The U.S. FairPay Overtime Initiative

Abstract

The Fair Labor Standards Act (here in after referred to as the FLSA or Act, 1938) requires that most employees in the U.S. be paid at least the federal minimum wage for all hours worked and receive overtime pay at one and one‐half times the regular rate for all hours worked over 40 hours in a work‐week. Defined within the Act are certain types of employees who are exempt from both minimum wage and overtime pay, i.e., if a worker is employed as a bonafide executive, administrative, professional, outside sales, or computer employee. These exempt categories are cumulatively referred to as the white collar exemption and the workers are called white collar employees. To qualify for such exemptions the job description and/or employment contract must meet certain salary and job duties tests. The past thirty years have seen these tests become outdated resulting in uncertainty and ambiguity in their application. On April 24, 2004 the Wage and Hour Division of the U. S. Department of Labor responded to these decades‐old exemption descriptions with new regulations relating to white collar exemptions of the Act called the FairPay Over time Initiative (here in after referred to asFPOI). The purpose of the new FLSA regulations was to modernize, update, and clarify the criteria for these exemptions and to eliminate legal problems that the prior regulations caused.