State of Wisconsin Will Not Follow New Federal “White Collar” Rules Issued by the Department of Labor

August 10, 2004

In late April of 2004, the U.S. Department of Labor (DOL) issued final revisions to its new regulations pertaining to the “white collar” overtime pay exemptions under the Fair Labor Standard Act (FLSA). The white collar exemptions apply to executive, administrative, professional, computer and outside sales employees. The new regulations redefine the criteria used to determine whether an employee qualifies as exempt from the overtime pay requirements in these categories. The new regulations are to take effect August 23, 2004.
The State of Wisconsin, Department of Workforce Development (DWD), has had in place rules addressing the white collar exemptions for decades. The Wisconsin rules are based upon the current federal regulations. Wisconsin’s rules are set forth in Administrative Rule, DWD 274. Under Wisconsin’s rules, private sector employees must meet certain criteria to be exempt as white collar employees. The criteria are based upon the current federal regulations. For public sector employees, Wisconsin’s rules simply state that the federal regulations will be followed.
A representative of the Wage and Hour Division has advised us that the DWD will not be adopting the new federal regulations addressing the white collar exemptions when they become effective on August 23. For private sector employees, this means that the criteria currently applicable in Wisconsin, which are based upon the existing federal regulations, will still be in effect after August 23. For public sector employees, the DWD’s position is that the rule which states that the federal regulations will apply, refers to the current federal regulations that existed at the time that the rule was originally adopted. Therefore, for all Wisconsin employees, the DWD will continue to apply the current federal regulations for determining the white collar exemptions notwithstanding the change in the federal regulations. However, we have also been informed that the terms of the new federal regulations will be applied by the DWD only if they are more restrictive than that of Wisconsin’s. The new federal regulations have very few criteria that are more restrictive than Wisconsin’s. The new federal regulations generally liberalize the white collar criteria to make them applicable to more employees.
Finally, we were advised that the DWD will be issuing a public statement on this issue and that the DWD may commence the process for changing its white collar rules in January of 2005. That process could take some time.
If you have questions regarding the above, please contact any of the attorneys in the Employment, Benefits & Labor Relations Practice Group of Ruder Ware.

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