	Frequently Asked Questions

This report addresses frequently asked questions related to the overtime provisions in the Fair Labor Standards Act (FLSA) for executive, administrative, and professional employees (the "EAP" or "white collar" exemptions). The FLSA, enacted in 1938, is the main federal law that establishes minimum wage and overtime pay requirements for most, but not all, private and public sector employees. Section 7(a) of the FLSA specifies that unless an employee is specifically exempted in the FLSA, he or she is considered to be a covered "nonexempt" employee and must receive pay at the rate of one-and-a-half times ("time and a half") the employee's regular rate for any hours worked in excess of 40 hours in a workweek. Rather than define the terms executive, administrative, or professional employee, the FLSA authorizes the Secretary of Labor to define and delimit these terms "from time to time" by regulations . Rather, the Secretary of Labor, through issuance of regulations, specifies the duties that EAP employees must perform to be exempt from the overtime pay requirements of the FLSA. Applicability of the EAP Exemptions

			Do the EAP exemptions affect independent contractors? On March 22, 2019, a Notice of Proposed Rulemaking (NPRM) was published in the Federal Register to define and delimit EAP exemptions. The future salary level updates would be based on the same data source (CPS) and methodology of the salary levels established in the 2019 proposed rule:
the standard salary level would be adjusted to the 20 th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census region and/or in the retail sector, the HCE salary level threshold would be adjusted to the 90 th percentile of annual earnings of full-time non-hourly workers nationally, and the quadrennial NPRM would seek comment on whether to update the salary level for the territories established in the 2019 proposed rule. Who would be covered by the changes to the EAP exemptions in the 2019 proposed rule? DOL estimates, with caveats, that approximately 4.9 million workers would be affected by the proposed rule. Specifically, DOL estimates the following:
In the first year under the provisions of the 2019 proposed rule, about 1.3 million EAP employees would become newly entitled to overtime pay due to the increase in the salary threshold: about 1.1 million employees in this group meet the duties test for the EAP exemption but earn between the current standard salary threshold ($455 per week) and the proposed threshold ($679 per week); and an additional 201,000 employees in this group meet the HCE duties test for exemption, but not the standard test, and earn at least the current HCE salary threshold ($100,000 per year) but less than the proposed threshold ($147,414 per year).
The Fair Labor Standards Act (FLSA), enacted in 1938, is the main federal law that establishes general wage and hour standards for most, but not all, private and public sector employees. Among other protections, the FLSA establishes that covered nonexempt employees must be compensated at one-and-a-half times their regular rate of pay for each hour worked over 40 hours in a workweek.
The FLSA also establishes certain exemptions from its general labor market standards. One of the major exemptions to the overtime provisions in the FLSA is for bona fide "executive, administrative, and professional" employees (the "EAP" or "white collar" exemptions). The FLSA grants authority to the Secretary of Labor to define and delimit the EAP exemption "from time to time." To qualify for this exemption from the FLSA's overtime pay requirement, an employee must be salaried (the "salary basis" test); perform specified executive, administrative, or professional duties (the "duties" test); and earn above an established salary level threshold (the "salary level" test).
In March 2019, the Secretary of Labor published a Notice of Proposed Rulemaking (NPRM) to make changes to the EAP exemptions. The 2019 proposed rule would become effective around January 2020. The major changes in the 2019 proposed rule include increasing the standard salary level threshold from the previous level of $455 per week to $679 per week and committing the Department of Labor (DOL) to updating the EAP exemptions every four years through the rulemaking process. The 2019 proposed rule does not change the duties and responsibilities that employees must perform to be exempt. Thus, the 2019 proposed rule would affect EAP employees at salary levels between $455 and $679 per week in 2020. DOL estimates that about 4.9 million workers would be affected in the first year, including about 1.3 million EAP employees who would become newly entitled to overtime pay and an additional 3.6 million workers who would have overtime protection clarified and thereby strengthened.
This report answers frequently asked questions about the overtime provisions of the FLSA, the EAP exemptions, and the 2019 proposed rule that would define and delimit the EAP exemptions.