Tagged: Administrative Exemption

DOL Issues Final Rule Increasing Salary Thresholds for Exempt Employees Under FLSA

On April 23, 2024, the United States Department of Labor (DOL) released a final rule that increased the salary thresholds for the executive, administrative, professional, and highly compensated employees exemptions under the Fair Labor Standards Act (FLSA). The final rule, “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees,” went into effect on July 1, 2024. The FLSA requires covered employers to pay employees a minimum wage and, for employees who work more than 40 hours in a week, overtime pay (at 1.5 times an employee’s regular rate).  However, the minimum wage and overtime requirements do not apply to employees who meet the requirements of the executive, administrative, or professional exemptions. One of the requirements of these exemptions is a minimum weekly salary. The final rule raised the minimum weekly salary to qualify for the exemption from $684 per week ($35,568 per year) to $844 per week ($43,888 per year) and, effective January 1, 2025, to $1,128 per week ($58,656 per year). Additionally, the final rule raised the annual salary threshold for the exemption for highly compensated employees from $107,432 per year to $132,964 per year and, effective January 1, 2025, to $151,164 per year.  The highly compensated employee exemption applies to certain highly compensated employees and combines an annual...

Minimum Wage Increased in New York and New Jersey; Salary Basis Requirements Increased in New York

All employers operating in either New York or New Jersey should take note that — effective immediately — the minimum hourly wage for non-exempt employees has increased. In New York, the minimum wage is now $8.00 per hour. In New Jersey, the minimum wage is now $8.25 per hour. In these states, employers must pay at least the new minimum hourly wage to non-exempt employees for each hour worked. Other than raising the hourly minimum wage, the changes do not alter the way that overtime is calculated.

Seventh Circuit Applies FLSA’s Administrative Exemption to Pharmaceutical Sales Representatives

The United States Court of Appeals for the Seventh Circuit has held that two pharmaceutical companies did not violate the Fair Labor Standards Act (FLSA) by failing to pay overtime to their sales representatives, concluding that the FLSA’s “administrative exemption” from the statute’s overtime requirements was applicable to these employees. Although the Court’s opinion focused on the job duties of pharmaceutical sales representatives (PSRs), the Court’s analysis of the general scope of the administrative exemption may prove useful to employers in other industries.

NJ Department of Labor Re-Adopts Inside Sales Exemption

Effective February 21, 2012, the inside salesperson exemption was re-adopted by the New Jersey Department of Labor and Workforce Development (NJDOL) as part of the Administrative Exemption contained in New Jersey’s wage and hour laws. When the NJDOL adopted the so-called “white collar” exemptions for Administrative, Executive, Professional, Outside Sales, and Computer employees as contained in the Federal Fair Labor Standards Act (“FLSA”) in September 2011, it eliminated this long-recognized exemption. As we previously reported, the NJDOL later admitted that the elimination of this exemption was inadvertent and proposed regulations to reinstate it.

Recent Case Law Focuses Heavily on “Outside Salesman” and “Administrative” Exemptions to the Fair Labor Standards Act

The issue of whether pharmaceutical company sales representatives who promote their employer’s products to doctors and hospitals are exempt from the overtime requirements of the Fair Labor Standards Act (“FLSA”) has spurred litigation across the country. Courts have considered whether these employees are entitled to overtime compensation or are exempt under the “outside salesman” or “administrative” exemptions recognized by the FLSA. The results have been inconsistent, leaving employers with many questions. For example, the Second Circuit (covering the states of New York, Connecticut, Vermont) has held that the pharmaceutical company sales representatives at issue did not qualify for either the “outside salesman” or “administrative” exemptions and were entitled to overtime compensation. Conversely, the Ninth Circuit (covering California, Alaska, Arizona, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington) recently held the pharmaceutical sales representatives were exempt from the FLSA’s overtime requirements under the “outside salesman” exemption, noting that the term “sale” must be ready broadly to include employees who “in some sense” sell. The Ninth Circuit ruled that the Department of Labor regulations, which supported a finding that the “outside salesman” exemption applied to the pharmaceutical representatives, were entitled to substantial deference and disagreed with the Second Circuit’s conclusion to the contrary. Most recently, the Third Circuit (covering New Jersey, Pennsylvania and Delaware) held that a pharmaceutical company’s sales representatives qualified for the “administrative” exemption in large part because they “executed nearly all of [their] duties without direct oversight.” Interestingly, despite the different results, the sales representatives at issue in the cases decided by the Second and Third Circuits performed similar functions.

NJ Department of Labor Proposes Re-Adoption of Inside Sales Exemption

As we previously reported on September 6, 2011, the New Jersey Department of Labor and Workforce Development (NJDOL) adopted the so-called “white collar” exemptions for Administrative, Executive, Professional, Outside Sales, and Computer employees as contained in the Federal Fair Labor Standards Act (“FLSA”). While the changes to the New Jersey law were designed to provide clarity to the state’s wage and hour landscape and consistency between the federal and New Jersey laws, they inadvertently eliminated a long-recognized exemption in New Jersey for commissioned inside salespersons. Because the New Jersey and federal exemptions for such sales personnel are different and were housed in different sections of the law — New Jersey’s treatment of inside salespersons was part of the “Administrative” exemption, whereas the FLSA addresses the issue in an entirely separate section — New Jersey’s replacement of its “Administrative” exemption with that found in the FLSA resulted in the deletion of the inside salesperson exemption. Acknowledging that this was an “unintended consequence,” the DOL has issued proposed regulations to reinstate the inside sales exemption to New Jersey law. In the November 21, 2011 New Jersey Register, the DOL proposed that the following language be added to N.J.A.C. 12:56-7.2 as section (c): “‘Administrative'” shall also include an employee whose primary duty consists of sales activity and who receives at least 50 percent of his or her total compensation from commissions and a total compensation of not less than $400.00 per week.” A public hearing on the re-adoption of this exemption is scheduled for December 13, 2011 and written comments must be submitted by January 20, 2012.

New Jersey Adopts Federal White-Collar Overtime Exemptions

The New Jersey Department of Labor and Workforce Development (“NJDOL”) has adopted the so-called “white collar” exemptions for Administrative, Executive, Professional, Outside Sales, and Computer employees as contained within the Federal Fair Labor Standards Act (“FLSA”). The adoption of these changes – which are considered by many to be long overdue – was announced in the New Jersey Register on September 6, 2011. The new regulations became effective immediately upon publication. As explained below, these changes will benefit employers and provide clarity and consistency to the wage and hour landscape in New Jersey.