[Federal Register Volume 62, Number 246 (Tuesday, December 23, 1997)]
[Rules and Regulations]
[Pages 67238-67253]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-33429]


      

[[Page 67237]]

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Part V





Office of Personnel Management





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5 CFR Part 551



Pay Administration Under the Fair Labor Standards Act; Final Rule

  Federal Register / Vol. 62, No. 246 / Tuesday, December 23, 1997 / 
Rules and Regulations  

[[Page 67238]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 551

RIN 3206-AG70


Pay Administration Under the Fair Labor Standards Act

AGENCY: Office of Personnel Management.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The U.S. Office of Personnel Management (OPM) amends the pay 
administration under the Fair Labor Standards Act (referred to as ``the 
Act'' or ``FLSA'') rules. We made text clearer, standardized terms, 
changed to the active voice, reorganized material for added clarity, 
inserted or revised headings to reflect content accurately, reduced 
internal cross-referencing, corrected typographical, punctuation, and 
grammatical errors, and used ``plain English.'' We included guidance 
published in the sunsetted Federal Personnel Manual, added certain work 
in the computer software field to the professional exemption criteria, 
added an exemption for certain pilots, added the statutory exclusion of 
customs officers, and included regulations on child labor and claims 
and compliance.

DATES: Effective December 23, 1997.

FOR FURTHER INFORMATION CONTACT: Jeffrey D. Miller, Director, 
Classification Appeals and FLSA Programs, by telephone on 202-606-2990; 
by fax on 202-606-2663; or by e-mail at [email protected].

SUPPLEMENTARY INFORMATION: We received 15 submissions:

1 was from an individual and was not a comment;
4 were from individuals;
5 were from 3 agencies (3 were from 1 agency);
4 were from 5 labor organizations (1 was submitted jointly by 2 labor 
organizations); and
1 was from the Office of Compliance in the Legislative Branch.

General Comments

    We inserted the word ``comparable'' after the word ``other'' in the 
phrase ``other white collar'' throughout the text to make the wording 
consistent.
    An individual commended the clarity of the supplementary 
information introducing the proposed regulations as particularly 
intelligible.
    Another individual suggested that the modified or added portions of 
the regulation published in the Code of Federal Regulations be shown in 
bold face. This cannot be done in the Federal Register. However, we 
will post on the OPM web site (www.opm.gov) a version of the final 
regulations in which changed or added material is shown in bold face. 
Individuals who do not have Internet access may request a copy by 
calling 202-606-2990 or by sending a request by e-mail to 
[email protected].
    One labor organization commented that it was not clear which 
portions of part 551 of title 5, Code of Federal Regulations, the 
proposed regulations amended. Subparts A and B are amended and subparts 
F and G are added. This final rule does not amend subparts C, D, or E.
    The same labor organization pointed out that, in its opinion, many 
Federal employees are wrongfully denied FLSA overtime pay and 
recommended three guiding principles to address this problem.
    First, an agency should not declare an employee to be exempt if 
there is reasonable doubt about whether an employee meets any exemption 
criteria.
    Second, OPM's regulations should be designed to reduce ambiguity, 
thereby reducing the chances that agencies will incorrectly determine 
an employee to be FLSA exempt.
    Third, OPM's regulations pertaining to exemptions should be 
consistent with the Department of Labor's administration of the Act and 
should not be susceptible to a more expansive interpretation than 
comparable Department of Labor regulations.
    We believe the proposed regulations published on August 25, 1997, 
adequately addressed these concerns. Nonetheless, we kept these 
suggested principles in mind as we made revisions. For example, 
sections 551.201 and 551.202 in particular emphasize that an employee 
is presumed to be nonexempt unless the agency correctly determines that 
the work the employee performs clearly meets one or more of the 
exemption criteria.
    Another labor organization asserted that the ``salary basis test'' 
that is included in the Department of Labor's FLSA regulations is 
applicable to Federal employees for whom OPM administers the Act.
    The Department of Labor has determined that such tests do not apply 
to public employees (see section 541.5d of title 29, Code of Federal 
Regulations).

1. Section 551.102--Authority and Administration

    The Office of Compliance in the Legislative Branch stated that 
OPM's description of its responsibilities was inaccurate in three 
respects.
    First, the proposed regulations imply that the nine listed 
employing entities and their employees are covered by the FLSA. 
However, the employees of these entities are not included in the 
definition of ``employee'' under section 3(e)(2) of the Act. The 
Congressional Accountability Act of 1995 extends the rights and 
protections of the FLSA to the employees of these entities, so it is 
the Accountability Act, not the FLSA, that actually applies.
    Second, the proposed regulations state that the Office of 
Compliance administers the law for the listed entities. However, while 
the Office of Compliance is assigned certain administrative 
responsibilities under the Accountability Act, that Act does not 
authorize the Office of Compliance to administer the law, as section 
4(f) of the FLSA authorizes OPM to administer the FLSA.
    Third, the proposed regulations refer to the Office of Technology 
Assessment. While it is included in the Accountability Act, the Office 
of Technology Assessment no longer exists and therefore should not be 
included in a description of the responsibilities of the Office of 
Compliance.
    In response to these comments, we deleted the introductory language 
of proposed paragraph (d) and substituted in its place the language 
provided by the Office of Compliance to describe its responsibilities. 
We deleted proposed paragraph (d)(9) to omit mention of the Office of 
Technology Assessment.

2. Section 551.103--Coverage

    An agency requested that the proposed regulations be amended to 
reflect that members of the Uniformed Services are not covered by the 
FLSA and ensuing regulations.
    There are seven Uniformed Services. The four Uniformed Services 
that comprise the Military Departments include the United States Army, 
United States Navy, United States Marines, and the United States Air 
Force. Additionally, three of the Uniformed Services are in Executive 
Departments. The United States Coast Guard is in the Department of 
Transportation. The Commissioned Corps of the National Oceanic and 
Atmospheric Administration is in the Department of Commerce. The 
Commissioned Corps of the Public Health Service is in the Department of 
Health and Human Services.
    Members of the Uniformed Services are not considered employees as 
defined in section 2105 of title 5, United States Code, or other 
statutes that address the pay, benefits, and duties of Federal 
employees. Further, officers of the

[[Page 67239]]

Uniformed Services are appointed by the President and, in many cases, 
by and with the consent of the Senate. The pay and benefits of members 
of the Uniformed Services are controlled by the provisions of title 37, 
United States Code.
    Officers of the Uniformed Services are appointed to serve when and 
where needed to meet the needs of their respective Services. Therefore, 
rules regarding workweek requirements in the current and proposed 
regulations are inapplicable to members of all Uniformed Services.
    We adopted the agency's recommendation. In proposed paragraph 
(a)(2), we inserted the words ``a civilian employee'' before the word 
``appointed.'' To proposed paragraph (b), we added members of the 
Uniformed Services to the list of persons not covered by the Act. We 
revised proposed paragraph (b)(2) by deleting the ``or'' after the 
semicolon. We revised proposed paragraph (b)(3) by deleting the period 
and substituting a semicolon followed by ``or.''

3. Section 551.104--Definition of Agency

    The Office of Compliance in the Legislative Branch suggested a 
revision of the definition of ``agency'' if OPM's final definition of 
``agency'' includes a specific exclusion of the entities in the 
legislative branch whose employees are not covered under the FLSA.
    The language is in keeping with the explanation of the 
responsibilities of the Office of Compliance discussed in item 1 and 
added to section 551.102(d), therefore, we adopted the revision.

4. Section 551.104--Definition of Claim

    We added a sentence explaining that the term ``claim'' is used 
generically in subpart G to include complaints under the child labor 
provisions of the Act.

5. Section 551.104--Definition of De Minimis Activity or Worktime

    One agency pointed out that section 785.47 of title 29, Code of 
Federal Regulations, requires an employer to count as hours worked any 
part, however small, of the employee's fixed or regular working time or 
practically ascertainable period of time the employee is regularly 
required to spend on assigned duties.
    The two labor organizations pointed out that the actual amount of 
time involved is only one of three factors to be considered. The other 
two factors are the administrative difficulty of recording small 
amounts of time and whether the work is performed on a regular basis. 
In addition, one labor organization suggested that the definition be 
clarified to mean fewer than a total of ten minutes in the entire 
workday. The same labor organization stated that some agencies have 
argued that if an employee performs a work activity for a period of 
fewer than 10 minutes at the beginning of a workday and fewer than 10 
minutes at the end of a workday, the de minimis doctrine can be applied 
even though the total combined time for the employee exceeds 10 minutes 
for the day. This labor organization outlined the three factors 
discussed by the court in Lindow v. U.S., 738 F.2d 1057 (9th Cir. 
1984).
    In view of these comments, we deleted the proposed definition of de 
minimis activity or worktime. We may address the term at a later time.

6. Section 551.104--Definition of Discretion and Independent Judgment

    One labor organization stated that the proposed definition appears 
to require less than is required under the Department of Labor's 
regulations and suggested that the definition be made more similar to 
the Department of Labor regulation at section 541.207(a) of title 29, 
Code of Federal Regulations. The labor organization also suggested that 
we add to proposed paragraph (3) the following sentence: ``The 
discretion and independent judgment exercised must be real and 
substantial, that is, they must be exercised with respect to matters of 
consequence.''
    After carefully weighing this comment against the need for OPM to 
apply the letter and spirit of the Act in a public sector context, we 
decided not to revise the proposed definition. Our proposed definition 
acknowledges that in the public sector, with its responsibility and 
accountability to the general public, levels of review are frequently 
required. We believe that paragraph (3) of the definition, which states 
that decisions made independently must be significant and then 
amplifies what ``significant'' includes versus what it does not extend 
to, adequately addresses the commentor's concerns.

7. Section 551.104--Definition of Employee

    The agency which in item 2 pointed out that members of the 
Uniformed Services are not covered by the FLSA recommended a change to 
the definition of employee to reflect this.
    We adopted the recommendation. In proposed paragraph (1) of the 
definition of employee, we inserted the phrase ``as a civilian'' before 
the phrase ``in an executive agency.''
    One individual and one agency pointed out that the definition of 
employee should include the Government Printing Office. The 
Congressional Accountability Act of 1995, Pub. L. 104-1, amended the 
FLSA at section 203(e)(2)(A) of title 29, United States Code, by 
deleting the reference to ``unit[s]'' in the legislative branch in 
clause (iii) and by adding a new clause (vi) identifying the Government 
Printing Office as a public agency whose employees are covered by the 
FLSA.
    OPM's proposed regulations tracked the law's deletion, but not the 
addition. This omission was unintentional. We revised the definition of 
employee by deleting the ``or'' following proposed paragraph (3), 
substituting a semicolon and the word ``or'' for the period following 
proposed paragraph (4), and adding paragraph (5) naming the Government 
Printing Office.

8. Section 551.104--Definition of Hours of Work

    One labor organization suggested that the definition of hours of 
work should state that all interpretations of the FLSA, including 
Comptroller General decisions, OPM guidance, and agency policy and 
regulations, must be consistent with the Act and Department of Labor 
regulations in order to be valid.
    OPM is tasked with administering the Act consistent with the 
Department of Labor. Our regulations accomplish this. Therefore, we did 
not find it necessary to adopt this suggestion.

9. Section 551.104--Definition of Management or General Business 
Function or Supporting Service

    We revised the first sentence of proposed paragraph (2) of the 
definition by deleting the words ``general management, business, or 
servicing functions'' and substituting in their place the words 
``management or general business functions or supporting services'' to 
be consistent with wording elsewhere.
    Two labor organizations contended that the proposed definition 
fails to clearly explain the type of work which falls under the 
administrative exemption.
    One labor organization pointed out that the Department of Labor 
regulation at Sec. 541.205(a) of title 29, Code of Federal Regulations, 
clearly distinguishes between work involving the administrative 
operations of an employer--which is exempt work--and ``production'' 
work which involves performing activities that carry out the day-to-day 
functions of the employer--which is nonexempt work.

[[Page 67240]]

    The other labor organization suggested that to clarify the 
definition of management or general business function or supporting 
service and make it consistent with law, the following statement should 
be added: ``Employees who perform the day-to-day activities necessary 
for an agency to accomplish its mission do not qualify as performing 
`management or general business functions or supporting services.'
    We believe the proposed definition is legally correct.

10. Section 551.104--Definition of Supervisory and Closely Related Work

    One labor organization stated that the paragraph (2) of the 
proposed definition of supervisory and closely related work is far more 
expansive than the Department of Labor regulation and perhaps more 
expansive than OPM intended. The labor organization suggested that we 
add the phrase ``closely related work'' to the definitions and adopt 
the definition used by the Department of Labor in Sec. 541.108 of title 
29, Code of Federal Regulations.
    We believe the proposed definition is legally correct.

11. Section 551.104--Definition of Temporary Work or Duties

    We had an inquiry from an agency personnelist who explained that 
the agency in question has a number of exempt employees whose official 
position descriptions include minor, nonexempt duties. The agency has 
correctly determined that the employees are exempt. The employees, 
however, are being required to perform the nonexempt work included in 
the official position description for a greater percentage of the time 
and on a long-term, but temporary, basis. Under our proposed 
regulations, the agency could argue that the work is not ``not 
consistent with the employee's official position description.''
    We revised the definition by inserting the words ``the primary or 
grade-controlling duty of'' before the words ``the employee's official 
position description.'' We made conforming changes throughout 
Sec. 551.208.

12. Section 551.201--Agency Authority

    Two labor organizations commented on this section.
    One labor organization suggested replacing the phrase ``makes a 
determination'' with ``properly determines'' to make it clear that the 
presumption of FLSA coverage can be rebutted only by a proper or 
correct determination that the exemption criteria have been met.
    We adopted the suggestion. We revised the first sentence of 
proposed paragraph 551.201 by deleting ``All employees are'' and 
substituting ``Each employee is,'' deleting ``makes a determination'' 
and substituting ``correctly determines,'' deleting ``position'' and 
substituting ``employee clearly,'' and adding ``and such supplemental 
interpretations or instructions issued by OPM'' after ``subpart.'' The 
word ``clearly'' is used to make this principle consistent with those 
expressed in proposed paragraphs 551.202 (a) and (b). The sentence was 
then moved to Sec. 551.202 as new paragraph (a).
    The other labor organization stated that agencies do not need to be 
told to exempt employees because they already do so more often than is 
justified. The labor organization recommended that the second sentence 
in this section be deleted, or modified by inserting the word 
``clearly'' in the phrase ``any employee who meets * * *'' to be 
consistent with proposed paragraphs (a) and (c) of Sec. 551.202 which 
already use the word.
    In this instance, we did not adopt the suggestion to use the word 
``clearly.'' Instead, we modified the sentence to better reflect an 
agency's authority to designate an employee FLSA exempt. We revised the 
second sentence in proposed Sec. 551.201 by deleting ``must exempt from 
the overtime provisions of the Act any employee who'' and substituting 
``may designate an employee FLSA exempt only when the agency correctly 
determines that the employee,'' and inserting ``one or more of'' after 
``meets.''

13. Section 551.202--General Principles Governing Exemptions

    As mentioned in item 12, we revised the first sentence of proposed 
Sec. 551.201 and added it as the first general principle under 
Sec. 551.202. Accordingly, we redesignated proposed paragraphs (a) 
through (h) as paragraphs (b) through (i).
    We revised the first sentence of proposed paragraph (c) 
(redesignated paragraph (d)) by deleting the words ``All employees who 
clearly meet'' and substituting ``An employee who clearly meets.''
    One labor organization commented on proposed paragraph (d)(2) 
(redesignated paragraph (e)(2)). It is the labor organization's opinion 
that all nonsupervisory employees performing technician work who are 
not performing predominantly administrative functions are nonexempt, 
regardless of their grade level. The labor organization suggests that 
this paragraph be revised to state that all employees performing 
technician work are nonexempt.
    Another labor organization commented on proposed paragraph (f) 
(redesignated paragraph (g)). The labor organization suggested that the 
example in the second sentence be changed because it has led agencies 
to incorrectly designate technicians as FLSA exempt when they should be 
FLSA nonexempt.
    We did not adopt either suggestion. OPM has found that many higher-
graded technical employees perform work fully comparable to work 
performed by professional engineers, particularly in the area of 
difficult, demanding, and original equipment and facilities design. 
Such employees are correctly determined to be FLSA exempt.
    One individual stated that proposed paragraph (d)(3) (redesignated 
(e)(3)) concerning FLSA nonexempt status of employees in the Aircraft 
Operation, GS-2181, series is inconsistent with other OPM guidance in 
the ``Classifier's Handbook,'' ``Introduction to the Position 
Classification Standards,'' and the ``Guide to Personnel Data 
Standards.'' The individual pointed out that Appendix 1 of the 
``Introduction to the Position Classification Standards'' lists the GS-
2181 series as a series for which a two-grade interval pattern is 
normal and the GS-2181 classification standard indicates that this 
series is two-grade interval in a footnote. The individual expressed 
the opinion that if a position is considered to be technical and its 
occupational category is designated as technical, the position should 
not be identified as a two-grade interval series. The individual 
suggested that the GS-2181 position classification standard and 
Appendix 1 of ``The Introduction to the Position Classification 
Standards'' be revised to delete references to the GS-2181 series as 
two-grade interval.
    Because this comment addressed classification, rather than FLSA, 
issues, we referred this comment to OPM's Office of Classification.
    We revised the third sentence of proposed paragraph (g) 
(redesignated paragraph (h)) by deleting the phrase ``exempting the 
employee'' and substituting ``designating an employee FLSA exempt'' to 
be consistent with wording elsewhere.

14. Section 551.204(a)--Exemption of Federal Wage System Employees

    We revised proposed paragraphs (a) and (b) by deleting the word 
``under'' and substituting ``in'' to be consistent with Sec. 551.203.

[[Page 67241]]

15. Section 551.205--Executive Exemption Criteria

    Two labor organizations stated that it is a mistake to eliminate 
the requirement that in order to qualify under the executive exemption 
an employee must customarily and regularly direct the work of at least 
three subordinate employees. The labor organizations argued that 
agencies frequently classify employees who serve as lead workers as 
exempt under the executive exemption criteria and that the numerical 
requirement helps to clarify that employees who perform minimal 
supervisory duties do not fall under this exemption. They predict that 
agencies will claim the individual employees who work with other 
employees and who make recommendations regarding their work will 
qualify for the executive exemption simply if the employees exercise 
some independence in their own work. They state that this may arise if 
employees work in teams and have no direct supervisory authority over 
team members but instead one of the team members acts as a team leader. 
Even if the team leader assignment is rotated among members of the 
team, an agency may, under the proposed regulation, claim that the 
employee meets the executive exemption criteria. The labor 
organizations also stated that the numerical requirement is consistent 
with the Department of Labor regulations.
    We did not adopt this suggestion. The original numerical 
requirement of at least three subordinate employees was based on the 
Supervisory Grade Evaluation Guide. That guide was replaced by the 
General Schedule Supervisory Guide which does not have a numerical 
requirement. We also recognized that OPM's requirement of three or more 
subordinate employees was inconsistent with Department of Labor's 
regulations. Instead of changing to an arbitrary number, we chose to 
use the plural ``employees'' which implies ``two or more.''

16. Section 551.206--Administrative Exemption Criteria

    One agency commented that the criterion in proposed paragraph 
(a)(1) under the primary duty test could lead to an incorrect and 
overly broad application of the exemption and be inconsistent with 
Department of Labor's application of the Act to the private sector.
    This comment addresses a well-established provision in the 
currently published regulations. Our experience is that the provision 
as currently published is sufficient.
    We revised proposed paragraph (a)(2) by deleting the phrase 
``general management or business functions'' and substituting in its 
place ``management or general business functions'' to be consistent 
with wording elsewhere.
    We revised the headings of proposed paragraphs (b) and (c) by 
inserting the word ``test'' before the periods.

17. Section 551.207--Professional Exemption Criteria

    Several commentors pointed out that proposed paragraph(a)(3) is 
more expansive than the law pertaining to employees in the computer 
software field (Public Law 101-583, 104 Stat. 2871, November 15, 1990).
    One labor organization suggested that in order to clarify the 
limited scope of the exemption for work in computer-related 
occupations, OPM's proposed regulations should include a provision 
similar to Sec. 541.303(c) of title 29, Code of Federal Regulations 
which provides that the professional exemption only applies to highly 
skilled employees who have achieved a level of proficiency in the 
theoretical and practical application of a body of highly-specialized 
knowledge in computer systems analysis, programming, and software 
engineering.
    The same labor organization also suggested that the proposed 
regulation should also include a provision analogous to Sec. 541.303(d) 
of title 29, Code of Federal Regulations, which provides that the 
exemption does not include ``employees engaged in the operation of 
computers or in the manufacture, repair, or maintenance of computer 
hardware and related equipment'' or employees whose work is dependent 
on computers but who do not work in computer systems analysis or 
computer programming occupations.
    The labor organization further suggested that the exemption does 
not include employees engaged in the operation of computers or in the 
manufacture of computer hardware and related equipment, or employees 
whose work is dependent on computers but who do not work in computer 
systems analysis or computer programming occupations.
    Public Law 101-583 (104 Stat. 2871, November 15, 1990) provides 
that employees performing such work may be designated FLSA exempt as 
executive, administrative, or professional employees. The law also 
states that ``if such employees are paid on an hourly basis they shall 
be exempt only if their hourly rate of pay is at least 6\1/2\ times 
greater than the applicable minimum wage . . . .'' Section 13(a) of the 
Act was amended to read ``in the case of an employee who is compensated 
on an hourly basis, is compensated at a rate not less than $27.63 an 
hour.'' Proposed paragraph (a)(3) essentially restates the criteria in 
section 213(a)(17) of title 29, United States Code, for exempting from 
the FLSA certain employees who work with computers. The regulation does 
not include a salary-based test because the Department of Labor has 
determined that such tests do not apply to public employees (see 
Sec. 541.5d of title 29, Code of Federal Regulations).
    Commentors suggested that we further explain the scope of this 
exemption. We considered this suggestion, but concluded that the 
language in the proposed regulation is sufficient.
    The citation in proposed paragraph (a)(3)(iv) was published as 
``(a)(3)(i), (3)(ii), and (3)(iii).'' We revised the citation to read 
``(a)(3)(i), (a)(3)(ii), and (a)(3)(iii)'' to be consistent with the 
citation in proposed paragraph 551.208(d)(2) which reads ``(d)(2)(i) 
and (d)(2)(ii).
    We revised the heading of proposed paragraph (b) by deleting the 
words ``in nature'' and substituting in their place the words ``work 
test.''
    We revised the heading of proposed paragraph (c) by inserting the 
word ``test'' before the period.

18. Section 551.208--Effect of Performing Temporary Work or Duties on 
FLSA Exemption Status

    As explained in item 11, we inserted the words ``the primary or 
grade-controlling duty of'' in proposed paragraphs (a)(1), (b)(1), 
(c)(1), and (c)(3).
    To avoid any possible confusion on the part of agencies or 
employees, we inserted the word ``calendar'' before the word ``days'' 
in proposed paragraphs (b)(1)(i), (b)(2)(ii), (c)(1)(i) and (c)(2)(ii).
    One labor organization took issue with proposed paragraphs 
(b)(1)(i) and (b)(2)(i) which state that the period of temporary work 
or duties must exceed 30 days (now referred to as the ``30-day test''). 
The labor organization incorrectly believed the OPM was ignoring the 
workweek basis of the FLSA and suggested that OPM should provide that 
exemption determinations be made on a workweek basis for temporary 
assignments of 5 workdays or more. We did not adopt the suggestion.
    We believe that this suggestion, if adopted, would place an extreme 
administrative burden on agencies. The Act takes a single workweek as 
its standard, that is, a workweek is the unit of time used as the basis 
for applying

[[Page 67242]]

overtime standards under the Act. It would be administratively 
burdensome for Federal agencies to have to make this determination each 
week. OPM adopted the 30-day test to ease this administrative burden on 
agencies but the weekly standard still applies for pay purposes. The 
30-day test is well established and has been unchanged in regulation 
since January 1988. The revision of this section makes clear to 
agencies and employees agencies' responsibilities regarding an employee 
who must temporarily perform work or duties that are not consistent 
with the primary or grade-controlling duty of the employee's official 
position description.
    In the heading of proposed paragraph (b)(1)(iii), we made the word 
``situations'' singular to parallel proposed paragraph (c)(1)(iii).
    In proposed paragraph (c)(1)(ii), we added the words ``or duty'' to 
the paragraph heading to parallel paragraph (b)(1)(ii).
    We italicized the heading of proposed paragraph (c)(3).

19. Section 551.209--Foreign Exemption Criteria

    In proposed paragraph (a), we italicized the words ``all'' and 
``any.''
    We changed the period at the end of the introductory language of 
proposed paragraph (b) to a colon.

20. Section 551.211--Statutory Exclusion

    One labor organization pointed out that the statutory exclusion in 
proposed Sec. 551.211 goes beyond the statutory provision on which it 
is based. The Customs Officers Pay Reform Act (Customs Pay Act), 
codified at section 267 of title 19, United States Code (U.S.C.), 
provides that ``a customs officer who receives overtime pay under 
subsection (a) of this section or premium pay under subsection (b) of 
this section for time worked may not receive pay or other compensation 
for that work under any other provision of law.'' (Emphasis added.) 
Under the statute, a customs officer cannot receive FLSA overtime pay 
for the same work for which the officer received overtime pay or 
premium pay under the Customs Pay Act. Proposed section 551.211 goes 
beyond the statute because it completely excludes customs officers from 
the overtime pay and hours of work provisions of the FLSA. The labor 
organization stated that there are a number of circumstances in which 
the Customs Pay Act does not provide overtime pay for particular work 
but the FLSA does. For example, under section 267(a)(1) of the Customs 
Pay Reform Act, an employee is entitled to overtime pay only when he or 
she is ``officially assigned to perform work.'' Unlike the FLSA, the 
Customs Pay Act does not provide overtime pay for work that an employee 
is suffered or permitted to perform. The labor organization further 
stated that the United States Customs Service has taken the position 
that the Customs Pay Act does not authorize overtime pay for training, 
even when such training is required by the agency. It is Customs' 
position that training is not ``work'' under section 267(a)(1). 
According to Customs, training time is compensable only for employees 
who are FLSA covered. Customs has also taken the position that certain 
travel time is not compensable under the Customs Pay Act. The FLSA, 
however, provides compensation for some travel time and for time spent 
in training when required by the agency (see section 410.402(d) of 
title 5, Code of Federal Regulations). The labor organization pointed 
out that the Customs Pay Act does not exclude customs officers from 
compensation for these hours under the FLSA.
    We revised proposed Sec. 551.211 by quoting the Customs Pay Act. We 
deleted the first sentence and in its place is substituted ``A customs 
officer who receives overtime pay under subsection (a) or premium pay 
under subsection (b) of section 267 of title 19, United States Code, 
for time worked may not receive pay or other compensation for that work 
under any other provision of law.'' We revised the second sentence by 
deleting ``a customs inspector,'' inserting ``a United States Customs 
Service'' before ``supervisory,'' inserting ``or nonsupervisory'' after 
supervisory, deleting ``a canine enforcement officer'' before 
``supervisory,'' and inserting ``or nonsupervisory'' after 
``supervisory.''

21. Section 551.601--Minimum Age Standards

    One agency suggested that the reference to section 3(l) in proposed 
paragraphs (a) and (b) be corrected to substitute a lower-case letter L 
for the Arabic numeral one inside the parentheses. We made this 
correction.

22. Section 551.602--Responsibilities

    One agency suggested that it would be helpful to Federal agencies 
to provide a citation to the Department of Labor's child labor 
regulations.
    We agree. We revised the first sentence of proposed paragraph (a) 
by inserting ``in part 570 of title 29, Code of Federal Regulations,'' 
before the phrase ``by the Secretary of Labor.''
    One agency noted the reference to ``claims'' in subpart F and the 
inclusion of child labor ``claims'' in subpart G. The agency stated 
that this seems somewhat anomalous in that the enforcement mechanism 
for the child labor provisions of the FLSA is the assessment of civil 
money penalties pursuant to section 261(e) of title 29, United States 
Code, payable to the Federal Government by violating employers. This is 
in contrast to the assertion of wage claims under sections 16(b) and 
16(c) of the FLSA by the Administrator or by an employee, resulting in 
the possible payment of back wages and liquidated damages to the 
employee.
    We revised proposed paragraph (b) by deleting the word ``claims'' 
and substituting in its place the word ``complaints'' and we made 
conforming changes in Secs. 551.701(a) and 551.702(a).

23. Section 551.701--Applicability

    We revised proposed paragraph (a) by deleting the word ``claims'' 
from the phrase ``claims arising under the child labor provision'' and 
substituting the word ``complaints'' in its place. As explained in item 
4, the term ``claim'' is used generically in subpart G to include 
complaints under the child labor provisions of the Act.

24. Section 551.702--Time Limits

    We revised the first sentence of proposed paragraph (a) by deleting 
the words ``may file an FLSA claim at any time'' and substituting in 
their place the words ``may at any time file a complaint'' and 
inserting the words ``an FLSA claim'' before the word ``challenging.''
    One labor organization argued that the applicable statute of 
limitations continues to be 6 years under the Barring Act (section 
3702(b)(1) of title 31, United States Code), notwithstanding the 
enactment of Pub. L. 104-52 (109 Stat. 468-69 (1995)) and the decision 
in Adams v. Bowsher, 946 F.Supp. 37 (D.C.D.C. 1996).
    It is OPM's position that the law and court decision established a 
2-year statute of limitations (3-year for willful violations).
    Another labor organization noted that proposed paragraph (c) 
permits a claimant to file a claim either with the agency employing the 
claimant during the claim period or with OPM. The labor organization 
stated that there should be a provision allowing the claimant the 
option to file the claim with OPM to resolve the claim if the agency 
fails to issue a decision on a claim filed with it within six months. 
This would preclude an agency from preventing an employee from 
receiving

[[Page 67243]]

compensation by simply refusing to process the claim.
    We did not adopt this suggestion. Nothing in OPM's regulations 
precludes an employee from withdrawing a claim submitted to an agency 
and submitting the claim to OPM, if the employee believes the agency is 
taking too long to decide the claim.

25. Section 551.703--Avenues of Review

    Two labor organizations noted that proposed paragraph (a) means 
that a claimant who is covered by a collective bargaining agreement 
that does not exclude FLSA matters for only part of a claim period, the 
claimant would be precluded from filing a claim with OPM for the period 
of time that the claimant was not covered by the agreement. The labor 
organizations suggested that the paragraph be rewritten to state that a 
claimant is limited to using the negotiated grievance procedure as the 
exclusive administrative remedy for only time periods in which he or 
she was a member of a bargaining unit and covered by a collective 
bargaining agreement which did not exclude FLSA matters.
    We did not adopt the suggestion for two reasons. First, Carter v. 
Gibbs, 909 F.2d 1452 (Fed. Cir. 1990), cert. denied, 111 S.Ct. 46 
(1990), established the principle that the negotiated grievance 
procedure is the only administrative avenue open to an employee covered 
by a collective bargaining agreement that does not exclude FLSA 
matters. Second, if a claimant were permitted to split the claim period 
between two avenues of review, different and conflicting decisions 
might be reached, neither binding on the other.
    We revised the introductory language of proposed paragraph (b) by 
inserting the phrase ``but not both simultaneously'' before the word 
``regarding'' to make it clear that an employee may not file the same 
claim with the agency and OPM simultaneously.
    One labor organization stated that the regulations should make it 
clear that employees have a right to proceed to court with FLSA claims 
independently of their right to file a claim with OPM.
    Proposed paragraph (c) states that nothing in subpart G limits the 
right of a claimant to bring an action in an appropriate United States 
court, and that OPM will not decide an FLSA claim that is in 
litigation. We believe the proposed paragraph is sufficient.
    The same labor organization suggested that employees should be 
advised that the filing of a claim with OPM or an agency will not toll 
the statute of limitations governing FLSA claims filed in court.
    We agree that this would be helpful to employees and added such 
language as the second sentence of proposed paragraph (c).

26. Section 551.704--Claimant's Representative.

    Two labor organizations interpreted the third sentence of the 
introductory language to proposed Sec. 551.704 (which states ``A 
representative has no right to participate in OPM fact-finding'') to 
mean that a claimant would be limited to self-representation and 
pointed out that this conflicts with the first sentence which permits 
the designation of a representative to assist in preparing or 
presenting a claim.
    We intended to make the point that an employee representative may 
not be present or listen in on fact-finding interviews conducted by OPM 
as a matter of right. Rather OPM, at its discretion, may invite the 
employee representative to participate. We revised the sentence in 
question to make this clear.

27. Section 551.705--Form and Content of an FLSA Claim.

    We deleted the heading of proposed section 551.705 and substituted 
in its place the heading ``Filing an FLSA claim.''
    One individual remarked that according to proposed paragraph (a) 
``a non-unit employee can file an FLSA claim with the agency, and the 
agency can either adjudicate it or forward it to OPM without taking any 
action.''
    This is not what we intended. Therefore, we have revised the second 
sentence by deleting the phrase ``At the discretion of the agency'' and 
substituting ``At the request of the claimant.''
    The individual also asked whether an employee may appeal to OPM if 
the agency adjudicates the claim.
    We redesignated proposed paragraphs (a) and (b) as (b) and (c) and 
added new paragraph (a) which states that an employee may file a claim 
with either the agency or with OPM, but may not pursue the same claim 
simultaneously with the agency and OPM. We encourage, but do not 
require, claimants to obtain decisions on claims from their agency 
before filing a claim with OPM. We also explain that a claimant may 
file a claim with OPM after receiving an unfavorable decision from the 
agency but may not file a claim with the agency after getting an 
unfavorable decision from OPM.
    Regarding the requirement in proposed paragraph (b)(7) 
(redesignated as paragraph(c)(7)) that a claim must include evidence 
that the claim period was preserved, one labor organization pointed out 
that claimants may not realize the importance of retaining such 
documentation. The labor organization recommended that the regulation 
include a statement that if the claimant does not have evidence showing 
the claim was filed, proof may be provided by documents in agency 
records.
    We did not adopt this recommendation. Proposed paragraph 551.702(c) 
states clearly that the claimant is responsible for proving when the 
claim was received by the agency or OPM and that the claimant should 
retain documentation to establish when the claim was received by the 
agency or OPM, such as by filing the claim using certified, return 
receipt mail, or by requesting that the agency or OPM provide written 
acknowledgment of receipt of the claim. The last sentence in proposed 
paragraph 551.702(c) explains why such documentation is important, that 
is, if a claim for back pay is established, the claimant will be 
entitled to pay for a period of up to 2 years (3 years for a willful 
violation) back from the date the claim was received. Further, proposed 
paragraphs 551.709(a) and (b) provide for the release of information 
from an FLSA claim file to the parties concerned, that is, the 
claimant, any representative designated in writing by the claimant, and 
any representative of the agency or OPM involved in the proceeding. 
Thus, the claimant or the claimant's representative can obtain 
documents regarding the claim, including documentation of when the 
claim was received by the agency or OPM.
    One labor organization suggested that in cases where the employee 
filed with an agency but withdrew the claim and submitted it to OPM, 
the date the claim was filed with the agency should be the relevant 
date for determining back pay.
    This provision already exists in proposed paragraph (b)(7) 
(redesignated as paragraph (c)(7)).

28. Sections 551.706--Responsibilities

    Two labor organizations argued that the time limit of 15 workdays 
in proposed paragraph (a)(1) is too restrictive. One of the labor 
organizations objected to the claimant being subject to a penalty 
(denial of the claim) if requested information is not received by OPM 
within 15 workdays without a corresponding penalty for the agency 
should the agency not provide requested information to OPM within 15 
workdays. The labor organization pointed out that claimants may not 
realize that they need to request an

[[Page 67244]]

extension if they need more time to provide requested information.
    We revised the first sentence of proposed paragraph (a)(1) by 
inserting ``the claimant or the claimant's representative requests 
additional time and'' after ``unless.'' We made corresponding changes 
in proposed Sec. 551.707.
    We revised the fourth sentence of proposed paragraph (a)(1) and the 
last sentence of proposed paragraph (b) by deleting the word ``denied'' 
and substituting in its place the word ``cancelled'' to be consistent 
with changes we made to proposed Sec. 551.707.
    One labor organization reasoned that much of the information 
necessary to support a claim is in the exclusive control of the agency. 
The labor organization suggested that OPM add a statement that upon 
request, and subject to any Privacy Act restrictions, agencies will 
provide a claimant with information relevant to the claimant's claim.
    We agree that this would further impress upon agencies their 
responsibilities in FLSA claims and have added a such a statement as a 
new paragraph (b)(3). We redesignated proposed paragraph (b)(3) as 
paragraph (b)(4).
    We revised proposed paragraph (b)(3) (redesignated as paragraph 
(b)(4)) by inserting the words ``the agency requests additional time 
and'' after the word ``unless'' to be consistent with wording 
elsewhere.

29. Section 551.707--Withdrawal or Denial of an FLSA Claim

    We revised the section heading by deleting ``denial'' and 
substituting ``cancellation'' and revised proposed paragraph (b) by 
deleting ``denied'' and ``deny'' and substituting ``cancelled'' and 
``cancel'' and inserting ``the claimant or the claimant's 
representative requests additional time and'' before ``OPM.'' With 
these changes, we believe the regulation states clearly enough that a 
claimant or claimant's representative can avoid cancellation of a claim 
by requesting and receiving an extension. Proposed paragraph (b) also 
states that a cancelled claim may be reconsidered by OPM if the claim 
shows that circumstances beyond the claimant's control prevented 
pursuit of the claim.

30. Section 551.708--Finality and Effect of OPM FLSA Claim Decision

    One labor organization stated that the proposed regulations do not 
address the right of appeal from OPM FLSA claim determinations and 
suggests that the regulations should do so.
    Proposed Sec. 551.708 states that OPM may reconsider a decision 
upon a showing that material information was not considered or there 
was a material error of law, regulation, or fact in the original 
decision.

31. Section 551.709--Availability of Information

    We added the words ``before disclosing the information contained in 
an FLSA claim file to the parties concerned'' to the end of the second 
sentence in proposed paragraph (b) to make clear that this sanitized 
information being released only to the parties concerned with the 
claim.

32. Section 551.710

    Under the address of the OPM Washington, DC Oversight Division, the 
District of Columbia is indented.

Regulatory Flexibility Act

    I certify that these regulations will not have significant economic 
impact on a substantial number of small entities because they affect 
only Federal employees and agencies.

List of Subjects in 5 CFR Part 551

    Government employees, Wages.

U.S. Office of Personnel Management.
Janice R. Lachance,
Director.

    For the reasons stated in the preamble, the Office of Personnel 
Management amends 5 CFR part 551 as follows:
    1. The title and authority citation for part 551 continues to read 
as follows:

PART 551--PAY ADMINISTRATION UNDER THE FAIR LABOR STANDARDS ACT

    Authority: 5 U.S.C. 5542(c); Sec. 4(f) of the Fair Labor 
Standards Act of 1938, as amended by Pub. L. 93-259, 88 Stat. 55 (29 
U.S.C. 204f).

    2. Subpart A is revised to read as follows:

Subpart A--General Provisions

Sec.
551.101  General.
551.102  Authority and administration.
551.103  Coverage.
551.104  Definitions.


Sec. 551.101  General.

    (a) The Fair Labor Standards Act of 1938, as amended (referred to 
as ``the Act'' or ``FLSA''), provides for minimum standards for both 
wages and overtime entitlement, and delineates administrative 
procedures by which covered worktime must be compensated. Included in 
the Act are provisions related to child labor, equal pay, and portal-
to-portal activities. In addition, the Act exempts specified employees 
or groups of employees from the application of certain of its 
provisions. It prescribes penalties for the commission of specifically 
prohibited acts.
    (b) This part contains the regulations, criteria, and conditions 
that the Office of Personnel Management has prescribed for the 
administration of the Act. This part supplements and implements the 
Act, and must be read in conjunction with it.


Sec. 551.102  Authority and administration.

    (a) Office of Personnel Management. Section 3(e)(2) of the Act 
authorizes the application of the provisions of the Act to any person 
employed by the Government of the United States, as specified in that 
section. Section 4(f) of the Act authorizes the Office of Personnel 
Management (OPM) to administer the provisions of the Act. OPM is the 
administrator of the provisions of the Act with respect to any person 
employed by an agency, except as specified in paragraphs (b), (c), and 
(d) of this section.
    (b) The Equal Employment Opportunity Commission administers the 
equal pay provisions contained in section 6(d) of the Act.
    (c) The Department of Labor administers the Act for the following 
United States Government entities:
    (1) The Library of Congress;
    (2) The United States Postal Service;
    (3) The Postal Rate Commission; and
    (4) The Tennessee Valley Authority.
    (d) Office of Compliance. The Congressional Accountability Act of 
1995, as amended, sections 1301 et seq. of title 2, United States Code, 
extends rights and protections of the FLSA to employees of the 
following United States Government entities, and assigns certain 
administrative responsibilities to the Office of Compliance:
    (1) The United States House of Representatives;
    (2) The United States Senate;:
    (3) The Capitol Guide Service;
    (4) The Capitol Police;
    (5) The Congressional Budget Office;
    (6) The Office of the Architect of the Capitol;
    (7) The Office of the Attending Physician; and
    (8) The Office of Compliance.


Sec. 551.103  Coverage.

    (a) Covered. Any employee of an agency who is not specifically 
excluded by another statute is covered by the Act. This includes any 
person who is--
    (1) Defined as an employee in section 2105 of title 5, United 
States Code;

[[Page 67245]]

    (2) A civilian employee appointed under other appropriate 
authority; or
    (3) Suffered or permitted to work by an agency whether or not 
formally appointed.
    (b) Not covered. The following persons are not covered under the 
Act:
    (1) A person appointed under appropriate authority without 
compensation;
    (2) A trainee;
    (3) A volunteer; or
    (4) A member of the Uniformed Services.


Sec. 551.104  Definitions.

    In this part--
    Act or FLSA means the Fair Labor Standards Act of 1938, as amended 
(29 U.S.C. 201 et seq.).
    Administrative employee means an employee who meets the criteria in 
Sec. 551.206.
    Agency, for purposes of OPM's administration of the Act, means any 
instrumentality of the United States Government, or any constituent 
element thereof acting directly or indirectly as an employer, as this 
term is defined in section 3(d) of the Act and in this section, but 
does not include the entities of the United States Government listed in 
Sec. 551.102(c) for which the Department of Labor administers the Act 
or Sec. 551.102(d)(1) through (8), whose employees are covered by the 
Congressional Accountability Act of 1995, as amended, which makes 
applicable the rights and protections of the FLSA and assigns certain 
administrative responsibilities to the Office of Compliance.
    Claim means a written allegation from a current or former employee 
concerning his or her FLSA exemption status determination or 
entitlement to minimum wage or overtime pay for work performed under 
the Act. The term ``claim'' is used generically in subpart G of this 
part to include complaints under the child labor provisions of the Act.
    Claim period means the time during which the cause or basis of the 
claim occurred.
    Claimant means a current or former employee who files an FLSA 
claim.
    Customarily and regularly means a frequency which must be greater 
than occasional but which may be less than constant. For example, the 
requirement in Sec. 551.205(a)(2) will be met by an employee who 
normally and recurrently exercises discretion and independent judgment 
in the day-to-day performance of duties.
    Discretion and independent judgment means work that involves 
comparing and evaluating possible courses of conduct, interpreting 
results or implications, and independently taking action or making a 
decision after considering the various possibilities. However, firm 
commitments or final decisions are not necessary to support exemption. 
The ``decisions'' made as a result of the exercise of independent 
judgment may consist of recommendations for action rather than the 
actual taking of action. The fact that an employee's decisions are 
subject to review, and that on occasion the decisions are revised or 
reversed after review, does not mean that the employee is not 
exercising discretion and independent judgment of the level required 
for exemption. Work reflective of discretion and independent judgment 
must meet the three following criteria:
    (1) The work must be sufficiently complex and varied so as to 
customarily and regularly require discretion and independent judgment 
in determining the approaches and techniques to be used, and in 
evaluating results. This precludes exempting an employee who performs 
work primarily requiring skill in applying standardized techniques or 
knowledge of established procedures, precedents, or other guidelines 
which specifically govern the employee's action.
    (2) The employee must have the authority to make such 
determinations during the course of assignments. This precludes 
exempting trainees who are in a line of work which requires discretion 
but who have not been given authority to decide discretionary matters 
independently.
    (3) The decisions made independently must be significant. The term 
``significant'' is not so restrictive as to include only the kinds of 
decisions made by employees who formulate policies or exercise broad 
commitment authority. However, the term does not extend to the kinds of 
decisions that affect only the procedural details of the employee's own 
work, or to such matters as deciding whether a situation does or does 
not conform to clearly applicable criteria.
    Emergency means a temporary condition that poses a direct threat to 
human life or safety, serious damage to property, or serious disruption 
to the operations of an activity, as determined by the employing 
agency.
    Employ means to engage a person in an activity that is for the 
benefit of an agency, and includes any hours of work that are suffered 
or permitted.
    Employee means a person who is employed--
    (1) As a civilian in an executive agency as defined in section 105 
of title 5, United States Code;
    (2) As a civilian in a military department as defined in section 
102 of title 5, United States Code;
    (3) In a nonappropriated fund instrumentality of an executive 
agency or a military department;
    (4) In a unit of the judicial branch of the Government that has 
positions in the competitive service; or
    (5) The Government Printing Office.
    Employer, as defined in section 3(d) of the Act, means any person 
acting directly or indirectly in the interest of an employer in 
relation to an employee and includes a public agency, but does not 
include any labor organization (other than when acting as an employer) 
or anyone acting in the capacity of officer or agent of such labor 
organization.
    Essential part of administrative or professional functions means 
work that is included as an integral part of administrative or 
professional exempt work. This work is identified by examining the 
processes involved in performing the exempt function. For example, the 
processes involved in evaluating a body of information include 
collecting and organizing information; analyzing, evaluating, and 
developing conclusions; and frequently, preparing a record of findings 
and conclusions. Often collecting or compiling information and 
preparing reports or other records, if divorced from the evaluative 
function, are nonexempt tasks. When an employee who performs the 
evaluative functions also performs some or all of these related steps, 
all such work (for example, collecting background information, 
recording test results, tabulating data, or typing reports) is included 
in the employee's exempt duties.
    Executive employee means an employee who meets the criteria in 
Sec. 551.205.
    Exempt area means any foreign country, or any territory under the 
jurisdiction of the United States other than the following locations:
    (1) A State of the United States;
    (2) The District of Columbia;
    (3) Puerto Rico;
    (4) The U.S. Virgin Islands;
    (5) Outer Continental Shelf Lands as defined in the Outer 
Continental Shelf Lands Act (67 Stat. 462);
    (6) American Samoa;
    (7) Guam;
    (8) Midway Atoll;
    (9) Wake Island;
    (10) Johnston Island; and
    (11) Palmyra.
    FLSA exempt means not covered by the minimum wage and overtime 
provisions of the Act.

[[Page 67246]]

    FLSA exemption status means an employee's designation by the 
employing agency as either FLSA exempt or FLSA nonexempt from the 
minimum wage and overtime provisions of the Act.
    FLSA exemption status determination claim means a claim from a 
current or former employee challenging the correctness of his or her 
FLSA exemption status determination.
    FLSA nonexempt means covered by the minimum wage and overtime 
provisions of the Act.
    FLSA overtime pay, for the purpose of Sec. 551.208, means overtime 
pay under this part.
    FLSA pay claim means a claim from a current or former employee 
concerning his or her entitlement to minimum wage or overtime pay for 
work performed under the Act.
    Foreign exemption means a provision of the Act under which the 
minimum wage, overtime, and child labor provisions of the Act do not 
apply to any employee who spends all hours of work in a given workweek 
in an exempt area.
    Formulation or execution of management programs or policies means 
work that involves management programs and policies which range from 
broad national goals expressed in statutes or Executive orders to 
specific objectives of a small field office. Employees make policy 
decisions or participate indirectly, through developing or recommending 
proposals that are acted on by others. Employees significantly affect 
the execution of management programs or policies typically when the 
work involves obtaining compliance with such policies by other 
individuals or organizations, within or outside of the Federal 
Government, or making significant determinations furthering the 
operation of programs and accomplishment of program objectives. 
Administrative employees engaged in such work typically perform one or 
more phases of program management (that is, planning, developing, 
promoting, coordinating, controlling, or evaluating operating programs 
of the employing organization or of other organizations subject to 
regulation or other controls).
    Hours of work means all time spent by an employee performing an 
activity for the benefit of an agency and under the control or 
direction of the agency. Hours of work are creditable for the purposes 
of determining overtime pay under subpart D of this subpart. Section 
551.401 of subpart D further explains this term. However, whether time 
is credited as hours of work is determined by considering many factors, 
such as the rules in subparts D and E of this subpart, provisions of 
law, Comptroller General decisions, OPM policy guidance, agency policy 
and regulations, negotiated agreements, the rules in part 550 of this 
chapter (for hours of work for travel), and the rules in part 410 of 
this chapter (for hours of work for training).
    Management or general business function or supporting service, as 
distinguished from production functions, means the work of employees 
who provide support to line managers.
    (1) These employees furnish such support by--
    (i) Providing expert advice in specialized subject matter fields, 
such as that provided by management consultants or systems analysts;
    (ii) Assuming facets of the overall management function, such as 
safety management, personnel management, or budgeting and financial 
management;
    (iii) Representing management in such business functions as 
negotiating and administering contracts, determining acceptability of 
goods or services, or authorizing payments; or
    (iv) Providing supporting services, such as automated data 
processing, communications, or procurement and distribution of 
supplies.
    (2) Neither the organizational location nor the number of employees 
performing identical or similar work changes management or general 
business functions or supporting services into production functions. 
The work, however, must involve substantial discretion on matters of 
enough importance that the employee's actions and decisions have a 
noticeable impact on the effectiveness of the organization advised, 
represented, or serviced.
    Nonexempt area means any of the following locations:
    (1) A State of the United States;
    (2) The District of Columbia;
    (3) Puerto Rico;
    (4) The U.S. Virgin Islands;
    (5) Outer Continental Shelf Lands as defined in the Outer 
Continental Shelf Lands Act (67 Stat. 462);
    (6) American Samoa;
    (7) Guam;
    (8) Midway Atoll;
    (9) Wake Island;
    (10) Johnston Island; and
    (11) Palmyra.
    Participation in the executive or administrative functions of a 
management official means the participation of employees, variously 
identified as secretaries, administrative or executive assistants, 
aides, etc., in portions of the managerial or administrative functions 
of a supervisor whose scope of responsibility precludes personally 
attending to all aspects of the work. To support exemption, such 
employees must be delegated and exercise substantial authority to act 
for the supervisor in the absence of specific instructions or 
procedures, and take actions which significantly affect the 
supervisor's effectiveness.
    Perform work in connection with an emergency means to perform work 
that is directly related to resolving or coping with an emergency, or 
its immediate aftermath, as determined by the employing agency.
    Preserve the claim period means to establish the period of possible 
entitlement to back pay by filing a written claim with either the 
agency employing the claimant during the claim period or with OPM. The 
date the agency or OPM receives the claim is the date that determines 
the period of possible entitlement to back pay.
    Primary duty typically means the duty that constitutes the major 
part (over 50 percent) of an employee's work. A duty constituting less 
than 50 percent of the work may be credited as the primary duty for 
exemption purposes provided that duty--
    (1) Constitutes a substantial, regular part of a position;
    (2) Governs the classification and qualification requirements of 
the position; and
    (3) Is clearly exempt work in terms of the basic nature of the 
work, the frequency with which the employee must exercise discretion 
and independent judgment, and the significance of the decisions made.
    Professional employee means an employee who meets the criteria in 
Sec. 551.207.
    Reckless disregard of the requirements of the Act means failure to 
make adequate inquiry into whether conduct is in compliance with the 
Act.
    Recognized organizational unit means an established and defined 
organizational entity which has regularly assigned employees and for 
which a supervisor is responsible for planning and accomplishing a 
continuing workload. This distinguishes supervisors from leaders who 
head temporary groups formed to perform assignments of limited 
duration.
    Situations 1 through 4 means the four basic situations described 
under Factor I, Nature of Supervisory Responsibility, in the Federal 
Wage System Job Grading Standard for Supervisors. The situations depict 
successively higher levels of supervisory responsibility and authority 
for scheduling work operations, planning use of resources to accomplish 
work, directing subordinates in

[[Page 67247]]

performing work assignments, and carrying out administrative duties.
    Statute of limitations means the time frame within which an FLSA 
pay claim must be filed, starting from the date the right accrued. All 
FLSA pay claims filed on or after June 30, 1994, are subject to a 2-
year statute of limitations, except in cases of willful violation where 
the statute of limitations is 3 years.
    Suffered or permitted work means any work performed by an employee 
for the benefit of an agency, whether requested or not, provided the 
employee's supervisor knows or has reason to believe that the work is 
being performed and has an opportunity to prevent the work from being 
performed.
    Supervisory and closely related work means work that is included in 
the calculation of exempt work for supervisory positions.
    (1) Work is considered closely related to exempt supervisory work 
if it contributes to the effective supervision of subordinate workers, 
or the smooth functioning of the unit supervised, or both. Examples of 
closely related work include the following:
    (i) Maintaining various records pertaining to workload or employee 
performance;
    (ii) Performing setup work that requires special skills, typically 
is not performed by production employees in the occupation, and does 
not approach the volume that would justify hiring a specially trained 
employee to perform; and
    (iii) Performing infrequently recurring or one-time tasks which are 
impractical to delegate because they would disrupt normal operations or 
take longer to explain than to perform.
    (2) Activities in which both workers and supervisors are required 
to engage themselves are considered to be closely related to the 
primary duty of the position, for example, physical training during 
tours of duty for firefighting and law enforcement personnel.
    Temporary work or duties means work or duties an employee must 
temporarily perform that are not consistent with the primary or grade-
controlling duty of the employee's official position description. The 
period of temporary work or duties may or may not involve a different 
geographic duty location.
    Title 5 overtime pay, for the purpose of Sec. 551.208, means 
overtime pay under part 550 of this chapter.
    Trainee means a person who does not meet the definition of employee 
in this section and who is assigned or attached to a Federal activity 
primarily for training. A person who attends a training program under 
the following conditions is considered a trainee and, therefore, is not 
an employee of the Government of the United States for purposes of the 
Act:
    (1) The training, even though it includes actual operation of the 
facilities of the Federal activity, is similar to that given in a 
vocational school or other institution of learning;
    (2) The training is for the benefit of the individual;
    (3) The trainee does not displace regular employees, but, rather, 
is supervised by them;
    (4) The Federal activity which provides the training derives no 
immediate advantage from the activities of the trainee; on occasion its 
operations may actually be impeded;
    (5) The trainee is not necessarily entitled to a job with the 
Federal activity at the completion of the training period; and
    (6) The agency and the trainee understand that the trainee is not 
entitled to the payment of wages from the agency for the time spent in 
training.
    Volunteer means a person who does not meet the definition of 
employee in this section and who volunteers or donates his or her 
service, the primary benefit of which accrues to the performer of the 
service or to someone other than the agency. Under such circumstances 
there is neither an expressed nor an implied compensation agreement. 
Services performed by such a volunteer include personal services that, 
if left unperformed, would not necessitate the assignment of an 
employee to perform them.
    Willful violation means a violation in circumstances where the 
agency knew that its conduct was prohibited by the Act or showed 
reckless disregard of the requirements of the Act. All of the facts and 
circumstances surrounding the violation are taken into account in 
determining whether a violation was willful.
    Work of an intellectual nature means work requiring general 
intellectual abilities, such as perceptiveness, analytical reasoning, 
perspective, and judgment applied to a variety of subject matter 
fields, or work requiring mental processes which involve substantial 
judgment based on considering, selecting, adapting, and applying 
principles to numerous variables. The employee cannot rely on 
standardized application of established procedures or precedents, but 
must recognize and evaluate the effect of a continual variety of 
conditions or requirements in selecting, adapting, or innovating 
techniques and procedures, interpreting findings, and selecting and 
recommending the best alternative from among a broad range of possible 
actions.
    Work of a specialized or technical nature means work which requires 
substantial specialized knowledge of a complex subject matter and of 
the principles, techniques, practices, and procedures associated with 
that subject matter field. This knowledge characteristically is 
acquired through considerable on-the-job training and experience in the 
specialized subject matter field, as distinguished from professional 
knowledge characteristically acquired through specialized academic 
education.
    Workday means the period between the commencement of the principal 
activities that an employee is engaged to perform on a given day and 
the cessation of the principal activities for that day. The term is 
further explained in Sec. 551.411.
    Worktime, for the purpose of determining FLSA exemption status, 
means time spent actually performing work. This excludes periods of 
time during which an employee performs no work, such as standby time, 
sleep time, meal periods, and paid leave.
    Worktime in a representative workweek means the average percentages 
of worktime over a period long enough to even out normal fluctuations 
in workloads and be representative of the job as a whole.
    Workweek means a fixed and recurring period of 168 hours--seven 
consecutive 24-hour periods. It need not coincide with the calendar 
week but may begin on any day and at any hour of a day. For employees 
subject to part 610 of this chapter, the workweek shall be the same as 
the administrative workweek defined in Sec. 610.102 of this chapter.
    Workweek basis means the unit of time used as the basis for 
applying overtime standards under the Act and, for employees under 
flexible or compressed work schedules, under 5 U.S.C. 6121(6) or (7). 
The Act takes a single workweek as its standard and does not permit 
averaging of hours over two or more weeks, except for employees engaged 
in fire protection or law enforcement activities under section 7(k) of 
the Act.
    3. Subpart B is revised to read as follows:

Subpart B--Exemptions and Exclusions

Sec.
551.201  Agency authority.
551.202  General principles governing exemptions.
551.203  Exemption of General Schedule employees.

[[Page 67248]]

551.204  Exemption of Federal Wage System employees.
551.205  Executive exemption criteria.
551.206  Administrative exemption criteria.
551.207  Professional exemption criteria.
551.208  Effect of performing temporary work or duties on FLSA 
exemption status.
551.209  Foreign exemption criteria.
551.210  Exemption of employees receiving availability pay.
551.211  Statutory exclusion.


Sec. 551.201  Agency authority.

    The employing agency may designate an employee FLSA exempt only 
when the agency correctly determines that the employee meets one or 
more of the exemption criteria of this subpart and such supplemental 
interpretations or instructions issued by OPM.


Sec. 551.202  General principles governing exemptions.

    In all exemption determinations, the agency must observe the 
following principles:
    (a) Each employee is presumed to be FLSA nonexempt unless the 
employing agency correctly determines that the employee clearly meets 
one or more of the exemption criteria of this subpart and such 
supplemental interpretations or instructions issued by OPM.
    (b) Exemption criteria must be narrowly construed to apply only to 
those employees who are clearly within the terms and spirit of the 
exemption.
    (c) The burden of proof rests with the agency that asserts the 
exemption.
    (d) An employee who clearly meets the criteria for exemption must 
be designated FLSA exempt. If there is a reasonable doubt as to whether 
an employee meets the criteria for exemption, the employee should be 
designated FLSA nonexempt.
    (e) There are groups of General Schedule employees who are FLSA 
nonexempt because they do not fit any of the exemption categories. 
These groups include the following:
    (1) Nonsupervisory General Schedule employees in equipment 
operating and protective occupations, and most clerical occupations 
(see the definition of participation in the executive or administrative 
functions of a management official in subpart A of this part);
    (2) Nonsupervisory General Schedule employees performing technician 
work in positions properly classified below GS-9 (or the equivalent 
level in other comparable white-collar pay systems) and many, but not 
all, of those positions properly classified at GS-9 or above (or the 
equivalent level in other comparable white-collar pay systems); and
    (3) Nonsupervisory General Schedule employees at any grade level in 
occupations requiring highly specialized technical skills and 
knowledges that can be acquired only through prolonged job training and 
experience, such as the Air Traffic Control series, GS-2152, or the 
Aircraft Operations series, GS-2181, unless such employees are 
performing predominantly administrative functions rather than the 
technical work of the occupation.
    (f) Although separate criteria are provided for the exemption of 
executive, administrative, and professional employees, those categories 
are not mutually exclusive. All exempt work, regardless of category, 
must be considered. The only restriction is that, when the requirements 
of one category are more stringent, the combination of exempt work must 
meet the more stringent requirements.
    (g) Failure to meet the criteria for exemption under what might 
appear to be the most appropriate criteria does not preclude exemption 
under another category. For example, an engineering technician who 
fails to meet the professional exemption criteria may be performing 
exempt administrative work, or an administrative officer who fails to 
meet the administrative criteria may be performing exempt executive 
work.
    (h) Although it is normally feasible and more convenient to 
identify the exemption category, this is not essential. An exemption 
may be based on a combination of functions, no one of which constitutes 
the primary duty, or the employee's primary duty may involve two 
categories which are intermingled and difficult to segregate. This does 
not preclude designating an employee FLSA exempt, provided the work as 
a whole clearly meets the other exemption criteria.
    (i) The designation of an employee as FLSA exempt or nonexempt 
ultimately rests on the duties actually performed by the employee.


Sec. 551.203  Exemption of General Schedule employees.

    (a) GS-4 or below. Any employee in a position properly classified 
at GS-4 or below (or the equivalent level in other comparable white-
collar pay systems) is nonexempt, unless the employee is subject to the 
foreign exemption in Sec. 551.209.
    (b) GS-5 or above. Any employee in a position properly classified 
at GS-5 or above (or the equivalent level in other comparable white-
collar pay systems) is exempt only if the employee is an executive, 
administrative, or professional employee as defined in this subpart, 
unless the employee is subject to Sec. 551.208 (the effect of 
performing temporary work or duties on FLSA exemption status) or 
Sec. 551.209 (the foreign exemption).


Sec. 551.204  Exemption of Federal Wage System employees.

    (a) Nonsupervisory. A nonsupervisory employee in the Federal Wage 
System or in other comparable wage systems is nonexempt, unless the 
employee is subject to Sec. 551.208 (the effect of performing temporary 
work or duties on FLSA exemption status) or Sec. 551.209 (the foreign 
exemption).
    (b) Supervisory. A supervisory employee in the Federal Wage System 
or in other comparable wage systems is exempt only if the employee is 
an executive employee as defined in Sec. 551.205, unless the employee 
is subject to Sec. 551.208 (the effect of performing temporary work or 
duties on FLSA exemption status) or Sec. 551.209 (the foreign 
exemption).


Sec. 551.205  Executive exemption criteria.

    An executive employee is a supervisor or manager who manages a 
Federal agency or any subdivision thereof (including the lowest 
recognized organizational unit with a continuing function) and 
customarily and regularly directs the work of subordinate employees and 
meets both of the following criteria:
    (a) Primary duty test. The primary duty test is met if the 
employee--
    (1) Has authority to make personnel changes that include, but are 
not limited to, selecting, removing, advancing in pay, or promoting 
subordinate employees, or has authority to suggest or recommend such 
actions with particular consideration given to these suggestions and 
recommendations; and
    (2) Customarily and regularly exercises discretion and independent 
judgment in such activities as work planning and organization; work 
assignment, direction, review, and evaluation; and other aspects of 
management of subordinates, including personnel administration.
    (b) 80-percent test. In addition to the primary duty test that 
applies to all employees, the following employees must spend 80 percent 
or more of the worktime in a representative workweek on supervisory and 
closely related work to meet the 80-percent test:
    (1) Employees in positions properly classified in the General 
Schedule at GS-5 or GS-6 (or the equivalent level in other comparable 
white-collar pay systems);
    (2) Firefighting or law enforcement employees in positions properly 
classified in the General Schedule at GS-7, GS-8, or GS-9 who are 
subject to

[[Page 67249]]

section 207(k) of title 29, United States Code; and
    (3) Supervisors in positions properly classified in the Federal 
Wage System below situation 3 of Factor I of the Federal Wage System 
Job Grading Standard for Supervisors (or the equivalent level in other 
comparable wage systems).


Sec. 551.206  Administrative exemption criteria.

    An administrative employee is an advisor or assistant to 
management, a representative of management, or a specialist in a 
management or general business function or supporting service and meets 
all four of the following criteria:
    (a) Primary duty test. The primary duty test is met if the 
employee's work--
    (1) Significantly affects the formulation or execution of 
management programs or policies; or
    (2) Involves management or general business functions or supporting 
services of substantial importance to the organization serviced; or
    (3) Involves substantial participation in the executive or 
administrative functions of a management official.
    (b) Nonmanual work test. The employee performs office or other 
predominantly nonmanual work which is--
    (1) Intellectual and varied in nature; or
    (2) Of a specialized or technical nature that requires considerable 
special training, experience, and knowledge.
    (c) Discretion and independent judgment test. The employee 
frequently exercises discretion and independent judgment, under only 
general supervision, in performing the normal day-to-day work.
    (d) 80-percent test. In addition to the primary duty test that 
applies to all employees, General Schedule employees in positions 
properly classified at GS-5 or GS-6 (or the equivalent level in other 
comparable white-collar pay systems) must spend 80 percent or more of 
the worktime in a representative workweek on administrative functions 
and work that is an essential part of those functions to meet the 80-
percent test.


Sec. 551.207  Professional exemption criteria.

    A professional employee is an employee who meets all of the 
following criteria, or any teacher who is engaged in the imparting of 
knowledge or in the administration of an academic program in a school 
system or educational establishment.
    (a) Primary duty test. The primary duty test is met if the 
employee's work consists of--
    (1) Work that requires knowledge in a field of science or learning 
customarily and characteristically acquired through education or 
training that meets the requirements for a bachelor's or higher degree, 
with major study in or pertinent to the specialized field as 
distinguished from general education; or is performing work, comparable 
to that performed by professional employees, on the basis of 
specialized education or training and experience which has provided 
both theoretical and practical knowledge of the specialty, including 
knowledge of related disciplines and of new developments in the field; 
or
    (2) Work in a recognized field of artistic endeavor that is 
original or creative in nature (as distinguished from work which can be 
produced by a person endowed with general manual or intellectual 
ability and training) and the result of which depends on the invention, 
imagination, or talent of the employee; or
    (3) Work that requires theoretical and practical application of 
highly-specialized knowledge in computer systems analysis, programming, 
and software engineering or other similar work in the computer software 
field. The work must consist of one or more of the following:
    (i) The application of systems analysis techniques and procedures, 
including consulting with users, to determine hardware, software, or 
system functional specifications; or
    (ii) 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; or
    (iii) The design, documentation, testing, creation, or modification 
of computer programs related to machine operating systems; or
    (iv) A combination of the duties described in paragraphs (a)(3)(i), 
(a)(3)(ii), and (a)(3)(iii) of this section, the performance of which 
requires the same level of skills.
    (b) Intellectual and varied work test. The employee's work is 
predominantly intellectual and varied in nature, requiring creative, 
analytical, evaluative, or interpretative thought processes for 
satisfactory performance.
    (c) Discretion and independent judgment test. The employee 
frequently exercises discretion and independent judgment, under only 
general supervision, in performing the normal day-to-day work.
    (d) 80-percent test. In addition to the primary duty test that 
applies to all employees, General Schedule employees in positions 
properly classified at GS-5 or GS-6 (or the equivalent level in other 
comparable white-collar pay systems), must spend 80 percent or more of 
the worktime in a representative workweek on professional functions and 
work that is an essential part of those functions to meet the 80-
percent test.


Sec. 551.208  Effect of performing temporary work or duties on FLSA 
exemption status.

    (a) Applicability. 
    (1) When applicable. This section applies only when an employee 
must temporarily perform work or duties that are not consistent with 
the primary or grade-controlling duty of the employee's official 
position description. The period of temporary work or duties may or may 
not involve a different geographic duty location. The FLSA exemption 
status of employees during a period of temporary work or duties must be 
determined as described in this section.
    (2) When not applicable. This section does not apply when an 
employee is detailed to an identical additional position as the 
employee's position or to a position of the same grade, series code, 
basic duties, and FLSA exemption status as the employee's position.
    (b) Effect on nonexempt employees.
    (1) A nonexempt employee who must temporarily perform work or 
duties that are not consistent with the primary or grade-controlling 
duty of the employee's official position description remains nonexempt 
for the entire period of temporary work or duties unless all three of 
the following conditions are met:
    (i) 30-day test. The period of temporary work or duties exceeds 30 
calendar days; and
    (ii) Exempt work or duty. The employee's primary duty for the 
period of temporary work or duties is exempt work or duty as defined in 
this part; and
    (iii) Positions at GS-7 or above, or at situation 3 or 4. The 
employee's position (including a position to which the employee is 
temporarily promoted) is properly classified in the General Schedule at 
GS-7 or above (or the equivalent level in other comparable white-collar 
pay systems) or properly classified in the Federal Wage System as a 
supervisor at situation 3 or 4 of Factor I of the Federal Wage System 
Job Grading Standard for Supervisors (or the equivalent level in other 
comparable wage systems).
    (2) If a nonexempt employee becomes exempt under the criteria in 
paragraph (b)(1) of this section--

[[Page 67250]]

    (i) The employee must be considered exempt for the entire period of 
temporary work or duties; and
    (ii) If the employee received FLSA overtime pay for work performed 
during the first 30 calendar days of the temporary work or duties, the 
agency must recalculate the employee's total pay retroactive to the 
beginning of that period because the employee is now not entitled to 
the FLSA overtime pay received but may be owed title 5 overtime pay.
    (c) Effect on exempt employees.
    (1) An exempt employee not covered by the special provision of 
paragraph (c)(3) of this section who must temporarily perform work or 
duties that are not consistent with the primary or grade-controlling 
duty of the employee's official position description remains exempt for 
the entire period of temporary work or duties unless all three of the 
following conditions are met:
    (i) 30-day test. The period of temporary work or duties exceeds 30 
calendar days; and
    (ii) Not exempt work or duty. The employee's primary duty for the 
period of temporary work or duties is not exempt work or duty as 
defined in this part; and
    (iii) Positions at GS-7 or above, or at situation 3 or 4. The 
employee's position (including a position to which the employee is 
temporarily promoted) is properly classified in the General Schedule at 
GS-7 or above (or the equivalent level in other comparable white-collar 
pay systems) or properly classified in the Federal Wage System as a 
supervisor at situation 3 or 4 of Factor I of the Federal Wage System 
Job Grading Standard for Supervisors (or the equivalent level in other 
comparable wage systems).
    (2) If an exempt employee becomes nonexempt under the criteria in 
paragraph (c)(1) of this section--
    (i) The employee must be considered nonexempt for the entire period 
of temporary work or duties; and
    (ii) If the employee received title 5 overtime pay for work 
performed during the first 30 calendar days of the temporary work or 
duties, the agency must recalculate the employee's total pay 
retroactive to the beginning of that period because the employee may 
now not be entitled to some or all of the title 5 overtime pay received 
but may be owed FLSA overtime pay.
    (3) Special provision for exempt employees at GS-5 or GS-6, or 
below situation 3. The exemption status of certain exempt employees who 
must temporarily perform work or duties that are not consistent with 
the primary or grade-controlling duty of their official position 
description must be determined on a workweek basis for the period of 
temporary work or duties. Such employees are exempt employees whose 
positions (including a position to which the employee is temporarily 
promoted) are properly classified in the General Schedule at GS-5 or 
GS-6 (or the equivalent level in other comparable white-collar pay 
systems), or are properly classified in the Federal Wage System below 
situation 3 of Factor I of the Federal Wage System Job Grading Standard 
for Supervisors (or the equivalent level in other comparable wage 
systems). The exemption status determination of these employees will 
result in the employee either remaining exempt or becoming nonexempt 
for that workweek, as described in paragraphs (c)(3)(i) and (c)(3)(ii) 
of this section.
    (i) Remain exempt. An exempt employee remains exempt for a given 
workweek only if the employee performs exempt work or duties for 80 
percent or more of the worktime in that workweek.
    (ii) Become nonexempt. An exempt employee becomes nonexempt for a 
given workweek only if the employee performs nonexempt work or duties 
for more than 20 percent of the worktime in that workweek.
    (d) Emergency situation. Notwithstanding any other provisions of 
this section, and regardless of an employee's grade level, the agency 
may determine that an emergency situation exists that directly 
threatens human life or safety, serious damage to property, or serious 
disruption to the operations of an activity, and there is no recourse 
other than to assign qualified employees to temporarily perform work or 
duties in connection with the emergency. In such a designated 
emergency--
    (1) Nonexempt employee. The exemption status of a nonexempt 
employee remains nonexempt whether the employee performs nonexempt work 
or exempt work during the emergency; and
    (2) Exempt employee. The exemption status of an exempt employee 
must be determined on a workweek basis. The exemption status 
determination of exempt employees will result in the employee either 
remaining exempt or becoming nonexempt for that workweek, as described 
in paragraphs (d)(2)(i) and (d)(2)(ii) of this section.
    (i) Remain exempt. An exempt employee remains exempt for any 
workweek in which the employee performs exempt work or duties for 80 
percent or more of the worktime in a given workweek.
    (ii) Become nonexempt. An exempt employee becomes nonexempt for any 
workweek in which the employee performs nonexempt work or duties for 
more than 20 percent of the worktime in a given workweek.


Sec. 551.209  Foreign exemption criteria.

    (a) Application. When the foreign exemption applies, the minimum 
wage, overtime, and child labor provisions of the Act do not apply to 
any employee who spends all hours of work in a given workweek in an 
exempt area. When an employee meets one of the two criteria in 
paragraph (b) of this section, the foreign exemption applies until the 
employee spends any hours of work in any nonexempt area as defined in 
Sec. 551.102.
    (b) Foreign exemption applies. If an employee meets one of the two 
following criteria, the employee is subject to the foreign exemption of 
the Act and the minimum wage, overtime, and child labor provisions of 
the Act do not apply:
    (1) The employee is permanently stationed in an exempt area and 
spends all hours of work in a given workweek in one or more exempt 
areas; or
    (2) The employee is not permanently stationed in an exempt area, 
but spends all hours of work in a given workweek in one or more exempt 
areas.
    (c) Foreign exemption does not apply. For any given workweek, the 
minimum wage, overtime, and child labor provisions of the Act apply to 
an employee permanently stationed in an exempt area who spends any 
hours of work in any nonexempt area. For that workweek, the employee is 
not subject to the foreign exemption, and the agency must determine the 
exemption status of such an employee as described paragraphs (c)(1) and 
(c)(2) of this section. The foreign exemption does not resume until the 
employee again meets one of the criteria in paragraph (b) of this 
section.
    (1) Same duties. If the duties performed during that workweek are 
consistent with the primary or grade-controlling duties of the 
employee's official position description, the agency must designate the 
employee the same FLSA exemption status as if the employee were 
permanently stationed in any nonexempt area.
    (2) Different duties. If the duties performed during that workweek 
are not consistent with the primary or grade-controlling duties of the 
employee's official position description--
    (i) The agency must first designate the employee the same FLSA 
exemption status as the employee would have been designated based on 
the duties included

[[Page 67251]]

in the employee's official position description if the employee were 
permanently stationed in any nonexempt area; and
    (ii) The agency must determine the employee's exemption status for 
that workweek by applying Sec. 551.208.
    (d) Resumption of foreign exemption. When an employee returns to 
any exempt area from performing any hours of work in any nonexempt 
area, the employee is not subject to the foreign exemption until the 
employee meets one of the criteria in paragraph (b) of this section.


Sec. 551.210  Exemption of employees receiving availability pay.

    The following employees are exempt from the hours of work and 
overtime pay provisions of the Act:
    (a) A criminal investigator receiving availability pay under 
Sec. 550.181 of this chapter; and
    (b) A pilot employed by the United States Customs Service who is a 
law enforcement officer as defined in section 5541(3) of title 5, 
United States Code, and who receives availability pay under section 
5545a(i) of title 5, United States Code.


Sec. 551.211  Statutory exclusion.

    A customs officer who receives overtime pay under subsection (a) or 
premium pay under subsection (b) of section 267 of title 19, United 
States Code, for time worked may not receive pay or other compensation 
for that work under any other provision of law. As used in section 5, 
the term ``customs officer'' means a United States Customs Service 
supervisory or nonsupervisory customs inspector or a supervisory or 
nonsupervisory canine enforcement officer.
    4. Subpart F is added to read as follows:

Subpart F--Child Labor

Sec.
551.601  Minimum age standards.
551.602  Responsibilities.


Sec. 551.601  Minimum age standards.

    (a) 16-year minimum age. The Act, in section 3(l), sets a general 
16-year minimum age, which applies to all employment subject to its 
child labor provisions, with certain exceptions not applicable here.
    (b) 18-year minimum age. The Act, in section 3(l), also sets an 18-
year minimum age with respect to employment in any occupation found and 
declared by the Secretary of Labor to be particularly hazardous for the 
employment of minors of such age or detrimental to their health or 
well-being.


Sec. 551.602  Responsibilities.

    (a) Agencies must remain cognizant of and abide by regulations and 
orders published in part 570 of title 29, Code of Federal Regulations, 
by the Secretary of Labor regarding the employment of individuals under 
the age of 18 years. These regulations and orders govern the minimum 
age at which persons under the age of 18 years may be employed and the 
occupations in which they may be employed. Persons under the age of 18 
years must not be employed in occupations or engage in work deemed 
hazardous by the Secretary of Labor.
    (b) OPM will decide complaints concerning the employment of persons 
under the age of 18 years. Complaints must be filed following the 
procedures set forth in subpart G of this part.
    5. Subpart G is added to read as follows:

Subpart G--FLSA Claims and Compliance

Sec.
551.701  Applicability.
551.702  Time limits.
551.703  Avenues of review.
551.704  Claimant's representative.
551.705  Filing an FLSA claim.
551.706  Responsibilities.
551.707  Withdrawal or cancellation of an FLSA claim.
551.708  Finality and effect of OPM FLSA claim decision.
551.709  Availability of information.
551.710  Where to file an FLSA claim with OPM.


Sec. 551.701  Applicability.

    (a) Applicable. This subpart applies to FLSA exemption status 
determination claims, FLSA pay claims for minimum wage or overtime pay 
for work performed under the Act, and complaints arising under the 
child labor provisions of the Act.
    (b) Not applicable. This subpart does not apply to claims or 
complaints arising under the equal pay provisions of the Act. The equal 
pay provisions of the Act are administered by the Equal Employment 
Opportunity Commission.


Sec. 551.702  Time limits.

    (a) Claims. A claimant may at any time file a complaint under the 
child labor provisions of the Act or an FLSA claim challenging the 
correctness of his or her FLSA exemption status determination. A 
claimant may also file an FLSA claim concerning his or her entitlement 
to minimum wage or overtime pay for work performed under the Act; 
however, time limits apply to FLSA pay claims. All FLSA pay claims 
filed on or after June 30, 1994, are subject to a 2-year statute of 
limitations (3 years for willful violations).
    (b) Statute of limitations. An FLSA pay claim filed on or after 
June 30, 1994, is subject to the statute of limitations contained in 
the Portal-to-Portal Act of 1947, as amended (section 255a of title 29, 
United States Code), which imposes a 2-year statute of limitations, 
except in cases of a willful violation where the statute of limitations 
is 3 years. In deciding a claim, a determination must be made as to 
whether the cause or basis of the claim was the result of a willful 
violation on the part of the agency.
    (c) Preserving the claim period. A claimant or a claimant's 
designated representative may preserve the claim period by submitting a 
written claim either to the agency employing the claimant during the 
claim period or to OPM. The date the agency or OPM receives the claim 
is the date that determines the period of possible entitlement to back 
pay. The claimant is responsible for proving when the claim was 
received by the agency or OPM. The claimant should retain documentation 
to establish when the claim was received by the agency or OPM, such as 
by filing the claim using certified, return receipt mail, or by 
requesting that the agency or OPM provide written acknowledgment of 
receipt of the claim. If a claim for back pay is established, the 
claimant will be entitled to pay for a period of up to 2 years (3 years 
for a willful violation) back from the date the claim was received.


Sec. 551.703  Avenues of review.

    (a) Negotiated grievance procedure (NGP) as exclusive 
administrative remedy. If at any time during the claim period, a 
claimant was a member of a bargaining unit covered by a collective 
bargaining agreement that did not specifically exclude matters under 
the Act from the scope of the negotiated grievance procedure, the 
claimant must use that negotiated grievance procedure as the exclusive 
administrative remedy for all claims under the Act. There is no right 
to further administrative review by the agency or by OPM. The remaining 
sections in this subpart (that is, Secs. 551.704 through 551.710) do 
not apply to such employees.
    (b) Non-NGP administrative review by agency or OPM. A claimant may 
file a claim with the agency employing the claimant during the claim 
period or with OPM, but not both simultaneously, regarding matters 
arising under the Act if, during the entire claim period, the 
claimant--
    (1) Was not a member of a bargaining unit, or
    (2) Was a member of a bargaining unit not covered by a collective 
bargaining agreement, or

[[Page 67252]]

    (3) Was a member of a bargaining unit covered by a collective 
bargaining agreement that specifically excluded matters under the Act 
from the scope of the negotiated grievance procedure.
    (c) Judicial review. Nothing in this subpart limits the right of a 
claimant to bring an action in an appropriate United States court. 
Filing a claim with an agency or with OPM does not satisfy the statute 
of limitations governing FLSA claims filed in court. OPM will not 
decide an FLSA claim that is in litigation.


Sec. 551.704  Claimant's representative.

    A claimant may designate a representative to assist in preparing or 
presenting a claim. The claimant must designate the representative in 
writing. A representative may not participate in OPM interviews unless 
specifically requested to do so by OPM. An agency may disallow a 
claimant's representative who is a Federal employee in any of the 
following circumstances:
    (a) When the individual's activities as a representative would 
cause a conflict of interest or position;
    (b) When the designated representative cannot be released from his 
or her official duties because of the priority needs of the Government; 
or
    (c) When the release of the designated representative would give 
rise to unreasonable costs to the Government.


Sec. 551.705  Filing an FLSA claim.

    (a) Filing an FLSA claim. A claimant may file an FLSA claim with 
either the agency employing the claimant during the claim period or 
with OPM, but a claimant cannot pursue the same claim with both at the 
same time. OPM encourages a claimant to obtain a decision on the claim 
from the agency before filing the claim with OPM. However, a claimant 
is not required to do this. This a matter of personal discretion and a 
claimant may use either avenue. A claimant who receives an unfavorable 
decision on a claim from the agency may still file the claim with OPM. 
However, a claimant may not file the claim with the agency after 
receiving an unfavorable decision from OPM. An OPM decision on a claim 
is final and is not subject to further administrative review.
    (b) FLSA claim filed with agency. An FLSA claim filed with an 
agency should be made according to appropriate agency procedures. At 
the request of the claimant, the agency may forward the claim to OPM on 
the claimant's behalf. The claimant is responsible for ensuring that 
OPM receives all the information requested in paragraph (b) of this 
section.
    (c) FLSA claim filed with OPM. An FLSA claim filed with OPM must be 
made in writing and must be signed by the claimant or the claimant's 
representative. Relevant information may be submitted to OPM at any 
time following the initial submission of a claim to OPM and prior to 
OPM's decision on the claim. The claim must include the following:
    (1) The identity of the claimant (see Sec. 551.706(a)(2) regarding 
requesting confidentiality) and any designated representative, the 
agency employing the claimant during the claim period, the position 
(job title, series, and grade) occupied by the claimant during the 
claim period, and the current mailing address, commercial telephone 
number, and facsimile machine number, if available, of the claimant and 
any designated representative;
    (2) A description of the nature of the claim and the specific 
issues or incidents giving rise to the claim, including the time period 
covered by the claim;
    (3) A description of actions taken by the claimant to resolve the 
claim within the agency and the results of any actions taken;
    (4) A copy of any relevant decision or written response by the 
agency;
    (5) Evidence available to the claimant or the claimant's designated 
representative which supports the claim, including the identity, 
commercial telephone number, and location of other individuals who may 
be able to provide information relating to the claim;
    (6) The remedy sought by the claimant;
    (7) Evidence, if available, that the claim period was preserved in 
accordance with Sec. 551.702. The date the claim is received by the 
agency or OPM becomes the date on which the claim period is preserved;
    (8) A statement from the claimant that he or she was or was not a 
member of a collective bargaining unit at any time during the claim 
period;
    (9) If the claimant was a member of a bargaining unit, a statement 
from the claimant that he or she was or was not covered by a negotiated 
grievance procedure at any time during the claim period, and if 
covered, whether that procedure specifically excluded the claim from 
the scope of the negotiated grievance procedure;
    (10) A statement from the claimant that he or she has or has not 
filed an action in an appropriate United States court; and
    (11) Any other information that the claimant believes OPM should 
consider.


Sec. 551.706  Responsibilities.

    (a) Claimant.
    (1) Providing information to OPM. For all FLSA claims, the claimant 
or claimant's designated representative must provide any additional 
information requested by OPM within 15 workdays after the date of the 
request, unless the claimant or the claimant's representative requests 
additional time and OPM grants a longer period of time in which to 
provide the requested information. The disclosure of information by a 
claimant is voluntary. However, OPM may be unable to render a decision 
on a claim without the information requested. In such a case, the claim 
will be cancelled without further action being taken by OPM. In the 
case of an FLSA pay claim, it is the claimant's responsibility to 
provide evidence that the claim period was preserved in accordance with 
Sec. 551.702 and of the liability of the agency and the claimant's 
right to payment.
    (2) Requesting confidentiality. If the claimant wishes the claim to 
be treated confidentially, the claim must specifically request that the 
identity of the claimant not be revealed to the agency. Witnesses or 
other sources may also request confidentiality. OPM will make every 
effort to conduct its investigation in a way to maintain 
confidentiality. If OPM is unable to obtain sufficient information to 
render a decision and preserve the requested confidentiality, OPM will 
notify the claimant that the claim will be cancelled with no further 
action by OPM unless the claimant voluntarily provides written 
authorization for his or her name to be revealed.
    (b) Agency.
    (1) In FLSA exemption status determination claims, the burden of 
proof rests with the agency that asserts the FLSA exemption.
    (2) The agency must provide the claimant with a written 
acknowledgment of the date the claim was received.
    (3) Upon a claimant's request, and subject to any Privacy Act 
requirements, an agency must provide a claimant with information 
relevant to the claim.
    (4) The agency must provide any information requested by OPM within 
15 workdays after the date of the request, unless the agency requests 
additional time and OPM grants a longer period of time in which to 
provide the requested information.

[[Page 67253]]

Sec. 551.707  Withdrawal or cancellation of an FLSA claim.

    (a) Withdrawal. A claimant or the claimant's representative may 
withdraw a claim at any time prior to the issuance of an OPM FLSA claim 
decision by providing written notice to the OPM office where the claim 
was filed.
    (b) Cancellation. OPM may, at its discretion, cancel an FLSA claim 
if the claimant or the claimant's designated representative fails to 
provide requested information within 15 workdays after the date of the 
request, unless the claimant or the claimant's representative requests 
additional time and OPM grants a longer period of time in which to 
provide the requested information. OPM may, at its discretion, 
reconsider a cancelled claim on a showing that circumstances beyond the 
claimant's control prevented pursuit of the claim.


Sec. 551.708  Finality and effect of OPM FLSA claim decision.

    OPM will send an FLSA claim decision to the claimant or the 
claimant's representative and the agency. An FLSA claim decision made 
by OPM is final. There is no further right of administrative appeal. At 
its discretion, OPM may reconsider a decision upon a showing that 
material information was not considered or there was a material error 
of law, regulation, or fact in the original decision. A decision by OPM 
under the Act is binding on all administrative, certifying, payroll, 
disbursing, and accounting officials of agencies for which OPM 
administers the Act. Upon receipt of a decision, the agency employing 
the claimant during the claim period must take all necessary steps to 
comply with the decision, including adherence with compliance 
instructions provided with the decision. All compliance actions must be 
completed within the time specified in the decision, unless an 
extension of time is requested by the agency and granted by OPM. The 
agency should identify all similarly situated current and, to the 
extent possible, former employees, ensure that they are treated in a 
manner consistent with the decision, and inform them in writing of 
their right to file an FLSA claim with the agency or OPM.


Sec. 551.709  Availability of information.

    (a) Except when the claimant has requested confidentiality, the 
agency and the claimant must provide to each other a copy of all 
information submitted with respect to the claim.
    (b) When a claimant has not requested confidentiality, OPM will 
disclose to the parties concerned the information contained in an FLSA 
claim file. When a claimant has requested confidentiality, OPM will 
delete any information identifying the claimant before disclosing the 
information in an FLSA claim file to the parties concerned. For the 
purposes of this subpart, the parties concerned means the claimant, any 
representative designated in writing, and any representative of the 
agency or OPM involved in the proceeding.
    (c) Except when the claimant has requested confidentiality or the 
disclosure would constitute a clearly unwarranted invasion of personal 
privacy, OPM, upon a request which identifies the individual from whose 
file the information is sought, will disclose the following information 
from a claim file to a member of the public:
    (1) Confirmation of the name of the individual from whose file the 
information is sought and the names of the other parties concerned;
    (2) The remedy sought;
    (3) The status of the claim;
    (4) The decision on the claim; and
    (5) With the consent of the parties concerned, other reasonably 
identified information from the file.


Sec. 551.710  Where to file an FLSA claim with OPM.

    An FLSA claim must be filed with the OPM office serving the area 
where the cause or basis of the claim occurred. Following are OPM 
addresses and service areas.

OPM Atlanta Oversight Division

75 Spring Street SW., Suite 972, Atlanta, GA 30303-3109
Alabama, Florida, Georgia, Mississippi, North Carolina, South 
Carolina, Tennessee, Virginia (except the Virginia locations listed 
under the Washington, DC Oversight Division)

OPM Chicago Oversight Division

230 S. Dearborn Street, DPN 30-6, Chicago, IL 60604-1687
llinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, 
Missouri, Nebraska, North Dakota, Ohio, South Dakota, West Virginia, 
Wisconsin

OPM Dallas Oversight Division

1100 Commerce Street, Room 4C22, Dallas, TX 75242-9968
Arizona, Arkansas, Colorado, Louisiana, Montana, New Mexico, 
Oklahoma, Texas, Utah, Wyoming

OPM Philadelphia Oversight Division

600 Arch Street, Room 3400, Philadelphia, PA 19106-1596
Connecticut, Delaware, Maine, Maryland (except the Maryland 
locations listed under the Washington, DC Oversight Division), 
Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, 
Rhode Island, Vermont, Puerto Rico, Virgin Islands

OPM San Francisco Oversight Division

120 Howard Street, Room 760, San Francisco, CA 94105-0001
Alaska, California, Hawaii, Idaho, Nevada, Oregon, Washington, 
Pacific Ocean Area

OPM Washington, DC Oversight Division

1900 E Street NW., Room 7675, Washington, DC 20415-0001
The District of Columbia
In Maryland: the counties of Charles, Montgomery, and Prince 
George's.
In Virginia: the counties of Arlington, Fairfax, King George, 
Loudoun, Prince William, and Stafford; the cities of Alexandria, 
Fairfax, Falls Church, Manassas, and Manassas Park; and any overseas 
area not listed in the service area of another Oversight division.

[FR Doc. 97-33429 Filed 12-22-97; 8:45 am]
BILLING CODE 6325-01-P