[Federal Register Volume 81, Number 224 (Monday, November 21, 2016)]
[Proposed Rules]
[Pages 83170-83171]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-27887]


 ========================================================================
 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 81, No. 224 / Monday, November 21, 2016 / 
Proposed Rules  

[[Page 83170]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 551

RIN 3206-AN41


Pay Administration Under the Fair Labor Standards Act

AGENCY: U.S. Office of Personnel Management.

ACTION: Proposed rule.

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SUMMARY: The U.S. Office of Personnel Management (OPM) proposes to 
revise the regulations issued under the Fair Labor Standards Act of 
1938, as amended (``FLSA'' or ``Act''). The revised regulations are 
intended to provide a clearer understanding of coverage under the Act 
and to ensure that the FLSA's intended overtime protections are fully 
implemented. By way of this rulemaking, OPM seeks to harmonize OPM's 
regulations with revisions made to the Department of Labor's (DOL) FLSA 
regulations by updating the salary-based nonexemption level and by 
providing for future automatic updates to that level consistent with 
the automatic updating mechanism utilized in DOL's FLSA regulations.

DATES: Comments must be received on or before December 21, 2016.

ADDRESSES: You may submit comments, identified by RIN number ``3206-
AN41,'' using either of the following methods:
    Federal eRulemaking Portal: www.regulations.gov. Follow the 
instructions for submitting comments.
    Email: [email protected].

FOR FURTHER INFORMATION CONTACT: Adam Garcia (813) 616-9296, or email: 
[email protected].

SUPPLEMENTARY INFORMATION: The U.S. Office of Personnel Management 
(OPM) is publishing a proposed rule to amend regulations issued under 
the Fair Labor Standards Act of 1938, as amended (``FLSA'' or ``Act''). 
The purpose of this amendment is to update and harmonize OPM's FLSA 
regulations with certain changes made by the Department of Labor (DOL), 
Wage and Hour Division, 29 CFR part 541, RIN 1235-AA11, Defining and 
Delimiting the Exemptions for Executive, Administrative, Professional, 
Outside Sales and Computer Employees (Federal Register, Vol. 81, No. 
99, dated May 23, 2016).
    OPM proposes to update the salary-based nonexemption level, 
increasing it to the annual rate of basic pay of $47,476, in order to 
ensure that the FLSA's intended overtime protections are fully 
implemented, and to simplify the identification of nonexempt employees, 
thus making the exemption easier for agency employers and employees to 
understand. OPM also proposes to make future automatic updates to the 
salary level to prevent the level from becoming outdated due to the 
often lengthy passage of time between rulemakings by incorporating the 
same automatic updating methodology utilized in the U.S. Department of 
Labor's (DOL) FLSA regulations.

Background

    Part 551 provides the regulations, criteria, and conditions set 
forth by OPM as prescribed by the Fair Labor Standards Act (``FLSA'' or 
``Act''). OPM's administration of the Act must comply with the terms of 
the Act, but the law does not require OPM's regulations to mirror the 
DOL's FLSA regulations. OPM's administration of the Act must be 
consistent with the DOL's administration of the Act only to the extent 
practicable and only to the extent that this consistency is required to 
maintain compliance with the terms of the Act.
    The FLSA guarantees a minimum wage and overtime pay at a rate of 
not less than one and one-half times the employee's regular rate for 
hours worked in excess of 40 in a workweek. While these protections 
extend to most employees, the FLSA does provide a number of exemptions. 
OPM proposes to update and revise the regulations issued under the FLSA 
implementing the criteria for exemption from the minimum wage and 
overtime pay provisions. One of the criteria required to qualify as an 
exempt employee is that the employee must be paid a certain salary 
level. The salary level required for exemption under OPM's FLSA 
regulations (5 CFR 551.203) is currently the annual rate of basic pay 
of $23,660.

Updates to DOL's FLSA Regulations

    On March 13, 2014, President Obama signed a Presidential Memorandum 
directing the Department of Labor to update the overtime regulations 
regarding executive, administrative, and professional employees, who 
are exempt from the FLSA's minimum wage and overtime standards. 79 FR 
18737 (April 3, 2014). Consistent with the President's goal of ensuring 
workers are paid a fair day's pay for a fair day's work, the memorandum 
instructed DOL to look for ways to modernize and simplify the 
regulations while ensuring that the FLSA's intended overtime 
protections are fully implemented.
    On July 6, 2015, the DOL issued proposed regulations in the Federal 
Register (80 FR 38515) that updated the salary level under part 541 of 
title 29, Code of Federal Regulations (CFR), Defining and Delimiting 
the Exemptions for Executive, Administrative, Professional, Computer 
and Outside Sales Employees. The final rule, providing an increase to 
the salary level to $913 per week ($47,476 annually), and providing for 
automatic updates to the salary level in the future, was issued on May 
23, 2016 (81 FR 32391) with an effective date of December 1, 2016. See 
29 CFR 541.600, 541.607.

Proposed Revisions to OPM's FLSA Regulations

    In order to maintain consistency with DOL's updates to the salary 
level provisions under their FLSA regulations, OPM proposes to revise 5 
CFR 551.203 to include the updated salary level (annual rate of basic 
pay of $47,476). In addition, OPM proposes to include a new paragraph 
(c) in section 551.203, providing for future automatic updates to the 
salary level, consistent with the automatic updating mechanism utilized 
in DOL's FLSA regulations. These updates are being proposed to ensure 
that the FLSA's intended overtime protections are fully implemented.

Regulatory Flexibility Act

    The Regulatory Flexibility Act of 1980 (Pub. L. 96-354) (RFA) 
establishes ``as a principle of regulatory issuance that agencies shall 
endeavor, consistent with the objectives of the rule and of applicable 
statutes, to fit regulatory and informational requirements to the scale 
of the businesses, organizations, and

[[Page 83171]]

governmental jurisdictions subject to regulation. To achieve this 
principle, agencies are required to solicit and consider flexible 
regulatory proposals and to explain the rationale for their actions to 
assure that such proposals are given serious consideration.''
    The RFA covers a wide range of small entities, including small 
businesses, not-for-profit organizations, and small governmental 
jurisdictions. Agencies must perform a review to determine whether a 
rule will have a significant economic impact on a substantial number of 
small entities. If the agency determines that it will, the agency must 
prepare a regulatory flexibility analysis as described in the RFA. 
However, if an agency determines that a rule is not expected to have a 
significant economic impact on a substantial number of small entities, 
section 605(b) of the RFA provides that the head of the agency may so 
certify and a regulatory flexibility analysis is not required. The 
certification must include a statement providing the factual basis for 
this determination, and the reasoning should be clear. These 
regulations will not have a significant economic impact on a 
substantial number of small entities because they would apply only to 
Federal agencies and employees.

Unfunded Mandates Reform Act of 1995

    This rule will not result in the expenditure by State, local, and 
tribal governments, in the aggregate, or by the private sector, of $100 
million or more in any one year, and it will not significantly or 
uniquely affect small governments. Therefore, no actions were deemed 
necessary under the provisions of the Unfunded Mandates Reform Act of 
1995.

Executive Orders 12866 and 13563--Regulatory Planning and Review

    OPM has determined that this rule is not a ``significant regulatory 
action'' under section 3(f) of Executive Order 12866, ``Regulatory 
Planning and Review''. Nevertheless, the Office certifies that this 
regulation has been drafted in accordance with the principles of 
Executive Order 12866, section 1(b), and Executive Order 13563, 
``Improving Regulation and Regulatory Review.'' Executive Orders 12866 
and 13563 direct agencies to assess all costs and benefits of available 
regulatory alternatives and, if regulation is necessary, to select 
regulatory approaches that maximize net benefits, including 
consideration of potential economic, environmental, public health, and 
safety effects, distributive impacts, and equity. The benefits of this 
proposed rule include simplification of the identification of nonexempt 
employees, inclusion of a mechanism to prevent the rule from becoming 
outdated, and harmonization with Department of Labor FLSA regulations. 
Additionally, the proposed rule provides equity in the treatment of 
Federal and private sector FLSA minimum wage and overtime pay 
treatment. The Office does not foresee any burdens to the public.

Executive Order 13132--Federalism

    This rule will not have substantial direct effects on the States, 
on the relationship between the national government and the States, or 
on the distribution of power and responsibilities among the various 
levels of government. Therefore, in accordance with section 6 of 
Executive Order 13132, this rule does not have sufficient federalism 
implications to warrant the preparation of a federalism summary impact 
statement.

Executive Order 12988--Civil Justice Reform

    This rule meets the applicable standards set forth in sections 3(a) 
and 3(b)(2) of Executive Order 12988.

Paperwork Reduction Act

    The provisions of the Paperwork Reduction Act of 1995, Public Law 
104-13, 44 U.S.C. chapter 35, and its implementing regulations, 5 CFR 
part 1320, do not apply to this proposed rule because there are no new 
or revised recordkeeping or reporting requirements.

List of Subjects in 5 CFR Part 551

    Government employees, and wages.

U.S. Office of Personnel Management.
Beth F. Cobert,
Acting Director.

    Accordingly, OPM proposes to amend title 5, Code of Federal 
Regulations, part 551, as follows:

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

0
1. The authority citation for part 551 continues to read as follows:

    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. 204(f)).

0
2. Revise Sec.  551.203 to read as follows:


Sec.  551.203  Salary-based nonexemption.

    (a) An employee, including a supervisory employee, whose annual 
rate of basic pay is less than $47,476 is nonexempt, unless:
    (1) The employee is subject to Sec.  551.211 (Effect of performing 
different work or duties for a temporary period of time on FLSA 
exemption status); or
    (2) The employee is subject to Sec.  551.212 (Foreign exemption 
criteria); or
    (3) The employee is a professional engaged in the practice of law 
or medicine as prescribed in paragraphs (c) and (d) of Sec.  551.208.
    (b) For the purpose of this section, ``rate of basic pay'' means 
the rate of pay fixed by law or administrative action for the position 
held by an employee, including any applicable locality payment under 5 
CFR part 531, subpart F, special rate supplement under 5 CFR part 530, 
subpart C, or similar payment or supplement under other legal 
authority, before any deductions and exclusive of additional pay of any 
other kind, such as premium payments, differentials, and allowances.
    (c) Beginning on January 1, 2020, and every three years thereafter, 
the salary-based nonexemption level will be updated to equal the 
annualized earnings amount of the 40th percentile of weekly earnings of 
full-time non-hourly workers in the lowest-wage Census Region in the 
second quarter of the year preceding the update as published by the 
Bureau of Labor Statistics.

[FR Doc. 2016-27887 Filed 11-18-16; 8:45 am]
 BILLING CODE 6325-39-P