Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees; Announcement of Time-Limited Non-Enforcement Policy for Providers of Medicaid-Funded Services for Individuals With Intellectual or Developmental Disabilities in Residential Homes and Facilities With 15 or Fewer Beds, 32389-32391 [2016-11753]

Download as PDF Vol. 81 Monday, No. 99 May 23, 2016 Part II Department of Labor mstockstill on DSK3G9T082PROD with RULES2 Wage and Hour Division 29 CFR Part 541 Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees; Announcement of Time-Limited Non-Enforcement Policy for Providers of Medicaid-Funded Services for Individuals With Intellectual or Developmental Disabilities in Residential Homes and Facilities With 15 or Fewer Beds and Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees; Final Rules VerDate Sep<11>2014 23:22 May 20, 2016 Jkt 238001 PO 00000 Frm 00001 Fmt 4717 Sfmt 4717 E:\FR\FM\23MYR2.SGM 23MYR2 32390 Federal Register / Vol. 81, No. 99 / Monday, May 23, 2016 / Rules and Regulations toll-free 1–877–889–5627 to obtain information or request materials in alternative formats. SUPPLEMENTARY INFORMATION: DEPARTMENT OF LABOR Wage and Hour Division 29 CFR Part 541 Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees; Announcement of Time-Limited NonEnforcement Policy for Providers of Medicaid-Funded Services for Individuals With Intellectual or Developmental Disabilities in Residential Homes and Facilities With 15 or Fewer Beds Wage and Hour Division, Department of Labor. ACTION: Announcement of policy. AGENCY: The Department of Labor’s (Department or DOL) Final Rule revising the regulations for implementing the exemption from minimum wage and overtime pay for executive, administrative, professional, outside sales, and computer employees, published in the Rules section of today’s Federal Register, will become effective December 1, 2016. This document announces a time-limited nonenforcement policy for providers of Medicaid-funded services for individuals with intellectual or developmental disabilities in residential homes and facilities with 15 or fewer beds. From December 1, 2016 to March 17, 2019, the Department will not enforce the updated salary threshold of $913 per week for the subset of employers covered by this nonenforcement policy. Throughout the duration of this non-enforcement policy, the Department will engage in outreach and technical assistance efforts, including to providers of services in settings covered by this policy. This non-enforcement policy does not apply to providers of Medicaid- funded services for individuals with intellectual or developmental disabilities in residential care facilities with 16 or more beds. DATES: May 23, 2016. FOR FURTHER INFORMATION CONTACT: Director, Division of Regulations, Legislation and Interpretation, U.S. Department of Labor, Wage and Hour Division, Room S–3502, 200 Constitution Avenue NW., Washington, DC 20210; telephone: (202) 693–0406 (this is not a toll-free number). Copies of this docuemnt may be obtained in alternative formats (Large Print, Braille, Audio Tape or Disc), upon request, by calling (202) 693–0675 (this is not a tollfree number). TTY/TDD callers may dial mstockstill on DSK3G9T082PROD with RULES2 SUMMARY: VerDate Sep<11>2014 23:22 May 20, 2016 Jkt 238001 states’ provision of Medicaid home and community-based services (‘‘HCBS’’). See 79 FR 2948 (Jan. 16, 2014). Among its provisions, this HHS rule requires that all settings for HCBS be integrated I. Non-Enforcement Policy in and support the beneficiary’s full Today, the Department’s Wage and access to the greater community and Hour Division issued Defining and requires States and the provider Delimiting the Exemptions for infrastructure on which these services Executive, Administrative, Professional, rely to implement necessary Outside Sales and Computer Employees; enhancements to their Medicaid home Final Rule (‘‘Overtime Final Rule’’ or and community based systems to ‘‘Final Rule’’). This Final Rule revised comply with these new requirements. the regulations under the FLSA States have until March 17, 2019 to implementing the exemption from implement approved transition plans minimum wage and overtime pay for under which providers must be in full executive, administrative, professional, compliance with the rule, and HHS outside sales, and computer employees. expressed concern that the timing of the These exemptions are frequently Overtime Final Rule could undermine referred to as the ‘‘white collar’’ compliance efforts of HCBS providers. The Department is committed to exemptions and are contained in 29 CFR working with HHS to ensure that part 541. To be considered exempt implementation of the Overtime Final under Part 541, employees must meet Rule does not compromise its agency certain minimum requirements related priorities or regulations. Based on these to their primary job duties and, in most instances, must be paid on a salary basis discussions with HHS, the Department has determined that DOL enforcement at not less than the minimum amounts of the new salary threshold in the specified in the regulations. Among Overtime Final Rule in the period other changes, the Final Rule updated immediately following the December 1, the salary level above which certain 2016 effective date could have an white collar workers may be exempt impact on the use of these types of from overtime pay requirements from the previous level of $455 per week (the community-based facilities. Providing equivalent of $23,660 per year) to a new this subset of providers of Medicaidfunded services additional time to level of $913 per week (the equivalent of $47,476 per year). The Department set transition and seek technical assistance an effective date of December 1, 2016 for from the Department without being subject to DOL enforcement of the new the Final Rule, explaining that this will salary threshold may mitigate some provide employers sufficient time— potential budgeting and implementation more than 180 days—to make any concerns. changes that are necessary to comply Providers in this subset of Medicaidwith the final regulations. funded residential homes and facilities The Department and the U.S. face a unique combination of challenges Department of Health and Human in balancing the goal of shifting care of Services (‘‘HHS’’) have engaged in individuals with intellectual or appropriate interagency discussions developmental disabilities to small regarding the interaction between the community-based settings and meeting Overtime Final Rule and HHS’ policy the timeline for implementing the HHS and regulatory priorities. During these rule impacting HCBS providers, with communications HHS expressed the fact that these facilities are small, particular concerns about the Final dependent on Medicaid funding in state Rule’s impact on residential homes and budgets, and serve vulnerable facilities for individuals with populations. The non-enforcement intellectual or developmental policy will allow the Department to disabilities with 15 or fewer beds. HHS devote its time and resources to also voiced concern that the December providing assistance to these providers 1, 2016 effective date could affect the of services at small community-based federal government’s efforts to facilities, and will allow these encourage the use of such communityemployers time, if needed, to work with based providers, and stated that their state legislatures and HHS on providing this subset of Medicaidimplementation of the Overtime Final funded providers additional time to Rule. implement these requirements could Accordingly, after carefully help mitigate potential budgeting and considering appropriate interagency implementation concerns for these discussions with HHS, the Department providers. has decided to enact a time-limited nonHHS conveyed that the Final Rule enforcement policy for providers of coincides with implementation of Medicaid-funded services for certain provisions of its rule affecting PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 E:\FR\FM\23MYR2.SGM 23MYR2 Federal Register / Vol. 81, No. 99 / Monday, May 23, 2016 / Rules and Regulations individuals with intellectual or developmental disabilities in residential homes and facilities with 15 or fewer beds. This non-enforcement period will last from December 1, 2016 (the effective date of the Overtime Final Rule) until March 17, 2019. During this period of non-enforcement, the Department will not enforce the updated salary threshold of $913 per week for the subset of employers covered by this non-enforcement policy. However, the Department will continue to enforce all other provisions of the Overtime Final Rule as to this subset of employers, including in instances involving employees who meet the salary basis and duties tests but who earn less than the previous salary threshold of $455 per week. The nonenforcement policy does not apply to providers of Medicaid- funded services for individuals with intellectual or developmental disabilities in residential care facilities with 16 or more beds. Regulatory Requirements This document is non-binding guidance articulating considerations relevant to the Department’s exercise of its enforcement authority under the FLSA. It is therefore exempt from the notice-and-comment rulemaking requirements under the Administrative Procedure Act pursuant to 5 U.S.C. 553(b). Because no notice of proposed rulemaking is required, the Regulatory Flexibility Act does not require an initial or final regulatory flexibility analysis. 5 U.S.C. 603(a), 604(a). The Department has determined that this guidance does not impose any new or revise any existing recordkeeping, reporting, or disclosure requirements on covered entities or members of the public that would be collections of information requiring OMB approval under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. Authority: 29 U.S.C. 216(c); Secretary’s Order No. 01–2014. Mary Ziegler, Assistant Administrator for Policy, Wage and Hour Division. [FR Doc. 2016–11753 Filed 5–18–16; 8:45 am] mstockstill on DSK3G9T082PROD with RULES2 BILLING CODE 4510–27–P VerDate Sep<11>2014 23:22 May 20, 2016 Jkt 238001 DEPARTMENT OF LABOR Wage and Hour Division 29 CFR Part 541 RIN 1235–AA11 Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees Wage and Hour Division, Department of Labor. ACTION: Final rule. AGENCY: The Fair Labor Standards Act (FLSA or Act) guarantees a minimum wage for all hours worked during the workweek and overtime premium pay of not less than one and one-half times the employee’s regular rate of pay for hours worked over 40 in a workweek. While these protections extend to most workers, the FLSA does provide a number of exemptions. In this Final Rule, the Department of Labor (Department) revises final regulations under the FLSA implementing the exemption from minimum wage and overtime pay for executive, administrative, professional, outside sales, and computer employees. These exemptions are frequently referred to as the ‘‘EAP’’ or ‘‘white collar’’ exemptions. To be considered exempt under part 541, employees must meet certain minimum requirements related to their primary job duties and, in most instances, must be paid on a salary basis at not less than the minimum amounts specified in the regulations. In this Final Rule the Department updates the standard salary level and total annual compensation requirements to more effectively distinguish between overtime-eligible white collar employees and those who may be exempt, thereby making the exemption easier for employers and employees to understand and ensuring that the FLSA’s intended overtime protections are fully implemented. The Department sets the standard salary level for exempt EAP employees at the 40th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region. The Department also permits employers to satisfy up to 10 percent of the standard salary requirement with nondiscretionary bonuses, incentive payments, and commissions, provided these forms of compensation are paid at least quarterly. The Department sets the total annual compensation requirement for an exempt Highly Compensated Employee (HCE) equal to the annualized weekly earnings of the 90th percentile of full-time salaried workers nationally. SUMMARY: PO 00000 Frm 00003 Fmt 4701 Sfmt 4700 32391 The Department also adds a provision to the regulations that automatically updates the standard salary level and HCE compensation requirements every three years by maintaining the earnings percentiles set in this Final Rule to prevent these thresholds from becoming outdated. Finally, the Department has not made any changes in this Final Rule to the duties tests for the EAP exemption. This Final Rule is effective on December 1, 2016. FOR FURTHER INFORMATION CONTACT: Director, Division of Regulations, Legislation and Interpretation, U.S. Department of Labor, Wage and Hour Division, Room S–3502, 200 Constitution Avenue NW., Washington, DC 20210; telephone: (202) 693–0406 (this is not a toll-free number). Copies of this Final Rule may be obtained in alternative formats (Large Print, Braille, Audio Tape or Disc), upon request, by calling (202) 693–0675 (this is not a tollfree number). TTY/TDD callers may dial toll-free 1–877–889–5627 to obtain information or request materials in alternative formats. Questions of interpretation and/or enforcement of the agency’s regulations may be directed to the nearest Wage and Hour Division (WHD) district office. Locate the nearest office by calling the WHD’s toll-free help line at (866) 4US– WAGE ((866) 487–9243) between 8 a.m. and 5 p.m. in your local time zone, or log onto WHD’s Web site at http:// www.dol.gov/whd/america2.htm for a nationwide listing of WHD district and area offices. SUPPLEMENTARY INFORMATION: DATES: Table of Contents I. Executive Summary II. Background A. What the FLSA Provides B. Legislative History C. Regulatory History D. Overview of Existing Regulatory Requirements E. Presidential Memorandum F. The Department’s Proposal G. Effective Date III. Need for Rulemaking IV. Final Regulatory Revisions A. Standard Salary Level B. Special Salary Tests C. Inclusion of Nondiscretionary Bonuses, Incentive Payments, and Commissions in the Salary Level Requirement D. Highly Compensated Employees E. Automatic Updates F. Duties Requirements for Exemption V. Paperwork Reduction Act VI. Analysis Conducted in Accordance With Executive Order 12866, Regulatory Planning and Review, and Executive Order 13563, Improving Regulation and Regulatory Review E:\FR\FM\23MYR2.SGM 23MYR2

Agencies

[Federal Register Volume 81, Number 99 (Monday, May 23, 2016)]
[Rules and Regulations]
[Pages 32389-32391]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-11753]



[[Page 32389]]

Vol. 81

Monday,

No. 99

May 23, 2016

Part II





Department of Labor





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Wage and Hour Division





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29 CFR Part 541





Defining and Delimiting the Exemptions for Executive, Administrative, 
Professional, Outside Sales and Computer Employees; Announcement of 
Time-Limited Non-Enforcement Policy for Providers of Medicaid-Funded 
Services for Individuals With Intellectual or Developmental 
Disabilities in Residential Homes and Facilities With 15 or Fewer Beds 
and Defining and Delimiting the Exemptions for Executive, 
Administrative, Professional, Outside Sales and Computer Employees; 
Final Rules

Federal Register / Vol. 81 , No. 99 / Monday, May 23, 2016 / Rules 
and Regulations

[[Page 32390]]


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DEPARTMENT OF LABOR

Wage and Hour Division

29 CFR Part 541


Defining and Delimiting the Exemptions for Executive, 
Administrative, Professional, Outside Sales and Computer Employees; 
Announcement of Time-Limited Non-Enforcement Policy for Providers of 
Medicaid-Funded Services for Individuals With Intellectual or 
Developmental Disabilities in Residential Homes and Facilities With 15 
or Fewer Beds

AGENCY: Wage and Hour Division, Department of Labor.

ACTION: Announcement of policy.

-----------------------------------------------------------------------

SUMMARY: The Department of Labor's (Department or DOL) Final Rule 
revising the regulations for implementing the exemption from minimum 
wage and overtime pay for executive, administrative, professional, 
outside sales, and computer employees, published in the Rules section 
of today's Federal Register, will become effective December 1, 2016. 
This document announces a time-limited non-enforcement policy for 
providers of Medicaid-funded services for individuals with intellectual 
or developmental disabilities in residential homes and facilities with 
15 or fewer beds. From December 1, 2016 to March 17, 2019, the 
Department will not enforce the updated salary threshold of $913 per 
week for the subset of employers covered by this non-enforcement 
policy. Throughout the duration of this non-enforcement policy, the 
Department will engage in outreach and technical assistance efforts, 
including to providers of services in settings covered by this policy. 
This non-enforcement policy does not apply to providers of Medicaid- 
funded services for individuals with intellectual or developmental 
disabilities in residential care facilities with 16 or more beds.

DATES: May 23, 2016.

FOR FURTHER INFORMATION CONTACT: Director, Division of Regulations, 
Legislation and Interpretation, U.S. Department of Labor, Wage and Hour 
Division, Room S-3502, 200 Constitution Avenue NW., Washington, DC 
20210; telephone: (202) 693-0406 (this is not a toll-free number). 
Copies of this docuemnt may be obtained in alternative formats (Large 
Print, Braille, Audio Tape or Disc), upon request, by calling (202) 
693-0675 (this is not a toll-free number). TTY/TDD callers may dial 
toll-free 1-877-889-5627 to obtain information or request materials in 
alternative formats.

SUPPLEMENTARY INFORMATION: 

I. Non-Enforcement Policy

    Today, the Department's Wage and Hour Division issued Defining and 
Delimiting the Exemptions for Executive, Administrative, Professional, 
Outside Sales and Computer Employees; Final Rule (``Overtime Final 
Rule'' or ``Final Rule''). This Final Rule revised the regulations 
under the FLSA implementing the exemption from minimum wage and 
overtime pay for executive, administrative, professional, outside 
sales, and computer employees. These exemptions are frequently referred 
to as the ``white collar'' exemptions and are contained in 29 CFR part 
541. To be considered exempt under Part 541, employees must meet 
certain minimum requirements related to their primary job duties and, 
in most instances, must be paid on a salary basis at not less than the 
minimum amounts specified in the regulations. Among other changes, the 
Final Rule updated the salary level above which certain white collar 
workers may be exempt from overtime pay requirements from the previous 
level of $455 per week (the equivalent of $23,660 per year) to a new 
level of $913 per week (the equivalent of $47,476 per year). The 
Department set an effective date of December 1, 2016 for the Final 
Rule, explaining that this will provide employers sufficient time--more 
than 180 days--to make any changes that are necessary to comply with 
the final regulations.
    The Department and the U.S. Department of Health and Human Services 
(``HHS'') have engaged in appropriate interagency discussions regarding 
the interaction between the Overtime Final Rule and HHS' policy and 
regulatory priorities. During these communications HHS expressed 
particular concerns about the Final Rule's impact on residential homes 
and facilities for individuals with intellectual or developmental 
disabilities with 15 or fewer beds. HHS also voiced concern that the 
December 1, 2016 effective date could affect the federal government's 
efforts to encourage the use of such community-based providers, and 
stated that providing this subset of Medicaid-funded providers 
additional time to implement these requirements could help mitigate 
potential budgeting and implementation concerns for these providers.
    HHS conveyed that the Final Rule coincides with implementation of 
certain provisions of its rule affecting states' provision of Medicaid 
home and community-based services (``HCBS''). See 79 FR 2948 (Jan. 16, 
2014). Among its provisions, this HHS rule requires that all settings 
for HCBS be integrated in and support the beneficiary's full access to 
the greater community and requires States and the provider 
infrastructure on which these services rely to implement necessary 
enhancements to their Medicaid home and community based systems to 
comply with these new requirements. States have until March 17, 2019 to 
implement approved transition plans under which providers must be in 
full compliance with the rule, and HHS expressed concern that the 
timing of the Overtime Final Rule could undermine compliance efforts of 
HCBS providers.
    The Department is committed to working with HHS to ensure that 
implementation of the Overtime Final Rule does not compromise its 
agency priorities or regulations. Based on these discussions with HHS, 
the Department has determined that DOL enforcement of the new salary 
threshold in the Overtime Final Rule in the period immediately 
following the December 1, 2016 effective date could have an impact on 
the use of these types of community-based facilities. Providing this 
subset of providers of Medicaid-funded services additional time to 
transition and seek technical assistance from the Department without 
being subject to DOL enforcement of the new salary threshold may 
mitigate some potential budgeting and implementation concerns.
    Providers in this subset of Medicaid-funded residential homes and 
facilities face a unique combination of challenges in balancing the 
goal of shifting care of individuals with intellectual or developmental 
disabilities to small community-based settings and meeting the timeline 
for implementing the HHS rule impacting HCBS providers, with the fact 
that these facilities are small, dependent on Medicaid funding in state 
budgets, and serve vulnerable populations. The non-enforcement policy 
will allow the Department to devote its time and resources to providing 
assistance to these providers of services at small community-based 
facilities, and will allow these employers time, if needed, to work 
with their state legislatures and HHS on implementation of the Overtime 
Final Rule.
    Accordingly, after carefully considering appropriate interagency 
discussions with HHS, the Department has decided to enact a time-
limited non-enforcement policy for providers of Medicaid-funded 
services for

[[Page 32391]]

individuals with intellectual or developmental disabilities in 
residential homes and facilities with 15 or fewer beds. This non-
enforcement period will last from December 1, 2016 (the effective date 
of the Overtime Final Rule) until March 17, 2019. During this period of 
non-enforcement, the Department will not enforce the updated salary 
threshold of $913 per week for the subset of employers covered by this 
non-enforcement policy. However, the Department will continue to 
enforce all other provisions of the Overtime Final Rule as to this 
subset of employers, including in instances involving employees who 
meet the salary basis and duties tests but who earn less than the 
previous salary threshold of $455 per week. The non-enforcement policy 
does not apply to providers of Medicaid- funded services for 
individuals with intellectual or developmental disabilities in 
residential care facilities with 16 or more beds.

Regulatory Requirements

    This document is non-binding guidance articulating considerations 
relevant to the Department's exercise of its enforcement authority 
under the FLSA. It is therefore exempt from the notice-and-comment 
rulemaking requirements under the Administrative Procedure Act pursuant 
to 5 U.S.C. 553(b).
    Because no notice of proposed rulemaking is required, the 
Regulatory Flexibility Act does not require an initial or final 
regulatory flexibility analysis. 5 U.S.C. 603(a), 604(a). The 
Department has determined that this guidance does not impose any new or 
revise any existing recordkeeping, reporting, or disclosure 
requirements on covered entities or members of the public that would be 
collections of information requiring OMB approval under the Paperwork 
Reduction Act, 44 U.S.C. 3501 et seq.

    Authority: 29 U.S.C. 216(c); Secretary's Order No. 01-2014.

Mary Ziegler,
Assistant Administrator for Policy, Wage and Hour Division.
[FR Doc. 2016-11753 Filed 5-18-16; 8:45 am]
 BILLING CODE 4510-27-P