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August 2, 2005
Dear Name* ,
This is in response to your letter concerning the recent updates to 29 C.F.R. 541 that went into effect on August 23, 2004. You presented three questions regarding whether the updates to the texts of sections 541.102, 541.106, and 541.703, copies enclosed, are substantive changes or merely clarifications of law under the previous regulations in effect prior to August 23, 2004. You inquired because the California Wage Orders interpret the Fair Labor Standards Act (FLSA) exemptions as they were interpreted as of October 1, 2000, the date that the California Wage Orders were promulgated. You have asked us to confirm the
following three statements.
Statement 1 (from page 3 of your letter) -“The addition of the
two items (‘planning and controlling the budget’ and ‘monitoring or
implementing legal compliance measures’) [to section 541.102] is a mere
clarification that is consistent with the DOL’s prior regulations and cases
that had construed those regulations.”
“[P]lanning and controlling the budget” and “monitoring or implementing legal compliance measures” were
added to the list of examples of management activities contained in section
541.102 of the revised final regulations. The list of management activities
remained almost the same for the recent revisions except for the
above-mentioned additions. The preamble to the revised final regulations
explains that several public comments recommended that the list of management
activities be expanded to include activities that are not supervisory, but
still within the purview of management duties. Therefore, the Department of
Labor (Department) added these two activities as examples to reflect its
agreement that “management activities are not limited to supervisory
activities.” 69 Fed. Reg. 22133, April 23, 2004,
copy enclosed. It is the Department’s position that the executive exemption
and the definition of management were not previously limited to “supervisory”
functions before the update, but rather included all activities that could be
properly described as management, including budgeting and implementing legal
compliance measures. Thus the language in section 541.102 regarding “planning
and controlling the budget” and “monitoring or implementing legal compliance
measures” was a clarification and not a change from the old regulations.
Statement 2 (from page 3 of your letter)- “The inclusion of
the ‘concurrent duties’ language in section 541.106 clarified the prior
regulations regarding this issue and reaffirmed that time spent simultaneously
performing exempt and nonexempt work qualifies as exempt time under the federal
regulations that were in effect on October 1, 2000.”
New section 541.106 on
concurrent duties is a clarification of the Department’s previous position that
exempt executive employees can concurrently spend time performing exempt duties
at the same time they are performing nonexempt duties, and that the performance
of such nonexempt work does not preclude the exemption if an employee’s primary
duty is management. Section 541.106 incorporated examples originally proposed
in both sections 541.106 (“Working supervisors”) and 541.107 (“Supervisors in
retail establishments”) and combined them into one section entitled “concurrent
duties.” As the Department explains in the preamble to the regulations,
section 541.106 codifies existing case law interpreting the prior regulations.
“The Department believes that the proposed and final regulations are consistent
with current case law [i.e., under the previously-existing regulations], which
makes clear that the performance of both exempt and nonexempt duties
concurrently or simultaneously does not preclude an employee from qualifying
for the exemption. Numerous courts have determined that an employee can have a
primary duty of management while concurrently performing nonexempt duties.” 69
Fed. Reg. 22136-7, April 23, 2004, copy enclosed (case citations omitted). Therefore,
the language of 29 C.F.R. 541.106 regarding concurrent duties was a clarification
and not a change in the Department’s position. In fact, some of the examples
were derived from the latter portion of former section 541.103 (“Primary
duty”). See also, Revised Final section 541.700(c).
Statement 3 (from page 3 of your letter)- “The ‘directly and
closely related’ standards that appeared in section 541.108 of the prior
regulations have been republished in section 541.703 of the new regulations
without altering the prior regulatory standard, which states that time spent on
any work that is ‘directly and closely related to’ the performance of exempt
work is considered time spent on exempt work.”
The “directly and closely related” standard in section 541.703 of the new regulations was previously
found in former section 541.108. As explained in the preamble at 69 Fed. Reg.
22187, copy enclosed, “the phrase ‘directly and closely related’ in final
section 541.703(a) is taken from the current sections 541.108 and 541.202.…The
Department did not intend any substantive change to the meaning of the phrase
‘directly and closely related’ and intends that the term be interpreted in
accordance with the long-standing meaning under the current [i.e.,
previously-existing] rule.” Therefore, the new standard has not changed from
the meaning under the prior rule.
This opinion is based exclusively on the facts and circumstances described in your request and is
given on the basis of your representation, express or implied, that you have
provided a full and fair description of all the facts and circumstances that
would be pertinent to our consideration of the question presented. Existence
of any other factual or historical background not contained in your request
might require a different conclusion than the one expressed herein. You have
represented that this opinion is not sought by a party to pending private
litigation concerning the issue addressed herein. You have also represented
that this opinion is not sought in connection with an investigation or
litigation between a client or firm and the Wage and Hour Division or the
Department of Labor. This opinion letter is issued as an official ruling of the
Wage and Hour Division for purposes of the Portal-to-Portal Act, 29 U.S.C. §
259. See 29 C.F.R. §§ 790.17(d), 790.19; Hultgren v. County of Lancaster, Nebraska, 913 F.2d 498, 507 (8th Cir. 1990).
We trust that the above is responsive to your inquiry.
Sincerely,
Alfred B. Robinson, Jr.
Deputy Administrator
Enclosures: 29 C.F.R. 541.102, .106., .703
68 Fed. Reg. 22133-37, 22187-88
* Note: The actual name(s) was removed to preserve privacy in accordance with 5 U.S.C. 552 (b)(7).
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