 
     of ``mine superintendent'' in the legislative branch and that 
     this example will not be applicable directly or by analogy 
     for employing offices to analyze whether employees are 
     covered by any exemption. Therefore, the Board finds good 
     cause to both eliminate and modify said language.
       Sec. 541.709: A commenter asked the Board to either 
     identify that the section was removed or renumber the 
     sections thereafter for typographical clarity. The Board will 
     include the word ``Reserved'' after the headings of removed 
     sections.
       Sec. 541.710: Commenters correctly observed that all 
     legislative employees are essentially ``Employees of public 
     agencies.'' The commenters thus requested that the language 
     be modified to further tailor the regulations to reflect 
     legislative branch terminology. The Board concurred with this 
     recommendation.
     What changes to the proposed substantive regulations 
         suggested by commenters were not made by the Board of 
         Directors?
       The Board of Directors reviewed all suggestions included in 
     comments pursuant to the statutory requirement that the 
     regulations ``shall be the same as substantive regulations 
     promulgated by the Secretary of Labor to implement the 
     statutory provisions . . . except insofar as the Board may 
     determine, for good cause shown and stated together with the 
     regulation, that a modification of such regulations would be 
     more effective for the implementation of the rights and 
     protections under this section.'' (section 203(c)(2) of the 
     CAA, 2 USC 1313(c)(2)). If the Board declined to adopt a 
     suggestion, it determined that there was not good cause for 
     such a change in implementing the FLSA.
       One commenter was critical of the Board's approach and 
     questioned why the Board incorporated some of its suggestions 
     in response to the proposed 2004 Substantive Regulations but 
     not others. The April 2022 proposed regulations were created 
     to mirror current Department of Labor regulations. This, in 
     addition to the almost 20 year lapse of time since 2004, is 
     why the Board diverged from the adopted 2005 Substantive 
     Regulations.

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       As discussed previously, several commenters requested the 
     Board to further amend the Proposed Rule to remove positions 
     not presently found in the legislative branch and include 
     examples of positions specific to the legislative branch 
     employees. While the Board agreed with this suggestion in 
     large part, the Board did not find good cause for all of the 
     requested changes. First, as explained in 2005, the Board is 
     aware that many of the job classifications and types of work 
     processes treated in Part 541 are probably not found within 
     the Legislative Branch of the Federal Government, that there 
     may be job categories in the Legislative Branch not directly 
     reflected in Part 541, and that there are differences among 
     the work forces in the several employing offices covered by 
     the CAA. However, the Board has concluded that adding or 
     removing all exemplary and descriptive provisions from the 
     regulations as applied to all employing offices could result 
     in a basic misunderstanding of the purpose and goal of the 
     new Part 541 of 29 CFR, and of the Congressional mandate in 
     the CAA that the Board issue regulations based upon the 
     Secretary of Labor's regulations promulgated for the private 
     sector. Second, the Board did not remove positions which do 
     not presently exist in the legislative branch but are 
     reasonably foreseeable to exist in the future. The Board 
     recognizes that this Proposed Rule, when adopted and issued, 
     may be effective for many years to come. For example, 
     although the legislative branch does not presently employ a 
     chef, it may in the future for one of the multiple dining 
     locations within the Capitol complex. Thus, descriptions of 
     positions or functions that are not currently held by 
     Congressional employees but could reasonably be foreseen to 
     exist in the future were maintained. Third, the Board did not 
     include position titles that are currently held by many 
     legislative branch employees where the employees may have the 
     same title but whose actual job duties may differ. The Board 
     believes that such determinations should not be made through 
     rulemaking but rather through adjudication.
       Sec. 541.0: One commenter suggested the removal of the 
     words ``elementary or secondary schools'' and in its stead 
     the inclusion of ``nursery school programs'' as exempt from 
     minimum wage and overtime requirements. The Board does not 
     believe that good cause exists to make this change. The 
     inclusion of ``elementary or secondary schools'' and the 
     exclusion of ``nursery schools'' provides an employing office 
     with the ability to evaluate whether a nursery school 
     employee is exempt, or not exempt, consistent with the maxim 
     of interpretation, expressio unius, exclusio alterius. 
     Further, the Board believes that determinations regarding 
     exemptions for nursery school program employees should be 
     made through adjudication and not through rulemaking. 
     Commenters also noted that the reference in the proposed 
     regulation to ``enforcement'' by the Office of Congressional 
     Workplace Rights of the equal pay provision found at section 
     6(d) of the FLSA reflected an authority not given to the 
     Office under the CAA. The Office of Congressional Workplace 
     Rights is authorized to administer the dispute resolution 
     process for employee claims of a violation of the equal pay 
     requirement at section 6(d) of the FLSA. Although the Office 
     of Congressional Workplace Rights does not initiate 
     enforcement, this remains a method of enforcement. Therefore, 
     the reference to ``enforcement'' of section 6(d) was 
     maintained.
       Sec. 541.1: One commenter expressed concern that by 
     defining the terms ``employee'', ``intern'', and ``employing 
     office'' by reference to statutory citations, this causes 
     confusion. It recommended, therefore, that the terms be 
     defined pursuant to definitions already extant in the 
     Substantive Regulations for the FLSA at Section 501.102. The 
     Board does not believe that citation to the Congressional 
     Accountability Act causes confusion. Therefore, the statutory 
     citations will remain.
       Sec. 541.100: One commenter requested this section be 
     revised to clarify that an executive must regularly direct 
     the work of two or more full time employees or their 
     equivalent. The Board does not find good cause to modify this 
     subsection as section 541.104(a)(3) provides this exact 
     clarification.
       Sec. 541.104: One commenter suggested that the Board re-
     evaluate its 2005 determination declining to include interns 
     as employees for the purpose of section 54.104 to the extent 
     that they are now paid staff. In 2005, then Office of 
     Compliance submitted an inquiry with the Department of Labor 
     as to whether the Department interprets the term ``employee'' 
     in regulation 541.104 to include individual workers who are 
     not ``employees'' as defined under the balance of Part 541. 
     The Department of Labor responded informally that such 
     workers are not counted as ``employees'' for purposes of the 
     application of section 541.104 of the regulations. The Board 
     has concluded that there is no good cause to modify section 
     541.104 to expressly include interns. The Board has defined 
     ``interns'' in this regulation pursuant to the Congressional 
     Accountability Act's definition, i.e., an individual who 
     performs work but is uncompensated. To the extent that an 
     employee holds the position of ``intern'' but is nevertheless 
     compensated, the employee may, in certain circumstances, be 
     considered a full time employee or the equivalent. The Board 
     believes that determinations regarding paid interns should be 
     made through adjudication and not through rulemaking.
       Sec. 541.202: One commenter requested that ``segment'' be 
     modified to ``department or division'' to further tailor the 
     regulations to reflect the legislative branch terminology. 
     Because segment is a generic description for the words 
     ``department'' and ``division'', and since ``segment'' would 
     also capture other partitions within the employing office 
     that are not called a department or division, the Board does 
     not find good cause to modify this language.
       Sec. 541.203: Multiple commenters requested that additional 
     position titles and descriptions be included as examples of 
     employees who are exempt based on the administrative 
     exemption. For example, one commenter proposed to include the 
     following examples of employees whose primary duty is to 
     perform office or non-manual work directly related to the 
     management or general business operations of the employer or 
     the employer's stakeholders:
       (k) ``Employees who perform public relations work for an 
     employing office, such as developing and implementing a media 
     strategy or managing and coordinating media contacts and 
     activities for the office, generally meet the duties 
     requirements for the administrative exemption.''
       (l) ``Employees who perform research and government 
     relations functions for an employing office, such as devising 
     and formulating legislative initiatives, serving as a 
     Senator's principal advisor on legislative matters, and 
     working with governmental and non-governmental offices to 
     gather support for particular legislative proposals, 
     generally meet the duties requirements for the administrative 
     exemption.''
       (m) ``Employees who act as a Senator's liaison to 
     government, community and constituent groups and leaders in 
     assigned geographic or issue areas and who research and 
     advise the Senator on community, legislative or other 
     developments in the assigned area, generally meet the duties 
     requirements for the administrative exemption.''
       However, among other potential issues, it is unclear from 
     these examples whether the employees exercise discretion and 
     independent judgment with respect to matters of significance 
     and whether the employee is paid the equivalent of at least 
     $684 per week on a salary basis. The Department of Labor's 
     Wage and Hour Division has opined that for a government 
     employee to qualify for the administrative exemption, the 
     employee's primary duty should involve its management 
     policies or the management policies of the government entity 
     or political subdivision, i.e., ``directly related to 
     assisting with the `running or servicing' of the . . . 
     government itself.'' WHD Opinion Letter FLSA2020-9. 
     Therefore, the Board cannot find good cause to include the 
     commenter's language as the determination whether these 
     employment positions and functions would qualify for the 
     administrative exemption should be made on a case by case 
     basis.
       Sec. 541.204: One commenter suggested the substitution of 
     ``nursery school programs'' for ``elementary or secondary 
     schools.'' As explained in Sec. 541.0 above, the Board does 
     not believe that good cause exists to make this change. The 
     inclusion of ``elementary or secondary schools'' and the 
     exclusion of ``nursery schools'' in the original regulation 
     provides an employing office with the ability to evaluate 
     whether a nursery school employee is exempt, or not exempt, 
     consistent with the maxim expressio unius, exclusio alterius. 
     Further, the Board believes that determinations regarding 
     exemptions for nursery school program management employees 
     should be made through adjudication and not through 
     rulemaking.
       Sec. 541.301: Commenters broadly suggested that portions of 
     the proposed regulations that arguably do not directly 
     concern types or categories of employment in their component 
     of the legislative branch should be deleted from the proposed 
     regulations in its entirety. Thus, they recommend deleting 
     Section 541.301(e)(1), pertaining to registered or certified 
     technologists; Section 541.301(e)(2), pertaining to nurses; 
     Section 541.30l(e)(3), relating to dental hygienists; Section 
     541.301(e)(4), pertaining to physicians assistants; Section 
     541.301(e)(6), relating to chefs; and Section 541.30l(e)(8), 
     relating to athletic trainers. The Board does not find good 
     cause to remove these positions and descriptions. Some of 
     these functions may exist directly or by analogy within the 
     Office of Attending Physician. Furthermore, for positions 
     that do not presently exist in the legislative branch but are 
     reasonably foreseeable to exist in the future, the Board 
     believes these descriptions will assist employing offices 
     either directly or by analogy for positions created in years 
     to come.
       Sec. 541.304: Commenters broadly suggested that portions of 
     the proposed regulations which arguably do not directly 
     concern types or categories of employment in their component 
     of the legislative branch should be deleted from the proposed 
     regulations in its entirety. For example, one commenter 
     recommends deleting all references to the practice of 
     medicine in 541.304. The Board does not find good cause to 
     remove these positions and descriptions. These functions may 
     exist directly or by analogy within the Office of Attending 
     Physician. Furthermore, for positions that do not presently 
     exist in the legislative branch but are reasonably 
     foreseeable to exist in the future, the Board believes these 
     descriptions will assist employing offices either directly or 
     by analogy for positions created in years to come.
       Sec. 541.605: One commenter suggested that this section in 
     its entirety, and the many references to this section, should 
     be eliminated since Congressional employees are paid on a 
     salary basis. The Board does

[[Page S5152]]

     not find good cause to remove the ``fee basis'' section. 
     Although most, if not all, positions are paid on a salary 
     basis, it is reasonably foreseeable that an employee could be 
     hired on a fee basis in the future.

                   How To Read the Adopted Amendments

       The text of the amendments adopted by the OCWR Board 
     reproduces the text of the current regulations promulgated by 
     the Secretary of Labor at 29 CFR Part 541, and shows changes 
     adopted by the OCWR Board for the CAA version of these same 
     regulations. Changes adopted by the Board are shown as 
     follows: deletions are marked with a [bracket] and added text 
     is within angled <>. Therefore, if these 
     regulations are adopted as proposed, the deletion within 
     bracketed text will disappear from the regulations and the 
     added text within angled brackets will remain. If these 
     regulations are approved for the House of Representatives by 
     resolution of the House, they will be promulgated with the 
     prefix ``H'' appearing before each regulations section 
     number. If these regulations are approved for the Senate by 
     resolution of the Senate, they will be promulgated with the 
     prefix ``S'' appearing before each regulation's section 
     number. If these regulations are approved for the other 
     employing offices by joint or concurrent resolution of the 
     House of Representatives and the Senate, they will be 
     promulgated with the prefix ``C'' appearing before each 
     regulation's section number.

                     Overtime Exemption Regulations

    PART 541--DEFINING AND DELIMITING THE EXEMPTIONS FOR EXECUTIVE, 
    ADMINISTRATIVE, PROFESSIONAL, AND COMPUTER [AND OUTSIDE SALES] 
                               EMPLOYEES

                     SUBPART A--GENERAL REGULATIONS

     Sec.
     541.0 Introductory statement.
     541.1 Terms used in regulations.
     541.2 Job titles insufficient.
     541.3 Scope of the section 13(a)(1) exemptions.
     541.4 Other laws and collective bargaining agreements.

                     SUBPART B--EXECUTIVE EMPLOYEES

     541.100 General rule for executive employees.
     [541.101 Business owner.]<<541.101 Reserved.>>
     541.102 Management.
     541.103 Department or subdivision.
     541.104 Two or more other employees.
     541.105 Particular weight.
     541.106 Concurrent duties.

                  SUBPART C--ADMINISTRATIVE EMPLOYEES

     541.200 General rule for administrative employees.
     541.201 Directly related to management or general business 
         operations.
     541.202 Discretion and independent judgment.
     541.203 Administrative exemption examples.
     541.204 Educational establishments.

                   SUBPART D--PROFESSIONAL EMPLOYEES

     541.300 General rule for professional employees.
     541.301 Learned professionals.
     541.302 Creative professionals.
     541.303 Teachers.
     541.304 Practice of law or medicine.

                     SUBPART E--COMPUTER EMPLOYEES

     541.400 General rule for computer employees.
     541.401 Computer manufacture and repair.
     541.402 Executive and administrative computer employees.

     [SUBPART F--OUTSIDE SALES EMPLOYEES] <>

     [541.500 General rule for outside sales employees.]
     [541.501 Making sales or obtaining orders.]
     [541.502 Away from employer's place of business.]
     [541.503 Promotion work.]
     [541.504 Drivers who sell.]

                     SUBPART G--SALARY REQUIREMENTS

     541.600 Amount of salary required.
     541.601 Highly compensated employees.
     541.602 Salary basis.
     541.603 Effect of improper deductions from salary.
     541.604 Minimum guarantee plus extras.
     541.605 Fee basis.
     541.606 Board, lodging or other facilities.
     <<541.607--Reserved.>>

          SUBPART H--DEFINITIONS AND MISCELLANEOUS PROVISIONS

     541.700 Primary duty.
     541.701 Customarily and regularly.
     541.702 Exempt and nonexempt work.
     541.703 Directly and closely related.
     541.704 Use of manuals.
     541.705 Trainees.
     541.706 Emergencies.
     541.707 Occasional tasks.
     541.708 Combination exemptions.
     [541.709 Motion picture producing industry.] <<541.709 
         Reserved.>>
     541.710 Employees of public agencies.

         SUBPART A--GENERAL REGULATIONS (Sec. Sec. 541.0-541.4)

     Sec. 541.0 Introductory statement.
       (a) Section 13(a)(1) of the Fair Labor Standards Act, as 
     amended, provides an exemption from the Act's minimum wage 
     and overtime requirements for any employee employed in a bona 
     fide executive, administrative, or professional capacity 
     (including any employee employed in the capacity of academic 
     administrative personnel or teacher in elementary or 
     secondary schools)[, or in the capacity of an outside sales 
     employee, as such terms are defined and delimited from time 
     to time by regulations of the Secretary, subject to the 
     provisions of the Administrative Procedure Act.]<< and 
     applies to covered employees by virtue of section 225(e)(1) 
     of the CAA, as amended, 2 U.S.C. 1361(e)(1).>> Section 
     13(a)(17) of the Act provides an exemption from the minimum 
     wage and overtime requirements for computer systems analysts, 
     computer programmers, software engineers, and other similarly 
     skilled computer employees << and applies to covered 
     employees by virtue of section 225(e)(1) of the CAA, as 
     amended, 2 U.S.C. 1361(e)(1)>>.
       (b) The requirements for these exemptions are contained in 
     this part as follows: executive employees, subpart B; 
     administrative employees, subpart C; professional employees, 
     subpart D; computer employees, subpart E[; outside sales 
     employees, subpart F]. Subpart G contains regulations 
     regarding salary requirements applicable to most of the 
     exemptions, including salary levels and the salary basis 
     test. Subpart G also contains a provision for exempting 
     certain highly compensated employees. Subpart H contains 
     definitions and other miscellaneous provisions applicable to 
     all or several of the exemptions.
       (c) Effective July 1, 1972, the Fair Labor Standards Act 
     was amended to include within the protection of the equal pay 
     provisions those employees exempt from the minimum wage and 
     overtime pay provisions as bona fide executive, 
     administrative, and professional employees (including any 
     employee employed in the capacity of academic administrative 
     personnel or teacher in elementary or secondary schools)[, or 
     in the capacity of an outside sales employee under section 
     13(a)(1) of the Act]. The equal pay provisions in section 
     6(d) of the Fair Labor Standards Act are administered and 
     enforced by the [United States Equal Employment Opportunity 
     Commission] <>.
     Sec. 541.1 Terms used in regulations.
       Act means the Fair Labor Standards Act of 1938, as amended. 
     [Administrator means the Administrator of the Wage and Hour 
     Division, United States Department of Labor. The Secretary of 
     Labor has delegated to the Administrator the functions vested 
     in the Secretary under sections 13(a)(1) and 13(a)(17) of the 
     Fair Labor Standards Act.] <>
     Sec. 541.2 Job titles insufficient.
       A job title alone is insufficient to establish the exempt 
     status of an employee. The exempt or nonexempt status of any 
     particular employee must be determined on the basis of 
     whether the employee's salary and duties meet the 
     requirements of the regulations in this part.
     Sec. 541.3 Scope of the section 13(a)(1) exemptions.
       (a) The section 13(a)(1) exemptions and the regulations in 
     this part do not apply to manual laborers or other ``blue 
     collar'' workers

[[Page S5153]]

     who perform work involving repetitive operations with their 
     hands, physical skill and energy. Such nonexempt ``blue 
     collar'' employees gain the skills and knowledge required for 
     performance of their routine manual and physical work through 
     apprenticeships and on-the-job training, not through the 
     prolonged course of specialized intellectual instruction 
     required for exempt learned professional employees such as 
     medical doctors, architects and archeologists. Thus, for 
     example, non-management production-line employees and non-
     management employees in maintenance, construction and similar 
     occupations such as carpenters, electricians, mechanics, 
     plumbers, iron workers, craftsmen, operating engineers, 
     longshoremen, construction workers and laborers are entitled 
     to minimum wage and overtime premium pay under the Fair Labor 
     Standards Act, and are not exempt under the regulations in 
     this part no matter how highly paid they might be.
       (b)(1) The section 13(a)(1) exemptions and the regulations 
     in this part also do not apply to police officers, 
     detectives, [deputy sheriffs, state troopers, highway patrol 
     officers,] investigators, inspectors, [correctional officers, 
     parole or probation officers,] park rangers, fire fighters, 
     paramedics, emergency medical technicians, ambulance 
     personnel, rescue workers, hazardous materials workers and 
     similar employees, regardless of rank or pay level, who 
     perform work such as preventing, controlling or extinguishing 
     fires of any type; rescuing fire, crime or accident victims; 
     preventing or detecting crimes; conducting investigations or 
     inspections for violations of law; performing surveillance; 
     pursuing, restraining and apprehending suspects; detaining or 
     supervising suspected and convicted criminals, including 
     those on probation or parole; interviewing witnesses; 
     interrogating and fingerprinting suspects; preparing 
     investigative reports; or other similar work.
       (2) Such employees do not qualify as exempt executive 
     employees because their primary duty is not management of the 
     [enterprise] <> in which the employee is 
     employed or a customarily recognized department or 
     subdivision thereof as required under Sec. 541.100. Thus, for 
     example, a police officer or fire fighter whose primary duty 
     is to investigate crimes or fight fires is not exempt under 
     section 13(a)(1) of the Act merely because the police officer 
     or fire fighter also directs the work of other employees in 
     the conduct of an investigation or fighting a fire.
       (3) Such employees do not qualify as exempt administrative 
     employees because their primary duty is not the performance 
     of work directly related to the management or general 
     business operations of the employer or the employer's 
     customers<<, constituents or stakeholders>> as required under 
     Sec. 541.200.
       (4) Such employees do not qualify as exempt professionals 
     because their primary duty is not the performance of work 
     requiring knowledge of an advanced type in a field of science 
     or learning customarily acquired by a prolonged course of 
     specialized intellectual instruction or the performance of 
     work requiring invention, imagination, originality or talent 
     in a recognized field of artistic or creative endeavor as 
     required under Sec. 541.300. Although some police officers, 
     fire fighters, paramedics, emergency medical technicians and 
     similar employees have college degrees, a specialized 
     academic degree is not a standard prerequisite for employment 
     in such occupations.
     Sec. 541.4 Other laws and collective bargaining agreements.
       The Fair Labor Standards Act provides minimum standards 
     that may be exceeded, but cannot be waived or reduced. 
     Employers must comply, for example, with any Federal[, State 
     or municipal] laws, regulations or ordinances establishing a 
     higher minimum wage or lower maximum workweek than those 
     established under the Act. Similarly, employers, on their own 
     initiative or under a collective bargaining agreement with a 
     labor union, are not precluded by the Act from providing a 
     wage higher than the statutory minimum, a shorter workweek 
     than the statutory maximum, or a higher overtime premium 
     (double time, for example) than provided by the Act. While 
     collective bargaining agreements cannot waive or reduce the 
     Act's protections, nothing in the Act or the regulations in 
     this part relieves employers from their contractual 
     obligations under collective bargaining agreements.

       SUBPART B--EXECUTIVE EMPLOYEES (Sec. Sec. 541.100-541.106)

     Sec. 541.100 General rule for executive employees.
       (a) The term ``employee employed in a bona fide executive 
     capacity'' in section 13(a)(1) of the Act shall mean any 
     employee:
       (1) Compensated on a salary basis pursuant to Sec. 541.600 
     at a rate of not less than $684 per week [(or $455 per week 
     if employed in the Commonwealth of the Northern Mariana 
     Islands, Guam, Puerto Rico, or the U.S. Virgin Islands by 
     employers other than the Federal government, or $380 per week 
     if employed in American Samoa by employers other than the 
     Federal government)], exclusive of board, lodging or other 
     facilities;
       (2) Whose primary duty is management of the [enterprise] 
     <> in which the employee is employed or of 
     a customarily recognized department or subdivision thereof;
       (3) Who customarily and regularly directs the work of two 
     or more other employees; and
       (4) Who has the authority to hire or fire other employees 
     or whose suggestions and recommendations as to the hiring, 
     firing, advancement, promotion or any other change of status 
     of other employees are given particular weight.
       (b) The phrase ``salary basis'' is defined at Sec. 541.602; 
     ``board, lodging or other facilities'' is defined at 
     Sec. 541.606; ``primary duty'' is defined at Sec. 541.700; 
     and ``customarily and regularly'' is defined at Sec. 541.701.
     Sec. [541.101 Business owner.
       The term ``employee employed in a bona fide executive 
     capacity'' in section 13(a)(1) of the Act also includes any 
     employee who owns at least a bona fide 20-percent equity 
     interest in the enterprise in which the employee is employed, 
     regardless of whether the business is a corporate or other 
     type of organization, and who is actively engaged in its 
     management. The term ``management'' is defined in 
     Sec. 541.102. The requirements of Subpart G (salary 
     requirements) of this part do not apply to the business 
     owners described in this section.]
     Sec. 541.102 Management.
       Generally, ``management'' includes, but is not limited to, 
     activities such as interviewing, selecting, and training of 
     employees; setting and adjusting their rates of pay and hours 
     of work; directing the work of employees; maintaining 
     production or sales records for use in supervision or 
     control; appraising employees' productivity and efficiency 
     for the purpose of recommending promotions or other changes 
     in status; handling employee complaints and grievances; 
     disciplining employees; planning the work; determining the 
     techniques to be used; apportioning the work among the 
     employees; determining the type of materials, supplies, 
     machinery, equipment or tools to be used or merchandise to be 
     bought, stocked and sold; controlling the flow and 
     distribution of materials or merchandise and supplies; 
     providing for the safety and security of the employees or the 
     property; planning and controlling the budget; and monitoring 
     or implementing legal compliance measures.
     Sec. 541.103 Department or subdivision.
       (a) The phrase ``a customarily recognized department or 
     subdivision'' is intended to distinguish between a mere 
     collection of employees assigned from time to time to a 
     specific job or series of jobs and a unit with permanent 
     status and function. A customarily recognized department or 
     subdivision must have a permanent status and a continuing 
     function. For example, a large employer's human resources 
     department might have subdivisions for labor relations, 
     pensions and other benefits, equal employment opportunity, 
     and personnel management, each of which has a permanent 
     status and function.
       (b) When an [enterprise] <> has more than 
     one [establishment] <>, the employee in charge of 
     each [establishment] <> may be considered in charge 
     of a recognized subdivision of the [enterprise] <>.
       (c) A recognized department or subdivision need not be 
     physically within the employer's establishment and may move 
     from place to place. The mere fact that the employee works in 
     more than one location does not invalidate the exemption if 
     other factors show that the employee is actually in charge of 
     a recognized unit with a continuing function in the 
     organization.
       (d) Continuity of the same subordinate personnel is not 
     essential to the existence of a recognized unit with a 
     continuing function. An otherwise exempt employee will not 
     lose the exemption merely because the employee draws and 
     supervises workers from a pool or supervises a team of 
     workers drawn from other recognized units, if other factors 
     are present that indicate that the employee is in charge of a 
     recognized unit with a continuing function.
     Sec. 541.104 Two or more other employees.
       (a) To qualify as an exempt executive under Sec. 541.100, 
     the employee must customarily and regularly direct the work 
     of two or more other employees. The phrase ``two or more 
     other employees'' means two full-time employees or their 
     equivalent. One full-time and two half-time employees, for 
     example, are equivalent to two full-time employees. Four 
     half-time employees are also equivalent.
       (b) The supervision can be distributed among two, three or 
     more employees, but each such employee must customarily and 
     regularly direct the work of two or more other full-time 
     employees or the equivalent. Thus, for example, a department 
     with five full-time nonexempt workers may have up to two 
     exempt supervisors if each such supervisor customarily and 
     regularly directs the work of two of those workers.
       (c) An employee who merely assists the manager of a 
     particular department and supervises two or more employees 
     only in the actual manager's absence does not meet this 
     requirement.
       (d) Hours worked by an employee cannot be credited more 
     than once for different executives. Thus, a shared 
     responsibility for the supervision of the same two employees 
     in the same department does not satisfy this requirement. 
     However, a full-time employee who works four hours for one 
     supervisor and four hours for a different supervisor, for 
     example, can be credited as a half-time employee for both 
     supervisors.

[[Page S5154]]

  

     Sec. 541.105 Particular weight.
       To determine whether an employee's suggestions and 
     recommendations are given ``particular weight,'' factors to 
     be considered include, but are not limited to, whether it is 
     part of the employee's job duties to make such suggestions 
     and recommendations; the frequency with which such 
     suggestions and recommendations are made or requested; and 
     the frequency with which the employee's suggestions and 
     recommendations are relied upon. Generally, an executive's 
     suggestions and recommendations must pertain to employees 
     whom the executive customarily and regularly directs. It does 
     not include an occasional suggestion with regard to the 
     change in status of a co-worker. An employee's suggestions 
     and recommendations may still be deemed to have ``particular 
     weight'' even if a higher level manager's recommendation has 
     more importance and even if the employee does not have 
     authority to make the ultimate decision as to the employee's 
     change in status.
     Sec. 541.106 Concurrent duties.
       (a) Concurrent performance of exempt and nonexempt work 
     does not disqualify an employee from the executive exemption 
     if the requirements of Sec. 541.100 are otherwise met. 
     Whether an employee meets the requirements of Sec. 541.100 
     when the employee performs concurrent duties is determined on 
     a case-by-case basis and based on the factors set forth in 
     Sec. 541.700. Generally, exempt executives make the decision 
     regarding when to perform nonexempt duties and remain 
     responsible for the success or failure of business operations 
     under their management while performing the nonexempt work. 
     In contrast, the nonexempt employee generally is directed by 
     a supervisor to perform the exempt work or performs the 
     exempt work for defined time periods. An employee whose 
     primary duty is ordinary production work or routine, 
     recurrent or repetitive tasks cannot qualify for exemption as 
     an executive.
       (b) For example, an assistant manager in a retail 
     establishment may perform work such as serving customers, 
     cooking food, stocking shelves and cleaning the 
     establishment, but performance of such nonexempt work does 
     not preclude the exemption if the assistant manager's primary 
     duty is management. An assistant manager can supervise 
     employees and serve customers at the same time without losing 
     the exemption. An exempt employee can also simultaneously 
     direct the work of other employees and stock shelves.
       (c) In contrast, a relief supervisor or working supervisor 
     whose primary duty is performing nonexempt work on the 
     production line in a manufacturing plant does not become 
     exempt merely because the nonexempt production line employee 
     occasionally has some responsibility for directing the work 
     of other nonexempt production line employees when, for 
     example, the exempt supervisor is unavailable. Similarly, an 
     employee whose primary duty is to work as an electrician is 
     not an exempt executive even if the employee also directs the 
     work of other employees on the job site, orders parts and 
     materials for the job, and handles requests from the prime 
     contractor.

    SUBPART C--ADMINISTRATIVE EMPLOYEES (Sec. Sec. 541.200-541.204)

     Sec. 541.200 General rule for administrative employees.
       (a) The term ``employee employed in a bona fide 
     administrative capacity'' in section 13(a)(1) of the Act 
     shall mean any employee:
       (1) Compensated on a salary or fee basis pursuant to 
     Sec. 541.600 at a rate of not less than $684 per week [(or 
     $455 per week if employed in the Commonwealth of the Northern 
     Mariana Islands, Guam, Puerto Rico, or the U.S. Virgin 
     Islands by employers other than the Federal government, or 
     $380 per week if employed in American Samoa by employers 
     other than the Federal government)], exclusive of board, 
     lodging or other facilities;
       (2) Whose primary duty is the performance of office or non-
     manual work directly related to the management or general 
     business operations of the employer or the employer's 
     customers<<, constituents or stakeholders>>; and
       (3) Whose primary duty includes the exercise of discretion 
     and independent judgment with respect to matters of 
     significance.
       (b) The term ``salary basis'' is defined at Sec. 541.602; 
     ``fee basis'' is defined at Sec. 541.605; ``board, lodging or 
     other facilities'' is defined at Sec. 541.606; and ``primary 
     duty'' is defined at Sec. 541.700.
     Sec. 541.201 Directly related to management or general 
         business operations.
       (a) To qualify for the administrative exemption, an 
     employee's primary duty must be the performance of work 
     directly related to the management or general business 
     operations of the employer or the employer's customers<<, 
     constituents or stakeholders>>. The phrase ``directly related 
     to the management or general business operations'' refers to 
     the type of work performed by the employee. To meet this 
     requirement, an employee must perform work directly related 
     to assisting with the running or servicing of the [business] 
     <>, as distinguished, for example, from 
     working on a manufacturing production line or selling a 
     product in a retail or service establishment.
       (b) Work directly related to management or general business 
     operations includes, but is not limited to, work in 
     functional areas such as tax; finance; accounting; budgeting; 
     auditing; insurance; quality control; purchasing; 
     procurement; advertising; marketing; research; safety and 
     health; personnel management; human resources; employee 
     benefits; labor relations; public relations, government 
     relations; computer network, internet and database 
     administration; legal and regulatory compliance; and similar 
     activities. Some of these activities may be performed by 
     employees who also would qualify for another exemption.
       (c) An employee may qualify for the administrative 
     exemption if the employee's primary duty is the performance 
     of work directly related to the management or general 
     business operations of the employer's customers<<, 
     constituents and/or stakeholders>>. Thus, for example, 
     employees acting as advisers or consultants to their 
     employer's [clients or] customer<<, constituents or 
     stakeholders>> (as tax experts or financial consultants, for 
     example) may be exempt.
     Sec. 541.202 Discretion and independent judgment.
       (a) To qualify for the administrative exemption, an 
     employee's primary duty must include the exercise of 
     discretion and independent judgment with respect to matters 
     of significance. In general, the exercise of discretion and 
     independent judgment involves the comparison and the 
     evaluation of possible courses of conduct, and acting or 
     making a decision after the various possibilities have been 
     considered. The term ``matters of significance'' refers to 
     the level of importance or consequence of the work performed.
       (b) The phrase ``discretion and independent judgment'' must 
     be applied in the light of all the facts involved in the 
     particular employment situation in which the question arises. 
     Factors to consider when determining whether an employee 
     exercises discretion and independent judgment with respect to 
     matters of significance include, but are not limited to: 
     whether the employee has authority to formulate, affect, 
     interpret, or implement management policies or operating 
     practices; whether the employee carries out major assignments 
     in conducting the operations of the [business] <>; whether the employee performs work that affects 
     business operations <>to a 
     substantial degree, even if the employee's assignments are 
     related to operation of a particular segment of the 
     [business] <>; whether the employee has 
     authority to commit the employer in matters that have 
     significant financial impact; whether the employee has 
     authority to waive or deviate from established policies and 
     procedures without prior approval; whether the employee has 
     authority to negotiate and bind the [company]<> on significant matters; whether the employee 
     provides consultation or expert advice to management; whether 
     the employee is involved in planning longer short-term 
     [business] <> objectives; whether the 
     employee investigates and resolves matters of significance on 
     behalf of management; and whether the employee represents the 
     [company]<> in handling complaints, 
     arbitrating disputes or resolving grievances.
       (c) The exercise of discretion and independent judgment 
     implies that the employee has authority to make an 
     independent choice, free from immediate direction or 
     supervision. However, employees can exercise discretion and 
     independent judgment even if their decisions or 
     recommendations are reviewed at a higher level. Thus, the 
     term ``discretion and independent judgment'' does not require 
     that the decisions made by an employee have a finality that 
     goes with unlimited authority and a complete absence of 
     review. The decisions made as a result of the exercise of 
     discretion and independent judgment may consist of 
     recommendations for action rather than the actual taking of 
     action. The fact that an employee's decision may be subject 
     to review and that upon occasion the decisions are revised or 
     reversed after review does not mean that the employee is not 
     exercising discretion and independent judgment. For example, 
     the policies formulated by the [credit] manager of a<> 
     [large corporation]<> may be subject to 
     review by higher [company]<> officials who 
     may approve or disapprove these policies. The [management 
     consultant] <> who has made a study of 
     the operations of a [business] <> and who has 
     drawn a proposed change in organization may have the plan 
     reviewed or revised by superiors before it is [submitted to 
     the client]<>.
       (d) An employer's volume of [business] <> may make it 
     necessary to employ a number of employees to perform the same 
     or similar work. The fact that many employees perform 
     identical work or work of the same relative importance does 
     not mean that the work of each such employee does not involve 
     the exercise of discretion and independent judgment with 
     respect to matters of significance.
       (e) The exercise of discretion and independent judgment 
     must be more than the use of skill in applying well-
     established techniques, procedures or specific standards 
     described in manuals or other sources. See also Sec. 541.704 
     regarding use of manuals. The exercise of discretion and 
     independent judgment also does not include clerical or 
     secretarial work, recording or tabulating data, or performing 
     other mechanical, repetitive, recurrent or routine work. An 
     employee who simply tabulates data is not exempt, even if 
     labeled as a ``statistician.''

[[Page S5155]]

       (f) An employee does not exercise discretion and 
     independent judgment with respect to matters of significance 
     merely because the employer will experience financial losses 
     if the employee fails to perform the job properly. For 
     example, a messenger who is entrusted with carrying large 
     sums of money does not exercise discretion and independent 
     judgment with respect to matters of significance even though 
     serious consequences may flow from the employee's neglect. 
     Similarly, an employee who operates very expensive equipment 
     does not exercise discretion and independent judgment with 
     respect to matters of significance merely because improper 
     performance of the employee's duties may cause serious 
     financial loss to the employer.
     Sec. 541.203 Administrative exemption examples.
       (a) [Insurance claims adjusters]<> generally meet the duties requirements for the 
     administrative exemption[, whether they work for an insurance 
     company or other type of company,] if their duties include 
     activities such as interviewing [insureds,] witnesses [and 
     physicians]; inspecting property damage; reviewing factual 
     information to prepare damage estimates; evaluating and 
     making recommendations regarding coverage of claims; 
     determining liability and total value of a claim; negotiating 
     settlements; and making recommendations regarding litigation.
       (b) Employees in [the] financial services [industry] 
     generally meet the duties requirements for the administrative 
     exemption if their duties include work such as collecting and 
     analyzing information regarding the customer's income, 
     assets, investments or debts; determining which financial 
     products best meet the customer's needs and financial 
     circumstances; advising the customer regarding the advantages 
     and disadvantages of different financial products; and 
     marketing, servicing or promoting the employer's financial 
     products. However, an employee whose primary duty is selling 
     financial products does not qualify for the administrative 
     exemption.
       (c) An employee who leads a team of other employees 
     assigned to complete major projects for the employer (such as 
     [purchasing, selling or closing all or part of the business,] 
     negotiating a real estate transaction or a collective 
     bargaining agreement, or designing and implementing 
     productivity improvements) generally meets the duties 
     requirements for the administrative exemption, even if the 
     employee does not have direct supervisory responsibility over 
     the other employees on the team.
       (d) An executive assistant or administrative assistant to a 
     [business owner or senior executive of a large business] 
     <> 
     generally meets the duties requirements for the 
     administrative exemption if such employee, without specific 
     instructions or prescribed procedures, has been delegated 
     authority regarding matters of significance.
       (e) Human resources managers who formulate, interpret or 
     implement employment policies and management consultants who 
     study the operations of a [business] <> and 
     propose changes in organization generally meet the duties 
     requirements for the administrative exemption. However, 
     personnel clerks who ``screen'' applicants to obtain data 
     regarding their minimum qualifications and fitness for 
     employment generally do not meet the duties requirements for 
     the administrative exemption. Such personnel clerks typically 
     will reject all applicants who do not meet minimum standards 
     for the particular job or for employment by the [company] 
     <>. The minimum standards are usually set 
     by the exempt human resources manager or other [company] 
     <> officials, and the decision to hire from 
     the group of qualified applicants who do meet the minimum 
     standards is similarly made by the exempt human resources 
     manager or other [company] <> officials. 
     Thus, when the interviewing and screening functions are 
     performed by the human resources manager or personnel manager 
     who makes the hiring decision or makes recommendations for 
     hiring from the pool of qualified applicants, such duties 
     constitute exempt work, even though routine, because this 
     work is directly and closely related to the employee's exempt 
     functions.
       (f) Purchasing agents with authority to bind the [company] 
     <> on significant purchases generally meet 
     the duties requirements for the administrative exemption even 
     if they must consult with top management officials when 
     making a purchase commitment for [raw] materials in excess of 
     the contemplated [plant] needs.
       (g) Ordinary inspection work generally does not meet the 
     duties requirements for the administrative exemption. 
     Inspectors normally perform specialized work along 
     standardized lines involving well-established techniques and 
     procedures which may have been catalogued and described in 
     manuals or other sources. Such inspectors rely on techniques 
     and skills acquired by special training or experience. They 
     have some leeway in the performance of their work but only 
     within closely prescribed limits.
       (h) Employees usually called examiners or graders, such as 
     employees that grade lumber, generally do not meet the duties 
     requirements for the administrative exemption. Such employees 
     usually perform work involving the comparison of products 
     with established standards which are frequently catalogued. 
     Often, after continued reference to the written standards, or 
     through experience, the employee acquires sufficient 
     knowledge so that reference to written standards is 
     unnecessary. The substitution of the employee's memory for a 
     manual of standards does not convert the character of the 
     work performed to exempt work requiring the exercise of 
     discretion and independent judgment.
       (i) [Comparison shopping performed by an employee of a 
     retail store who merely reports to the buyer the prices at a 
     competitor's store does not qualify for the administrative 
     exemption. However, the buyer who evaluates such reports on 
     competitor prices to set the employer's prices generally 
     meets the duties requirements for the administrative 
     exemption.] <>
       (j) [Public sector i]<>nspectors or investigators of 
     various types, such as fire prevention or safety, building or 
     construction, health or sanitation, environmental or soils 
     specialists and similar employees, generally do not meet the 
     duties requirements for the administrative exemption because 
     their work typically does not involve work directly related 
     to the management or general business operations of the 
     employer. Such employees also do not qualify for the 
     administrative exemption because their work involves the use 
     of skills and technical abilities in gathering factual 
     information, applying known standards or prescribed 
     procedures, determining which procedure to follow, or 
     determining whether prescribed standards or criteria are met.
     Sec. 541.204 Educational establishments.
       (a) The term ``employee employed in a bona fide 
     administrative capacity'' in section 13(a)(1) of the Act also 
     includes employees:
       (1) Compensated on a salary or fee basis at a rate of not 
     less than $684 per week [(or $455 per week if employed in the 
     Commonwealth of the Northern Mariana Islands, Guam, Puerto 
     Rico, or the U.S. Virgin Islands by employers other than the 
     Federal government, or $380 per week if employed in American 
     Samoa by employers other than the Federal government)], 
     exclusive of board, lodging, or other facilities; or on a 
     salary basis which is at least equal to the entrance salary 
     for teachers in the educational establishment by which 
     employed; and
       (2) Whose primary duty is performing administrative 
     functions directly related to academic instruction or 
     training in an educational establishment or department or 
     subdivision thereof.
       (b) The term ``educational establishment'' means an 
     elementary or secondary school system, an institution of 
     higher education or other educational institution. Sections 
     3(v) and 3(w) of the Act define elementary and secondary 
     schools as those day or residential schools that provide 
     elementary or secondary education, as determined under State 
     law. Under the laws of most States, such education includes 
     the curriculums in grades 1 through 12; under many it 
     includes also the introductory programs in kindergarten. Such 
     education in some States may also include nursery school 
     programs in elementary education and junior college 
     curriculums in secondary education. The term ``other 
     educational establishment'' includes special schools for 
     mentally or physically disabled or gifted children, 
     regardless of any classification of such schools as 
     elementary, secondary or higher. Factors relevant in 
     determining whether post-secondary career programs are 
     educational institutions include whether the school is 
     licensed by a state agency responsible for the state's 
     educational system or accredited by a nationally recognized 
     accrediting organization for career schools. Also, for 
     purposes of the exemption, no distinction is drawn between 
     public and private schools, or between those operated for 
     profit and those that are not for profit.
       (c) The phrase ``performing administrative functions 
     directly related to academic instruction or training'' means 
     work related to the academic operations and functions in a 
     school rather than to administration along the lines of 
     general business operations. Such academic administrative 
     functions include operations directly in the field of 
     education. Jobs relating to areas outside the educational 
     field are not within the definition of academic 
     administration.
       (1) Employees engaged in academic administrative functions 
     include: the superintendent or other head of an elementary or 
     secondary school system, and any assistants, responsible for 
     administration of such matters as curriculum, quality and 
     methods of instructing, measuring and testing the learning 
     potential and achievement of students, establishing and 
     maintaining academic and grading standards, and other aspects 
     of the teaching program; the principal and any vice-
     principals responsible for the operation of an elementary or 
     secondary school; department heads in institutions of higher 
     education responsible for the administration of the 
     mathematics department, the English department, the foreign 
     language department, etc.; academic counselors who perform 
     work such as administering school testing programs, assisting 
     students with academic problems and advising students 
     concerning degree requirements; and other employees with 
     similar responsibilities.
       (2) Jobs relating to building management and maintenance, 
     jobs relating to the health of the students, and academic 
     staff such as social workers, psychologists, lunch room 
     managers or dietitians do not perform academic administrative 
     functions. Although

[[Page S5156]]

     such work is not considered academic administration, such 
     employees may qualify for exemption under 541.200 or under 
     other sections of this part, provided the requirements for 
     such exemptions are met.

     SUBPART D--PROFESSIONAL EMPLOYEES (Sec. Sec. 541.300-541.304)

     Sec. 541.300 General rule for professional employees.
       (a) The term ``employee employed in a bona fide 
     professional capacity'' in section 13(a)(1) of the Act shall 
     mean any employee:
       (1) Compensated on a salary or fee basis pursuant to 
     Sec. 541.600 at a rate of not less than $684 per week [(or 
     $455 per week if employed in the Commonwealth of the Northern 
     Mariana Islands, Guam, Puerto Rico, or the U.S. Virgin 
     Islands by employers other than the Federal government, or 
     $380 per week if employed in American Samoa by employers 
     other than the Federal government)], exclusive of board, 
     lodging or other facilities; and
       (2) Whose primary duty is the performance of work:
       (i) Requiring knowledge of an advanced type in a field of 
     science or learning customarily acquired by a prolonged 
     course of specialized intellectual instruction; or
       (ii) Requiring invention, imagination, originality or 
     talent in a recognized field of artistic or creative 
     endeavor.
       (b) The term ``salary basis'' is defined at Sec. 541.602; 
     ``fee basis'' is defined at Sec. 541.605; ``board, lodging or 
     other facilities'' is defined at Sec. 541.606; and ``primary 
     duty'' is defined at Sec. 541.700.
     Sec. Sec. 541.301 Learned professionals.
       (a) To qualify for the learned professional exemption, an 
     employee's primary duty must be the performance of work 
     requiring advanced knowledge in a field of science or 
     learning customarily acquired by a prolonged course of 
     specialized intellectual instruction. This primary duty test 
     includes three elements:
       (1) The employee must perform work requiring advanced 
     knowledge;
       (2) The advanced knowledge must be in a field of science or 
     learning; and
       (3) The advanced knowledge must be customarily acquired by 
     a prolonged course of specialized intellectual instruction.
       (b) The phrase ``work requiring advanced knowledge'' means 
     work which is predominantly intellectual in character, and 
     which includes work requiring the consistent exercise of 
     discretion and judgment, as distinguished from performance of 
     routine mental, manual, mechanical or physical work. An 
     employee who performs work requiring advanced knowledge 
     generally uses the advanced knowledge to analyze, interpret 
     or make deductions from varying facts or circumstances. 
     Advanced knowledge cannot be attained at the high school 
     level.
       (c) The phrase ``field of science or learning'' includes 
     the traditional professions of law, medicine, theology, 
     accounting, actuarial computation, engineering, architecture, 
     teaching, various types of physical, chemical and biological 
     sciences, pharmacy and other similar occupations that have a 
     recognized professional status as distinguished from the 
     mechanical arts or skilled trades where in some instances the 
     knowledge is of a fairly advanced type, but is not in a field 
     of science or learning.
       (d) The phrase ``customarily acquired by a prolonged course 
     of specialized intellectual instruction'' restricts the 
     exemption to professions where specialized academic training 
     is a standard prerequisite for entrance into the profession. 
     The best prima facie evidence that an employee meets this 
     requirement is possession of the appropriate academic degree. 
     However, the word ``customarily'' means that the exemption is 
     also available to employees in such professions who have 
     substantially the same knowledge level and perform 
     substantially the same work as the degreed employees, but who 
     attained the advanced knowledge through a combination of work 
     experience and intellectual instruction. Thus, for example, 
     the learned professional exemption is available to the 
     occasional lawyer who has not gone to law school, or the 
     occasional chemist who is not the possessor of a degree in 
     chemistry. However, the learned professional exemption is not 
     available for occupations that customarily may be performed 
     with only the general knowledge acquired by an academic 
     degree in any field, with knowledge acquired through an 
     apprenticeship, or with training in the performance of 
     routine mental, manual, mechanical or physical processes. The 
     learned professional exemption also does not apply to 
     occupations in which most employees have acquired their skill 
     by experience rather than by advanced specialized 
     intellectual instruction.
       (e)(1) Registered or certified medical technologists. 
     Registered or certified medical technologists who have 
     successfully completed three academic years of pre-
     professional study in an accredited college or university 
     plus a fourth year of professional course work in a school of 
     medical technology approved by the Council of Medical 
     Education of the American Medical Association generally meet 
     the duties requirements for the learned professional 
     exemption.
       (2) Nurses. Registered nurses who are registered by the 
     appropriate State examining board generally meet the duties 
     requirements for the learned professional exemption. Licensed 
     practical nurses and other similar health care employees, 
     however, generally do not qualify as exempt learned 
     professionals because possession of a specialized advanced 
     academic degree is not a standard prerequisite for entry into 
     such occupations.
       (3) Dental hygienists. Dental hygienists who have 
     successfully completed four academic years of pre-
     professional and professional study in an accredited college 
     or university approved by the Commission on Accreditation of 
     Dental and Dental Auxiliary Educational Programs of the 
     American Dental Association generally meet the duties 
     requirements for the learned professional exemption.
       (4) Physician assistants. Physician assistants who have 
     successfully completed four academic years of pre-
     professional and professional study, including graduation 
     from a physician assistant program accredited by the 
     Accreditation Review Commission on Education for the 
     Physician Assistant, and who are certified by the National 
     Commission on Certification of Physician Assistants generally 
     meet the duties requirements for the learned professional 
     exemption.
       (5) Accountants. Certified public accountants generally 
     meet the duties requirements for the learned professional 
     exemption. In addition, many other accountants who are not 
     certified public accountants but perform similar job duties 
     may qualify as exempt learned professionals. However, 
     accounting clerks, bookkeepers and other employees who 
     normally perform a great deal of routine work generally will 
     not qualify as exempt professionals.
       (6) Chefs. Chefs, such as executive chefs and sous chefs, 
     who have attained a four-year specialized academic degree in 
     a culinary arts program, generally meet the duties 
     requirements for the learned professional exemption. The 
     learned professional exemption is not available to cooks who 
     perform predominantly routine mental, manual, mechanical or 
     physical work.
       (7) Paralegals. Paralegals and legal assistants generally 
     do not qualify as exempt learned professionals because an 
     advanced specialized academic degree is not a standard 
     prerequisite for entry into the field. Although many 
     paralegals possess general four-year advanced degrees, most 
     specialized paralegal programs are two-year associate degree 
     programs from a community college or equivalent institution. 
     However, the learned professional exemption is available for 
     paralegals who possess advanced specialized degrees in other 
     professional fields and apply advanced knowledge in that 
     field in the performance of their duties. For example, if a 
     law firm hires an engineer as a paralegal to provide expert 
     advice on product liability cases or to assist on patent 
     matters, that engineer would qualify for exemption.
       (8) Athletic trainers. Athletic trainers who have 
     successfully completed four academic years of pre-
     professional and professional study in a specialized 
     curriculum accredited by the Commission on Accreditation of 
     Allied Health Education Programs and who are certified by the 
     Board of Certification of the National Athletic Trainers 
     Association Board of Certification generally meet the duties 
     requirements for the learned professional exemption.
       [(9) Funeral directors or embalmers. Licensed funeral 
     directors and embalmers who are licensed by and working in a 
     state that requires successful completion of four academic 
     years of pre-professional and professional study, including 
     graduation from a college of mortuary science accredited by 
     the American Board of Funeral Service Education, generally 
     meet the duties requirements for the learned professional 
     exemption.]
       (f) The areas in which the professional exemption may be 
     available are expanding. As knowledge is developed, academic 
     training is broadened and specialized degrees are offered in 
     new and diverse fields, thus creating new specialists in 
     particular fields of science or learning. When an advanced 
     specialized degree has become a standard requirement for a 
     particular occupation, that occupation may have acquired the 
     characteristics of a learned profession. Accrediting and 
     certifying organizations similar to those listed in 
     paragraphs (e)(1), (e)(3), (e)(4) and (e)(8) of this section 
     also may be created in the future. Such organizations may 
     develop similar specialized curriculums and certification 
     programs which, if a standard requirement for a particular 
     occupation, may indicate that the occupation has acquired the 
     characteristics of a learned profession.
     Sec. 541.302 Creative professionals.
       (a) To qualify for the creative professional exemption, an 
     employee's primary duty must be the performance of work 
     requiring invention, imagination, originality or talent in a 
     recognized field of artistic or creative endeavor as opposed 
     to routine mental, manual, mechanical or physical work. The 
     exemption does not apply to work which can be produced by a 
     person with general manual or intellectual ability and 
     training.
       (b) To qualify for exemption as a creative professional, 
     the work performed must be ``in a recognized field of 
     artistic or creative endeavor.'' This includes such fields as 
     music, writing, acting and the graphic arts.
       (c) The requirement of ``invention, imagination, 
     originality or talent'' distinguishes the creative 
     professions from work that primarily depends on intelligence, 
     diligence and accuracy. The duties of employees vary widely, 
     and exemption as a creative professional depends on the 
     extent of the invention, imagination, originality or talent 
     exercised by the employee. Determination of exempt creative 
     professional status, therefore, must be made on a case-by-
     case basis. This requirement generally is met by actors, 
     musicians, composers, conductors, and soloists;

[[Page S5157]]

     painters who at most are given the subject matter of their 
     painting; cartoonists who are merely told the title or 
     underlying concept of a cartoon and must rely on their own 
     creative ability to express the concept; essayists, 
     novelists, short-story writers and screen-play writers who 
     choose their own subjects and hand in a finished piece of 
     work to their employers (the majority of such persons are, of 
     course, not employees but self-employed); and persons holding 
     the more responsible writing positions in advertising 
     agencies. This requirement generally is not met by a person 
     who is employed as a copyist, as an ``animator'' of motion-
     picture cartoons, or as a retoucher of photographs, since 
     such work is not properly described as creative in character.
       (d) Journalists may satisfy the duties requirements for the 
     creative professional exemption if their primary duty is work 
     requiring invention, imagination, originality or talent, as 
     opposed to work which depends primarily on intelligence, 
     diligence and accuracy. Employees of newspapers, magazines, 
     television and other media are not exempt creative 
     professionals if they only collect, organize and record 
     information that is routine or already public, or if they do 
     not contribute a unique interpretation or analysis to a news 
     product. Thus, for example, newspaper reporters who merely 
     rewrite press releases or who write standard recounts of 
     public information by gathering facts on routine community 
     events are not exempt creative professionals. Reporters also 
     do not qualify as exempt creative professionals if their work 
     product is subject to substantial control by the employer. 
     However, journalists may qualify as exempt creative 
     professionals if their primary duty is performing on the air 
     in radio, television or other electronic media; conducting 
     investigative interviews; analyzing or interpreting public 
     events; writing editorials, opinion columns or other 
     commentary; or acting as a narrator or commentator.
     Sec. 541.303 Teachers.
       (a) The term ``employee employed in a bona fide 
     professional capacity'' in section 13(a)(1) of the Act also 
     means any employee with a primary duty of teaching, tutoring, 
     instructing or lecturing in the activity of imparting 
     knowledge and who is employed and engaged in this activity as 
     a teacher in an educational establishment by which the 
     employee is employed. The term ``educational establishment'' 
     is defined in Sec. 541.204(b).
       (b) Exempt teachers include, but are not limited to: 
     Regular academic teachers; teachers of kindergarten or 
     nursery school pupils; teachers of gifted or disabled 
     children; teachers of skilled and semi-skilled trades and 
     occupations; teachers engaged in automobile driving 
     instruction; aircraft flight instructors; home economics 
     teachers; and vocal or instrumental music instructors. Those 
     faculty members who are engaged as teachers but also spend a 
     considerable amount of their time in extracurricular 
     activities such as coaching athletic teams or acting as 
     moderators or advisors in such areas as drama, speech, debate 
     or journalism are engaged in teaching. Such activities are a 
     recognized part of the schools' responsibility in 
     contributing to the educational development of the student.
       (c) The possession of an elementary or secondary teacher's 
     certificate provides a clear means of identifying the 
     individuals contemplated as being within the scope of the 
     exemption for teaching professionals. Teachers who possess a 
     teaching certificate qualify for the exemption regardless of 
     the terminology (e.g., permanent, conditional, standard, 
     provisional, temporary, emergency, or unlimited) used by the 
     State to refer to different kinds of certificates. However, 
     private schools and public schools are not uniform in 
     requiring a certificate for employment as an elementary or 
     secondary school teacher, and a teacher's certificate is not 
     generally necessary for employment in institutions of higher 
     education or other educational establishments. Therefore, a 
     teacher who is not certified may be considered for exemption, 
     provided that such individual is employed as a teacher by the 
     employing school or school system.
       (d) The requirements of Sec. 541.300 and Subpart G (salary 
     requirements) of this part do not apply to the teaching 
     professionals described in this section.
     Sec. 541.304 Practice of law or medicine.
       (a) The term ``employee employed in a bona fide 
     professional capacity'' in section 13(a)(1) of the Act also 
     shall mean:
       (1) Any employee who is the holder of a valid license or 
     certificate permitting the practice of law or medicine or any 
     of their branches and is actually engaged in the practice 
     thereof; and
       (2) Any employee who is the holder of the requisite 
     academic degree for the general practice of medicine and is 
     engaged in an internship or resident program pursuant to the 
     practice of the profession.
       (b) In the case of medicine, the exemption applies to 
     physicians and other practitioners licensed and practicing in 
     the field of medical science and healing or any of the 
     medical specialties practiced by physicians or practitioners. 
     The term ``physicians'' includes medical doctors including 
     general practitioners and specialists, osteopathic physicians 
     (doctors of osteopathy), podiatrists, dentists (doctors of 
     dental medicine), and optometrists (doctors of optometry or 
     bachelors of science in optometry).
       (c) Employees engaged in internship or resident programs, 
     whether or not licensed to practice prior to commencement of 
     the program, qualify as exempt professionals if they enter 
     such internship or resident programs after the earning of the 
     appropriate degree required for the general practice of their 
     profession.
       (d) The requirements of Sec. 541.300 and subpart G (salary 
     requirements) of this part do not apply to the employees 
     described in this section.

       SUBPART E--COMPUTER EMPLOYEES (Sec. Sec. 541.400-541.402)

     Sec. 541.400 General rule for computer employees.
       (a) Computer systems analysts, computer programmers, 
     software engineers or other similarly skilled workers in the 
     computer field are eligible for exemption as professionals 
     under section 13(a)(1) of the Act and under section 13(a)(17) 
     of the Act. Because job titles vary widely and change quickly 
     in the computer industry, job titles are not determinative of 
     the applicability of this exemption.
       (b) The section 13(a)(1) exemption applies to any computer 
     employee who is compensated on a salary or fee basis at a 
     rate of not less than $684 per week [(or $455 per week if 
     employed in the Commonwealth of the Northern Mariana Islands, 
     Guam, Puerto Rico, or the U.S. Virgin Islands by employers 
     other than the Federal government, or $380 per week if 
     employed in American Samoa by employers other than the 
     Federal government)], exclusive of board, lodging, or other 
     facilities.
       The section 13(a)(17) exemption applies to any computer 
     employee compensated on an hourly basis at a rate of not less 
     than $27.63 an hour. In addition, under either section 
     13(a)(1) or section 13(a)(17) of the Act, the exemptions 
     apply only to computer employees whose primary duty consists 
     of:
       (1) The application of systems analysis techniques and 
     procedures, including consulting with users, to determine 
     hardware, software or system functional specifications;
       (2) The design, development, documentation, analysis, 
     creation, testing or modification of computer systems or 
     programs, including prototypes, based on and related to user 
     or system design specifications;
       (3) The design, documentation, testing, creation or 
     modification of computer programs related to machine 
     operating systems; or
       (4) A combination of the aforementioned duties, the 
     performance of which requires the same level of skills.
       (c) The term ``salary basis'' is defined at Sec. 541.602; 
     ``fee basis'' is defined at Sec. 541.605; ``board, lodging or 
     other facilities'' is defined at Sec. 541.606; and ``primary 
     duty'' is defined at Sec. 541.700.
     Sec. 541.401 Computer manufacture and repair.
       The exemption for employees in computer occupations does 
     not include employees engaged in the manufacture or repair of 
     computer hardware and related equipment. Employees whose work 
     is highly dependent upon, or facilitated by, the use of 
     computers and computer software programs (e.g., engineers, 
     drafters and others skilled in computer-aided design 
     software), but who are not primarily engaged in computer 
     systems analysis and programming or other similarly skilled 
     computer-related occupations identified in Sec. 541.400(b), 
     are also not exempt computer professionals.
     Sec. 541.402 Executive and administrative computer employees.
       Computer employees within the scope of this exemption, as 
     well as those employees not within its scope, may also have 
     executive and administrative duties which qualify the 
     employees for exemption under subpart B or subpart C of this 
     part. For example, systems analysts and computer programmers 
     generally meet the duties requirements for the administrative 
     exemption if their primary duty includes work such as 
     planning, scheduling, and coordinating activities required to 
     develop systems to solve complex business, scientific or 
     engineering problems of the employer or the employer's 
     customers<<, constituents or stakeholders>>. Similarly, a 
     senior or lead computer programmer who manages the work of 
     two or more other programmers in a customarily recognized 
     department or subdivision of the employer, and whose 
     recommendations as to the hiring, firing, advancement, 
     promotion or other change of status of the other programmers 
     are given particular weight, generally meets the duties 
     requirements for the executive exemption.

      <>[SUBPART F--OUTSIDE SALES EMPLOYEES 
                      (Sec. Sec. 541.500-541.504)

     Sec. 541.500 General rule for outside sales employees.
       (a) The term ``employee employed in the capacity of outside 
     salesman'' in section 13(a)(1) of the Act shall mean any 
     employee:
       (1) Whose primary duty is:
       (i) making sales within the meaning of section 3(k) of the 
     Act, or
       (ii) obtaining orders or contracts for services or for the 
     use of facilities for which a consideration will be paid by 
     the client or customer; and
       (2) Who is customarily and regularly engaged away from the 
     employer's place or places of business in performing such 
     primary duty.
       (b) The term ``primary duty'' is defined at Sec. 541.700. 
     In determining the primary duty of

[[Page S5158]]

     an outside sales employee, work performed incidental to and 
     in conjunction with the employee's own outside sales or 
     solicitations, including incidental deliveries and 
     collections, shall be regarded as exempt outside sales work. 
     Other work that furthers the employee's sales efforts also 
     shall be regarded as exempt work including, for example, 
     writing sales reports, updating or revising the employee's 
     sales or display catalogue, planning itineraries and 
     attending sales conferences.
       (c) The requirements of subpart G (salary requirements) of 
     this part do not apply to the outside sales employees 
     described in this section.
     Sec. 541.501 Making sales or obtaining orders.
       (a) Section 541.500 requires that the employee be engaged 
     in:
       (1) Making sales within the meaning of section 3(k) of the 
     Act, or
       (2) Obtaining orders or contracts for services or for the 
     use of facilities.
       (b) Sales within the meaning of section 3(k) of the Act 
     include the transfer of title to tangible property, and in 
     certain cases, of tangible and valuable evidences of 
     intangible property. Section 3(k) of the Act states that 
     ``sale'' or ``sell'' includes any sale, exchange, contract to 
     sell, consignment for sale, shipment for sale, or other 
     disposition.
       (c) Exempt outside sales work includes not only the sales 
     of commodities, but also ``obtaining orders or contracts for 
     services or for the use of facilities for which a 
     consideration will be paid by the client or customer.'' 
     Obtaining orders for ``the use of facilities'' includes the 
     selling of time on radio or television, the solicitation of 
     advertising for newspapers and other periodicals, and the 
     solicitation of freight for railroads and other 
     transportation agencies.
       (d) The word ``services'' extends the outside sales 
     exemption to employees who sell or take orders for a service, 
     which may be performed for the customer by someone other than 
     the person taking the order.
     Sec. 541.502 Away from employer's place of business.
       An outside sales employee must be customarily and regularly 
     engaged ``away from the employer's place or places of 
     business.'' The outside sales employee is an employee who 
     makes sales at the customer's place of business or, if 
     selling door-to-door, at the customer's home. Outside sales 
     does not include sales made by mail, telephone or the 
     Internet unless such contact is used merely as an adjunct to 
     personal calls. Thus, any fixed site, whether home or office, 
     used by a salesperson as a headquarters or for telephonic 
     solicitation of sales is considered one of the employer's 
     places of business, even though the employer is not in any 
     formal sense the owner or tenant of the property. However, an 
     outside sales employee does not lose the exemption by 
     displaying samples in hotel sample rooms during trips from 
     city to city; these sample rooms should not be considered as 
     the employer's places of business. Similarly, an outside 
     sales employee does not lose the exemption by displaying the 
     employer's products at a trade show. If selling actually 
     occurs, rather than just sales promotion, trade shows of 
     short duration (i.e., one or two weeks) should not be 
     considered as the employer's place of business.
     Sec. 541.503 Promotion work.
       (a) Promotion work is one type of activity often performed 
     by persons who make sales, which may or may not be exempt 
     outside sales work, depending upon the circumstances under 
     which it is performed. Promotional work that is actually 
     performed incidental to and in conjunction with an employee's 
     own outside sales or solicitations is exempt work. On the 
     other hand, promotional work that is incidental to sales 
     made, or to be made, by someone else is not exempt outside 
     sales work. An employee who does not satisfy the requirements 
     of this subpart may still qualify as an exempt employee under 
     other subparts of this rule.
       (b) A manufacturer's representative, for example, may 
     perform various types of promotional activities such as 
     putting up displays and posters, removing damaged or spoiled 
     stock from the merchant's shelves or rearranging the 
     merchandise. Such an employee can be considered an exempt 
     outside sales employee if the employee's primary duty is 
     making sales or contracts. Promotion activities directed 
     toward consummation of the employee's own sales are exempt. 
     Promotional activities designed to stimulate sales that will 
     be made by someone else are not exempt outside sales work.
       (c) Another example is a company representative who visits 
     chain stores, arranges the merchandise on shelves, 
     replenishes stock by replacing old with new merchandise, sets 
     up displays and consults with the store manager when 
     inventory runs low, but does not obtain a commitment for 
     additional purchases. The arrangement of merchandise on the 
     shelves or the replenishing of stock is not exempt work 
     unless it is incidental to and in conjunction with the 
     employee's own outside sales. Because the employee in this 
     instance does not consummate the sale nor direct efforts 
     toward the consummation of a sale, the work is not exempt 
     outside sales work.
     Sec. 541.504 Drivers who sell.
       (a) Drivers who deliver products and also sell such 
     products may qualify as exempt outside sales employees only 
     if the employee has a primary duty of making sales. In 
     determining the primary duty of drivers who sell, work 
     performed incidental to and in conjunction with the 
     employee's own outside sales or solicitations, including 
     loading, driving or delivering products, shall be regarded as 
     exempt outside sales work.
       (b) Several factors should be considered in determining if 
     a driver has a primary duty of making sales, including, but 
     not limited to: a comparison of the driver's duties with 
     those of other employees engaged as truck drivers and as 
     salespersons; possession of a selling or solicitor's license 
     when such license is required by law or ordinances; presence 
     or absence of customary or contractual arrangements 
     concerning amounts of products to be delivered; description 
     of the employee's occupation in collective bargaining 
     agreements; the employer's specifications as to 
     qualifications for hiring; sales training; attendance at 
     sales conferences; method of payment; and proportion of 
     earnings directly attributable to sales.
       (c) Drivers who may qualify as exempt outside sales 
     employees include:
       (1) A driver who provides the only sales contact between 
     the employer and the customers visited, who calls on 
     customers and takes orders for products, who delivers 
     products from stock in the employee's vehicle or procures and 
     delivers the product to the customer on a later trip, and who 
     receives compensation commensurate with the volume of 
     products sold.
       (2) A driver who obtains or solicits orders for the 
     employer's products from persons who have authority to commit 
     the customer for purchases.
       (3) A driver who calls on new prospects for customers along 
     the employee's route and attempts to convince them of the 
     desirability of accepting regular delivery of goods.
       (4) A driver who calls on established customers along the 
     route and persuades regular customers to accept delivery of 
     increased amounts of goods or of new products, even though 
     the initial sale or agreement for delivery was made by 
     someone else.
       (d) Drivers who generally would not qualify as exempt 
     outside sales employees include:
       (1) A route driver whose primary duty is to transport 
     products sold by the employer through vending machines and to 
     keep such machines stocked, in good operating condition, and 
     in good locations.
       (2) A driver who often calls on established customers day 
     after day or week after week, delivering a quantity of the 
     employer's products at each call when the sale was not 
     significantly affected by solicitations of the customer by 
     the delivering driver or the amount of the sale is determined 
     by the volume of the customer's sales since the previous 
     delivery.
       (3) A driver primarily engaged in making deliveries to 
     customers and performing activities intended to promote sales 
     by customers (including placing point-of-sale and other 
     advertising materials, price stamping commodities, arranging 
     merchandise on shelves, in coolers or in cabinets, rotating 
     stock according to date, and cleaning and otherwise servicing 
     display cases), unless such work is in furtherance of the 
     driver's own sales efforts.]

       SUBPART G--SALARY REQUIREMENTS (Sec. Sec. 541.600-541.607)

     Sec. 541.600 Amount of salary required.
       (a) To qualify as an exempt executive, administrative or 
     professional employee under section 13(a)(1) of the Act, an 
     employee must be compensated on a salary basis at a rate of 
     not less than $684 per week [(or $455 per week if employed in 
     the Commonwealth of the Northern Mariana Islands, Guam, 
     Puerto Rico, or the U.S. Virgin Islands by employers other 
     than the Federal Government, or $380 per week if employed in 
     American Samoa by employers other than the Federal 
     Government)], exclusive of board, lodging or other 
     facilities. Administrative and professional employees may 
     also be paid on a fee basis, as defined in Sec. 541.605.
       (b) The required amount of compensation per week may be 
     translated into equivalent amounts for periods longer than 
     one week. For example, the $684-per-week requirement will be 
     met if the employee is compensated biweekly on a salary basis 
     of not less than $1,368, semimonthly on a salary basis of not 
     less than $1,482, or monthly on a salary basis of not less 
     than $2,964. However, the shortest period of payment that 
     will meet this compensation requirement is one week.
       (c) In the case of academic administrative employees, the 
     compensation requirement also may be met by compensation on a 
     salary basis at a rate at least equal to the entrance salary 
     for teachers in the educational establishment by which the 
     employee is employed, as provided in Sec. 541.204(a)(1).
       (d) In the case of computer employees, the compensation 
     requirement also may be met by compensation on an hourly 
     basis at a rate not less than $27.63 an hour, as provided in 
     Sec. 541.400(b).
       (e) In the case of professional employees, the compensation 
     requirements in this section shall not apply to employees 
     engaged as teachers (see Sec. 541.303); employees who hold a 
     valid license or certificate permitting the practice of law 
     or medicine or any of their branches and are actually engaged 
     in the practice thereof (see Sec. 541.304); or to employees 
     who hold the requisite academic degree for the general 
     practice of medicine and are engaged in an internship or 
     resident program pursuant to the practice of the profession 
     (see Sec. 541.304). In the case of medical occupations, the 
     exception from the salary or fee

[[Page S5159]]

     requirement does not apply to pharmacists, nurses, 
     therapists, technologists, sanitarians, dietitians, social 
     workers, psychologists, psychometrists, or other professions 
     which service the medical profession.
     Sec. 541.601 Highly compensated employees.
       (a)(1) Beginning on [January 1, 2020]<>, an employee with total 
     annual compensation of at least $107,432 is deemed exempt 
     under section 13(a)(1) of the Act if the employee customarily 
     and regularly performs any one or more of the exempt duties 
     or responsibilities of an executive, administrative or 
     professional employee as identified in subparts B, C or D of 
     this part.
       (2) Where the annual period covers periods both prior to 
     and after [January 1, 2020]<>, the amount of total annual 
     compensation due will be determined on a proportional basis.
       (b)(1) ``Total annual compensation'' must include at least 
     $684 per week paid on a salary or fee basis as set forth in 
     Sec. Sec. 541.602 and 541.605, except that 541.602(a)(3) 
     shall not apply to highly compensated employees. Total annual 
     compensation may also include commissions, nondiscretionary 
     bonuses and other nondiscretionary compensation earned during 
     a 52-week period. Total annual compensation does not include 
     board, lodging and other facilities as defined in 
     Sec. 541.606, and does not include payments for medical 
     insurance, payments for life insurance, contributions to 
     retirement plans and the cost of other fringe benefits.
       (2) If an employee's total annual compensation does not 
     total at least the amount specified in the applicable 
     subsection of paragraph (a) by the last pay period of the 52-
     week period, the employer may, during the last pay period or 
     within one month after the end of the 52-week period, make 
     one final payment sufficient to achieve the required level. 
     For example, for a 52-week period [beginning January 1, 
     2020], an employee may earn $90,000 in base salary, and the 
     employer may anticipate [based upon past sales] that the 
     employee also will earn $17,432 in [commissions]<>. However, [due to poor sales] in the final quarter 
     of the year, the employee actually only earns $12,000 in 
     [commissions]<>. In this situation, the 
     employer may within one month after the end of the year make 
     a payment of at least $5,432 to the employee. Any such final 
     payment made after the end of the 52-week period may count 
     only toward the prior year's total annual compensation and 
     not toward the total annual compensation in the year it was 
     paid. If the employer fails to make such a payment, the 
     employee does not qualify as a highly compensated employee, 
     but may still qualify as exempt under subparts B, C, or D of 
     this part.
       (3) An employee who does not work a full year for the 
     employer, either because the employee is newly hired after 
     the beginning of the year or ends the employment before the 
     end of the year, may qualify for exemption under this section 
     if the employee receives a pro rata portion of the minimum 
     amount established in paragraph (a) of this section, based 
     upon the number of weeks that the employee will be or has 
     been employed. An employer may make one final payment as 
     under paragraph (b)(2) of this section within one month after 
     the end of employment.
       (4) The employer may utilize any 52-week period as the 
     year, such as a calendar year, a fiscal year, or an 
     anniversary of hire year. If the employer does not identify 
     some other year period in advance, the calendar year will 
     apply.
       (c) A high level of compensation is a strong indicator of 
     an employee's exempt status, thus eliminating the need for a 
     detailed analysis of the employee's job duties. Thus, a 
     highly compensated employee will qualify for exemption if the 
     employee customarily and regularly performs any one or more 
     of the exempt duties or responsibilities of an executive, 
     administrative or professional employee identified in 
     subparts B, C or D of this part. An employee may qualify as a 
     highly compensated executive employee, for example, if the 
     employee customarily and regularly directs the work of two or 
     more other employees, even though the employee does not meet 
     all of the other requirements for the executive exemption 
     under Sec. 541.100.
       (d) This section applies only to employees whose primary 
     duty includes performing office or non-manual work. Thus, for 
     example, non-management production-line workers and non-
     management employees in maintenance, construction and similar 
     occupations such as carpenters, electricians, mechanics, 
     plumbers, iron workers, craftsmen, operating engineers, 
     longshoremen, construction workers, laborers and other 
     employees who perform work involving repetitive operations 
     with their hands, physical skill and energy are not exempt 
     under this section no matter how highly paid they might be.
     Sec. 541.602 Salary basis.
       (a) General rule. An employee will be considered to be paid 
     on a ``salary basis'' within the meaning of this part if the 
     employee regularly receives each pay period on a weekly, or 
     less frequent basis, a predetermined amount constituting all 
     or part of the employee's compensation, which amount is not 
     subject to reduction because of variations in the quality or 
     quantity of the work performed.
       (1) Subject to the exceptions provided in paragraph (b) of 
     this section, an exempt employee must receive the full salary 
     for any week in which the employee performs any work without 
     regard to the number of days or hours worked. Exempt 
     employees need not be paid for any workweek in which they 
     perform no work.
       (2) An employee is not paid on a salary basis if deductions 
     from the employee's predetermined compensation are made for 
     absences occasioned by the employer or by the operating 
     requirements of the [business] <>. If the 
     employee is ready, willing and able to work, deductions may 
     not be made for time when work is not available.
       (3) Up to ten percent of the salary amount required by 
     Sec. 541.600(a) may be satisfied by the payment of 
     nondiscretionary bonuses, incentives and commissions, that 
     are paid annually or more frequently. The employer may 
     utilize any 52-week period as the year, such as a calendar 
     year, a fiscal year, or an anniversary of hire year. If the 
     employer does not identify some other year period in advance, 
     the calendar year will apply. This provision does not apply 
     to highly compensated employees under Sec. 541.601.
       (i) If by the last pay period of the 52-week period the sum 
     of the employee's weekly salary plus nondiscretionary bonus, 
     incentive, and commission payments received is less than 52 
     times the weekly salary amount required by Sec. 541.600(a), 
     the employer may make one final payment sufficient to achieve 
     the required level no later than the next pay period after 
     the end of the year. Any such final payment made after the 
     end of the 52-week period may count only toward the prior 
     year's salary amount and not toward the salary amount in the 
     year it was paid.
       (ii) An employee who does not work a full 52-week period 
     for the employer, either because the employee is newly hired 
     after the beginning of this period or ends the employment 
     before the end of this period, may qualify for exemption if 
     the employee receives a pro rata portion of the minimum 
     amount established in paragraph (a)(3) of this section, based 
     upon the number of weeks that the employee will be or has 
     been employed. An employer may make one final payment as 
     under paragraph (a)(3)(i) of this section within one pay 
     period after the end of employment.
       (b) Exceptions. The prohibition against deductions from pay 
     in the salary basis requirement is subject to the following 
     exceptions:
       (1) Deductions from pay may be made when an exempt employee 
     is absent from work for one or more full days for personal 
     reasons, other than sickness or disability. Thus, if an 
     employee is absent for two full days to handle personal 
     affairs, the employee's salaried status will not be affected 
     if deductions are made from the salary for two full-day 
     absences. However, if an exempt employee is absent for one 
     and a half days for personal reasons, the employer can deduct 
     only for the one full-day absence.
       (2) Deductions from pay may be made for absences of one or 
     more full days occasioned by sickness or disability 
     (including work-related accidents) if the deduction is made 
     in accordance with a bona fide plan, policy or practice of 
     providing compensation for loss of salary occasioned by such 
     sickness or disability. The employer is not required to pay 
     any portion of the employee's salary for full-day absences 
     for which the employee receives compensation under the plan, 
     policy or practice. Deductions for such full-day absences 
     also may be made before the employee has qualified under the 
     plan, policy or practice, and after the employee has 
     exhausted the leave allowance thereunder. Thus, for example, 
     if an employer maintains a short-term disability insurance 
     plan providing salary replacement for 12 weeks starting on 
     the fourth day of absence, the employer may make deductions 
     from pay for the three days of absence before the employee 
     qualifies for benefits under the plan; for the twelve weeks 
     in which the employee receives salary replacement benefits 
     under the plan; and for absences after the employee has 
     exhausted the 12 weeks of salary replacement benefits. 
     [Similarly, an employer may make deductions from pay for 
     absences of one or more full days if salary replacement 
     benefits are provided under a State disability insurance law 
     or under a State workers' compensation law.]
       (3) While an employer cannot make deductions from pay for 
     absences of an exempt employee occasioned by jury duty, 
     attendance as a witness or temporary military leave, the 
     employer can offset any amounts received by an employee as 
     jury fees, witness fees or military pay for a particular week 
     against the salary due for that particular week without loss 
     of the exemption.
       (4) Deductions from pay of exempt employees may be made for 
     penalties imposed in good faith for infractions of safety 
     rules of major significance. Safety rules of major 
     significance include those relating to the prevention of 
     serious danger in the workplace or to other employees, such 
     as rules prohibiting smoking in explosive plants, oil 
     refineries and coal mines.
       (5) Deductions from pay of exempt employees may be made for 
     unpaid disciplinary suspensions of one or more full days 
     imposed in good faith for infractions of workplace conduct 
     rules. Such suspensions must be imposed pursuant to a written 
     policy applicable to all employees. Thus, for example, an 
     employer may suspend an exempt employee without pay for three 
     days for violating a

[[Page S5160]]

     generally applicable written policy prohibiting sexual 
     harassment. Similarly, an employer may suspend an exempt 
     employee without pay for twelve days for violating a 
     generally applicable written policy prohibiting workplace 
     violence.
       (6) An employer is not required to pay the full salary in 
     the initial or terminal week of employment. Rather, an 
     employer may pay a proportionate part of an employee's full 
     salary for the time actually worked in the first and last 
     week of employment. In such weeks, the payment of an hourly 
     or daily equivalent of the employee's full salary for the 
     time actually worked will meet the requirement. However, 
     employees are not paid on a salary basis within the meaning 
     of these regulations if they are employed occasionally for a 
     few days, and the employer pays them a proportionate part of 
     the weekly salary when so employed.
       (7) An employer is not required to pay the full salary for 
     weeks in which an exempt employee takes unpaid leave under 
     the Family and Medical Leave Act. Rather, when an exempt 
     employee takes unpaid leave under the Family and Medical 
     Leave Act, an employer may pay a proportionate part of the 
     full salary for time actually worked. For example, if an 
     employee who normally works 40 hours per week uses four hours 
     of unpaid leave under the Family and Medical Leave Act, the 
     employer could deduct 10 percent of the employee's normal 
     salary that week.
       (c) When calculating the amount of a deduction from pay 
     allowed under paragraph (b) of this section, the employer may 
     use the hourly or daily equivalent of the employee's full 
     weekly salary or any other amount proportional to the time 
     actually missed by the employee. A deduction from pay as a 
     penalty for violations of major safety rules under paragraph 
     (b)(4) of this section may be made in any amount.
     Sec. 541.603 Effect of improper deductions from salary.
       (a) An employer who makes improper deductions from salary 
     shall lose the exemption if the facts demonstrate that the 
     employer did not intend to pay employees on a salary basis. 
     An actual practice of making improper deductions demonstrates 
     that the employer did not intend to pay employees on a salary 
     basis. The factors to consider when determining whether an 
     employer has an actual practice of making improper deductions 
     include, but are not limited to: the number of improper 
     deductions, particularly as compared to the number of 
     employee infractions warranting discipline; the time period 
     during which the employer made improper deductions; the 
     number and geographic location of employees whose salary was 
     improperly reduced; the number and geographic location of 
     managers responsible for taking the improper deductions; and 
     whether the employer has a clearly communicated policy 
     permitting or prohibiting improper deductions.
       (b) If the facts demonstrate that the employer has an 
     actual practice of making improper deductions, the exemption 
     is lost during the time period in which the improper 
     deductions were made for employees in the same job 
     classification working for the same managers responsible for 
     the actual improper deductions. Employees in different job 
     classifications or who work for different managers do not 
     lose their status as exempt employees. Thus, for example, if 
     a manager [at a company facility] routinely docks the pay of 
     engineers at that facility for partial-day personal absences, 
     then all engineers at that facility whose pay could have been 
     improperly docked by the manager would lose the exemption; 
     engineers at other facilities or working for other managers, 
     however, would remain exempt.
       (c) Improper deductions that are either isolated or 
     inadvertent will not result in loss of the exemption for any 
     employees subject to such improper deductions, if the 
     employer reimburses the employees for such improper 
     deductions.
       (d) If an employer has a clearly communicated policy that 
     prohibits the improper pay deductions specified in 
     Sec. 541.602(a) and includes a complaint mechanism, 
     reimburses employees for any improper deductions and makes a 
     good faith commitment to comply in the future, such employer 
     will not lose the exemption for any employees unless the 
     employer willfully violates the policy by continuing to make 
     improper deductions after receiving employee complaints. If 
     an employer fails to reimburse employees for any improper 
     deductions or continues to make improper deductions after 
     receiving employee complaints, the exemption is lost during 
     the time period in which the improper deductions were made 
     for employees in the same job classification working for the 
     same managers responsible for the actual improper deductions. 
     The best evidence of a clearly communicated policy is a 
     written policy that was distributed to employees prior to the 
     improper pay deductions by, for example, providing a copy of 
     the policy to employees at the time of hire, publishing the 
     policy in an employee handbook or publishing the policy on 
     the employer's Intranet.
       (e) This section shall not be construed in an unduly 
     technical manner so as to defeat the exemption.
     Sec. 541.604 Minimum guarantee plus extras.
       (a) An employer may provide an exempt employee with 
     additional compensation without losing the exemption or 
     violating the salary basis requirement, if the employment 
     arrangement also includes a guarantee of at least the minimum 
     weekly-required amount paid on a salary basis. Thus, for 
     example, an exempt employee guaranteed at least $684 each 
     week paid on a salary basis may also receive additional 
     compensation of a one percent commission on sales. An exempt 
     employee also may receive a percentage of the sales or 
     profits of the employer if the employment arrangement also 
     includes a guarantee of at least $684 each week paid on a 
     salary basis. Similarly, the exemption is not lost if an 
     exempt employee who is guaranteed at least $684 each week 
     paid on a salary basis also receives additional compensation 
     based on hours worked for work beyond the normal workweek. 
     Such additional compensation may be paid on any basis (e.g., 
     flat sum, bonus payment, straight-time hourly amount, time 
     and one-half or any other basis), and may include paid time 
     off.
       (b) An exempt employee's earnings may be computed on an 
     hourly, a daily or a shift basis, without losing the 
     exemption or violating the salary basis requirement, if the 
     employment arrangement also includes a guarantee of at least 
     the minimum weekly required amount paid on a salary basis 
     regardless of the number of hours, days or shifts worked, and 
     a reasonable relationship exists between the guaranteed 
     amount and the amount actually earned. The reasonable 
     relationship test will be met if the weekly guarantee is 
     roughly equivalent to the employee's usual earnings at the 
     assigned hourly, daily or shift rate for the employee's 
     normal scheduled workweek. Thus, for example, an exempt 
     employee guaranteed compensation of at least $725 for any 
     week in which the employee performs any work, and who 
     normally works four or five shifts each week, may be paid 
     $210 per shift without violating the $684-per-week salary 
     basis requirement. The reasonable relationship requirement 
     applies only if the employee's pay is computed on an hourly, 
     daily or shift basis. It does not apply, for example, to an 
     exempt store manager paid a guaranteed salary per week that 
     exceeds the current salary level who also receives a 
     commission of one-half percent of all sales in the store or 
     five percent of the store's profits, which in some weeks may 
     total as much as, or even more than, the guaranteed salary.
     Sec. 541.605 Fee basis.
       (a) Administrative and professional employees may be paid 
     on a fee basis, rather than on a salary basis. An employee 
     will be considered to be paid on a ``fee basis'' within the 
     meaning of these regulations if the employee is paid an 
     agreed sum for a single job regardless of the time required 
     for its completion. These payments resemble piecework 
     payments with the important distinction that generally a 
     ``fee'' is paid for the kind of job that is unique rather 
     than for a series of jobs repeated an indefinite number of 
     times and for which payment on an identical basis is made 
     over and over again. Payments based on the number of hours or 
     days worked and not on the accomplishment of a given single 
     task are not considered payments on a fee basis.
       (b) To determine whether the fee payment meets the minimum 
     amount of salary required for exemption under these 
     regulations, the amount paid to the employee will be tested 
     by determining the time worked on the job and whether the fee 
     payment is at a rate that would amount to at least the 
     minimum salary per week, as required by Sec. Sec. 541.600(a) 
     and 541.602(a), if the employee worked 40 hours. Thus, an 
     artist paid $350 for a picture that took 20 hours to complete 
     meets the $684 minimum salary requirement for exemption since 
     earnings at this rate would yield the artist $700 if 40 hours 
     were worked.
     Sec. 541.606 Board, lodging or other facilities.
       (a) To qualify for exemption under section 13(a)(1) of the 
     Act, an employee must earn the minimum salary amount set 
     forth in Sec. 541.600, ``exclusive of board, lodging or other 
     facilities.'' The phrase ``exclusive of board, lodging or 
     other facilities'' means ``free and clear'' or independent of 
     any claimed credit for non-cash items of value that an 
     employer may provide to an employee. Thus, the costs incurred 
     by an employer to provide an employee with board, lodging or 
     other facilities may not count towards the minimum salary 
     amount required for exemption under this part 541. Such 
     separate transactions are not prohibited between employers 
     and their exempt employees, but the costs to employers 
     associated with such transactions may not be considered when 
     determining if an employee has received the full required 
     minimum salary payment.
       (b) Regulations defining what constitutes ``board, lodging, 
     or other facilities'' are contained in 29 CFR part 531. As 
     described in 29 CFR 531.32, the term ``other facilities'' 
     refers to items similar to board and lodging, such as meals 
     furnished at company restaurants or cafeterias or by 
     hospitals, hotels, or restaurants to their employees; meals, 
     dormitory rooms, and tuition furnished by a college to its 
     student employees; merchandise furnished at company stores or 
     commissaries, including articles of food, clothing, and 
     household effects; housing furnished for dwelling purposes; 
     and transportation furnished to employees for ordinary 
     commuting between their homes and work.
     [Sec. 541.607][Reserved by 85 FR 34970 Effective: June 8, 
         2020] <<541.607--Reserved.>>

SUBPART H--DEFINITIONS AND MISCELLANEOUS PROVISIONS (Sec. Sec. 541.700-
                                541.710)

     Sec. 541.700 Primary duty.
       (a) To qualify for exemption under this part, an employee's 
     ``primary duty'' must be

[[Page S5161]]

     the performance of exempt work. The term ``primary duty'' 
     means the principal, main, major or most important duty that 
     the employee performs. Determination of an employee's primary 
     duty must be based on all the facts in a particular case, 
     with the major emphasis on the character of the employee's 
     job as a whole. Factors to consider when determining the 
     primary duty of an employee include, but are not limited to, 
     the relative importance of the exempt duties as compared with 
     other types of duties; the amount of time spent performing 
     exempt work; the employee's relative freedom from direct 
     supervision; and the relationship between the employee's 
     salary and the wages paid to other employees for the kind of 
     nonexempt work performed by the employee.
       (b) The amount of time spent performing exempt work can be 
     a useful guide in determining whether exempt work is the 
     primary duty of an employee. Thus, employees who spend more 
     than 50 percent of their time performing exempt work will 
     generally satisfy the primary duty requirement. Time alone, 
     however, is not the sole test, and nothing in this section 
     requires that exempt employees spend more than 50 percent of 
     their time performing exempt work. Employees who do not spend 
     more than 50 percent of their time performing exempt duties 
     may nonetheless meet the primary duty requirement if the 
     other factors support such a conclusion.
       (c) Thus, for example, assistant managers in a retail 
     establishment who perform exempt executive work such as 
     supervising and directing the work of other employees, 
     ordering merchandise, managing the budget and authorizing 
     payment of bills may have management as their primary duty 
     even if the assistant managers spend more than 50 percent of 
     the time performing nonexempt work such as running the cash 
     register. However, if such assistant managers are closely 
     supervised and earn little more than the nonexempt employees, 
     the assistant managers generally would not satisfy the 
     primary duty requirement.
     Sec. 541.701 Customarily and regularly.
       The phrase ``customarily and regularly'' means a frequency 
     that must be greater than occasional but which, of course, 
     may be less than constant. Tasks or work performed 
     ``customarily and regularly'' includes work normally and 
     recurrently performed every workweek; it does not include 
     isolated or one-time tasks.
     Sec. 541.702 Exempt and nonexempt work.
       The term ``exempt work'' means all work described in 
     Sec. Sec. 541.100, 541.101, 541.200, 541.300, 541.301, 
     541.302, 541.303, 541.304, <> 541.400 [and 541.500], and 
     the activities directly and closely related to such work. All 
     other work is considered ``nonexempt.''
     Sec. 541.703 Directly and closely related.
       (a) Work that is ``directly and closely related'' to the 
     performance of exempt work is also considered exempt work. 
     The phrase ``directly and closely related'' means tasks that 
     are related to exempt duties and that contribute to or 
     facilitate performance of exempt work. Thus, ``directly and 
     closely related'' work may include physical tasks and menial 
     tasks that arise out of exempt duties, and the routine work 
     without which the exempt employee's exempt work cannot be 
     performed properly. Work ``directly and closely related'' to 
     the performance of exempt duties may also include 
     recordkeeping; monitoring and adjusting machinery; taking 
     notes; using the computer to create documents or 
     presentations; opening the mail for the purpose of reading it 
     and making decisions; and using a photocopier or fax machine. 
     Work is not ``directly and closely related'' if the work is 
     remotely related or completely unrelated to exempt duties.
       (b) The following examples further illustrate the type of 
     work that is and is not normally considered as directly and 
     closely related to exempt work:
       (1) Keeping time, production or sales records for 
     subordinates is work directly and closely related to an 
     exempt executive's function of managing a department and 
     supervising employees.
       (2) The distribution of materials, merchandise or supplies 
     to maintain control of the flow of and expenditures for such 
     items is directly and closely related to the performance of 
     exempt duties.
       (3) A supervisor who spot checks and examines the work of 
     subordinates to determine whether they are performing their 
     duties properly, and whether the product is satisfactory, is 
     performing work which is directly and closely related to 
     managerial and supervisory functions, so long as the checking 
     is distinguishable from the work ordinarily performed by a 
     nonexempt inspector.
       (4) A supervisor who sets up a machine may be engaged in 
     exempt work, depending upon the nature of the industry and 
     the operation. In some cases the setup work, or adjustment of 
     the machine for a particular job, is typically performed by 
     the same employees who operate the machine. Such setup work 
     is part of the production operation and is not exempt. In 
     other cases, the setting up of the work is a highly skilled 
     operation which the ordinary production worker or machine 
     tender typically does not perform. In large plants, non-
     supervisors may perform such work. However, particularly in 
     small plants, such work may be a regular duty of the 
     executive and is directly and closely related to the 
     executive's responsibility for the work performance of 
     subordinates and for the adequacy of the final product. Under 
     such circumstances, it is exempt work.
       (5) A department manager in a retail or service 
     establishment who walks about the sales floor observing the 
     work of sales personnel under the employee's supervision to 
     determine the effectiveness of their sales techniques, checks 
     on the quality of customer service being given, or observes 
     customer preferences is performing work which is directly and 
     closely related to managerial and supervisory functions.
       (6) A business consultant may take extensive notes 
     recording the flow of work and materials through the office 
     or plant of the client; after returning to the office of the 
     employer, the consultant may personally use the computer to 
     type a report and create a proposed table of organization. 
     Standing alone, or separated from the primary duty, such 
     note-taking and typing would be routine in nature. However, 
     because this work is necessary for analyzing the data and 
     making recommendations, the work is directly and closely 
     related to exempt work. While it is possible to assign note-
     taking and typing to nonexempt employees, and in fact it is 
     frequently the practice to do so, delegating such routine 
     tasks is not required as a condition of exemption.
       (7) A [credit] manager who makes and administers the 
     [credit]<> policy of the [employer]<>, establishes [credit]<> limits for 
     [customers]<>, <> authorizes [the 
     shipment of orders on credit, and makes decisions on whether 
     to exceed credit limits]<> would be performing 
     work exempt under Sec. 541.200. Work that is directly and 
     closely related to these exempt duties may include checking 
     the status of accounts to determine whether the credit limit 
     would be exceeded by the shipment of a new order, removing 
     credit reports from the files for analysis, and writing 
     letters giving credit data and experience to other employers 
     or credit agencies.
       (8) A traffic manager in charge of planning a company's 
     transportation, including the most economical and quickest 
     routes for shipping merchandise to and from the plant, 
     contracting for common-carrier and other transportation 
     facilities, negotiating with carriers for adjustments for 
     damages to merchandise, and making the necessary 
     rearrangements resulting from delays, damages or 
     irregularities in transit, is performing exempt work. If the 
     employee also spends part of the day taking telephone orders 
     for local deliveries, such order-taking is a routine function 
     and is not directly and closely related to the exempt work.
       (9) An example of work directly and closely related to 
     exempt professional duties is a chemist performing menial 
     tasks such as cleaning a test tube in the middle of an 
     original experiment, even though such menial tasks can be 
     assigned to laboratory assistants.
       (10) A teacher performs work directly and closely related 
     to exempt duties when, while taking students on a field trip, 
     the teacher drives a school van or monitors the students' 
     behavior in a restaurant.
     Sec. 541.704 Use of manuals.
       The use of manuals, guidelines or other established 
     procedures containing or relating to highly technical, 
     scientific, legal, financial or other similarly complex 
     matters that can be understood or interpreted only by those 
     with advanced or specialized knowledge or skills does not 
     preclude exemption under section 13(a)(1) of the Act or the 
     regulations in this part. Such manuals and procedures provide 
     guidance in addressing difficult or novel circumstances and 
     thus use of such reference material would not affect an 
     employee's exempt status. The section 13(a)(1) exemptions are 
     not available, however, for employees who simply apply well-
     established techniques or procedures described in manuals or 
     other sources within closely prescribed limits to determine 
     the correct response to an inquiry or set of circumstances.
     Sec. 541.705 Trainees.
       The executive, administrative, professional, [outside 
     sales] and computer employee exemptions do not apply to 
     employees training for employment in an executive, 
     administrative, professional, [outside sales] or computer 
     employee capacity who are not actually performing the duties 
     of an executive, administrative, professional, [outside 
     sales] or computer employee.
     Sec. 541.706 Emergencies.
       (a) An exempt employee will not lose the exemption by 
     performing work of a normally nonexempt nature because of the 
     existence of an emergency. Thus, when emergencies arise that 
     threaten the safety of employees, a cessation of operations 
     or serious damage to the employer's property, any work 
     performed in an effort to prevent such results is considered 
     exempt work.
       (b) An ``emergency'' does not include occurrences that are 
     not beyond control or for which the employer can reasonably 
     provide in the normal course of business. Emergencies 
     generally occur only rarely, and are events that the employer 
     cannot reasonably anticipate.
       (c) The following examples illustrate the distinction 
     between emergency work considered exempt work and routine 
     work that is not exempt work:
       (1) [A mine superintendent who pitches in after an 
     explosion and digs out workers who are trapped in the mine is 
     still a bona fide executive.] <>
       (2) Assisting nonexempt employees with their work during 
     periods of heavy workload or to handle rush orders is not 
     exempt work.

[[Page S5162]]

       (3) Replacing a nonexempt employee during the first day or 
     partial day of an illness may be considered exempt emergency 
     work depending on factors such as the size of the 
     [establishment]<> and of the executive's 
     department, the nature of the [industry]<>, the consequences that would flow from 
     the failure to replace the ailing employee immediately, and 
     the feasibility of filling the employee's place promptly.
       (4) Regular repair and cleaning of equipment is not 
     emergency work, even when necessary to prevent fire or 
     explosion; however, repairing equipment may be emergency work 
     if the breakdown of or damage to the equipment was caused by 
     accident or carelessness that the employer could not 
     reasonably anticipate.
     Sec. 541.707 Occasional tasks.
       Occasional, infrequently recurring tasks that cannot 
     practicably be performed by nonexempt employees, but are the 
     means for an exempt employee to properly carry out exempt 
     functions and responsibilities, are considered exempt work. 
     The following factors should be considered in determining 
     whether such work is exempt work: Whether the same work is 
     performed by any of the exempt employee's subordinates; 
     practicability of delegating the work to a nonexempt 
     employee; whether the exempt employee performs the task 
     frequently or occasionally; and existence of an industry 
     practice for the exempt employee to perform the task.
     Sec. 541.708 Combination exemptions.
       Employees who perform a combination of exempt duties as set 
     forth in the regulations in this part for executive, 
     administrative, professional, [outside sales] and computer 
     employees may qualify for exemption. Thus, for example, an 
     employee whose primary duty involves a combination of exempt 
     administrative and exempt executive work may qualify for 
     exemption. In other words, work that is exempt under one 
     section of this part will not defeat the exemption under any 
     other section.
     Sec. [541.709 Motion picture producing industry.
       The requirement that the employee be paid ``on a salary 
     basis'' does not apply to an employee in the motion picture 
     producing industry who is compensated at a base rate of at 
     least $1,043 per week (exclusive of board, lodging, or other 
     facilities). Thus, an employee in this industry who is 
     otherwise exempt under subparts B, C, or D of this part, and 
     who is employed at a base rate of at least the applicable 
     current minimum amount a week is exempt if paid a 
     proportionate amount (based on a week of not more than 6 
     days) for any week in which the employee does not work a full 
     workweek for any reason. Moreover, an otherwise exempt 
     employee in this industry qualifies for exemption if the 
     employee is employed at a daily rate under the following 
     circumstances:
       (a) The employee is in a job category for which a weekly 
     base rate is not provided and the daily base rate would yield 
     at least the minimum weekly amount if 6 days were worked; or
       (b) The employee is in a job category having the minimum 
     weekly base rate and the daily base rate is at least one-
     sixth of such weekly base rate.] <<541.709 Reserved.>>
     Sec. 541.710 [Employees of public agencies]<>.
       (a) An employee [of a public agency] who otherwise meets 
     the salary basis requirements of Sec. 541.602 shall not be 
     disqualified from exemption under Sec. Sec. 541.100, 541.200, 
     541.300 or 541.400 on the basis that such employee is paid 
     according to a pay system established by statute, ordinance 
     or regulation, or by a policy or practice established 
     pursuant to principles of public accountability, under which 
     the employee accrues personal leave and sick leave and which 
     requires the [public agency] employee's pay to be reduced or 
     such employee to be placed on leave without pay for absences 
     for personal reasons or because of illness or injury of less 
     than one work-day when accrued leave is not used by an 
     employee because:
       (1) Permission for its use has not been sought or has been 
     sought and denied;
       (2) Accrued leave has been exhausted; or
       (3) The employee chooses to use leave without pay.
       (b) Deductions from the pay of an employee [of a public 
     agency] for absences due to a budget-required furlough shall 
     not disqualify the employee from being paid on a salary basis 
     except in the workweek in which the furlough occurs and for 
     which the employee's pay is accordingly reduced.

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