The US Department of Labor has proposed revisions to regulations defining exemptions from overtime pay requirements for executive, administrative, professional and computer employees. The proposed revisions would increase the minimum salary level required to qualify for an exemption from $455 or $921 per week to $921 per week. Highly compensated employees earning over $122,148 annually would still be exempt if they meet other requirements. Additional compensation such as commissions or bonuses would not disqualify an exemption if the employee is guaranteed at least the minimum salary per week. Public comments on the proposed changes are being accepted through September 4, 2015.

1. HARRISON & HELD, LLP
MEMORANDUM
1
TO:
FROM: Steve Filipowski
DATE: July 8, 2015
SUBJECT: USDOL Proposed Revisions to Regulations Defining and Delimiting the Exemptions
for Executive, Administrative, Professional, Computer and Outside Sales Employees
Background
The United States Department of Labor (“DOL”) has proposed revisions to regulations concerning
exemptions from overtime pay requirements for executive, administrative, professional, computer
and outside sales employees. At present, the proposed changes are limited to the required minimum
compensation which qualifies employees for exemption from overtime pay requirements. None of
the proposed changes affect the so-called Duties Test. However, DOL has invited public comment
concerning whether the Duties Test as it stands is adequate to protect workers’ rights to overtime
pay and, if not, how it ought to be revised. Written comments are requested on or before September
4, 2015. The proposed revisions to the regulations will be the subject of public comment and will
not take effect until sometime in 2016.
As background, historically, each of three tests must be met for exemptions from overtime pay
requirements to apply: 1) an employee must be paid a predetermined and fixed salary which is not
subject to reduction because of variations in the quality or quantity of work performed; 2) the
amount of the salary paid must meet the minimum specified amount (the “Salary Level Test”); and,
3) the employee’s job duties must primarily involve executive, administrative or professional duties
as defined by the regulations (the “Duties Test”). The Duties Test differs for each category of
employee. The proposed revisions to the regulations affect the Salary Level Test.
General Rule
The general rule for executive, administrative, professional and computer employees provides that
such employees must be compensated on a salary basis at a rate per week of not less than $921
($47,892 annually), exclusive of board, lodging or other facilities, to qualify for the exemption.
After the effective date of the proposed regulations, DOL proposes that in each subsequent year,
such employees must be compensated on a salary basis at a rate per week of not less than an
updated salary rate to be published annually by the Secretary in the federal register at least 60 days
prior to the proposed effective date of the updated salary rate, again exclusive of board, lodging or
other facilities.

2. HARRISON & HELD, LLP
MEMORANDUM
2
The amount of required compensation per week may be translated into equivalent amounts for pay
periods longer than one week. The requirement will be met when an employee is compensated bi-
weekly on a salary basis in an amount equal to double the required minimum amount; semi-monthly
on a salary basis equal to the required minimal weekly amount multiplied by 52 and divided by 24;
or, on a monthly basis calculated by multiplying the required weekly minimum amount by 52 and
then dividing by 12.
Computer Employees
Exemptions from overtime requirements for computer employees are set out in two sections of the
Act, Section 13(a)(1) and Section 13(a)(17). These sections provide an exemption for computer
systems analysts, computer programmers, software engineers, and other similarly skilled employees
in the computer field who meet tests regarding their job duties and who are compensated either on a
salary basis at a rate of not less than $455 per week or on an hourly basis at a rate not less than
$27.63 per hour. The proposed regulation will increase the minimum salary per week to not less
than $921 per week ($47,892 annually). For the exemption to apply, computer employee’s specific
job duties must meet the relevant Duties Test specified in the regulations.
Highly Compensated Employees
Employees with a total annual compensation of at least $122,148 as of the effective date of the final
rule, will be deemed exempt under the Fair Labor Standards Act (the “Act”) if the employee
customarily and regularly performs any one or more of the exempt duties or responsibilities of an
executive, administrative or professional employee as defined in the Act and regulations. The total
annual compensation must include at least a weekly amount that is, as of the effective date of the
final rule, $921 paid on a salary or fee basis. The total annual compensation eligibility requirement
will be adjusted by the secretary on an annual basis and published in the federal register at least 60
days prior to taking effect.
If an employee’s total annual compensation does not total at least $122,148 by the last pay period of
a 52 week period, the employer may, during the last period or within one month after the end of the
52 week period, make one final payment sufficient to achieve the pay level required for the
exemption.
Example given in the proposed regulations: If the current annual salary level for a
highly compensated employee is $122,148, an employee may earn $100,000 in
base salary, and the employer may anticipate based on past sales that the
employee will also earn $25,000 in commissions. However, due to poor sales in
the final quarter of the year, the employee actually earns only $10,000 in

3. HARRISON & HELD, LLP
MEMORANDUM
3
commissions. In such case, the employer may within one month after the end of
the year make a payment of at least $12,148 to the employee, and thus preserve
the exemption. Any final payment made after the end of the 52 week period may
count only toward the prior year’s total compensation and not toward the annual
compensation of the year in which it was paid. If the employer fails to make such
payment, the employee does not qualify as a highly compensated employee, but
may still qualify as exempt under parts of the rules.
Additional Compensation and Preservation of the Exemption
An employer may provide an exempt employee with additional compensation without losing the
exemption or violating the salary basis requirement, if the employment relationship includes a
guarantee of at least the minimum weekly required amount paid on a salary basis.
 Example given in the proposed regulations: If the current weekly salary level is $921, an
exempt employee guaranteed at least $921 each week paid on a salary basis may also
receive additional compensation of a 1% commission on sales. An exempt employee
may also receive a percentage of sales or profits of the employer if the employment
arrangement also includes a guarantee of at least $921 each week paid on a salary basis.
• An employee may also receive additional compensation based on hours worked for work
beyond the normal work week. Such additional compensation may be paid on any basis
(flat sum, bonus payment, straight time, hourly amount, time and one half or any other
basis) and may include paid time off.
• An exempt employee’s earnings may be computed on an hourly, daily or shift basis
without losing the exemption:
o The employment arrangement must include a guarantee of at least the minimum
weekly required amount paid on a salary basis, regardless of the number of
hours, days or shifts worked;
o There must be a reasonable relationship between the guaranteed amount and the
amount actually earned.
o The reasonable relationship test will be met where the weekly guarantee is
roughly equal to the employee’s usual earnings at the assigned hourly, daily or
shift rate for a normal scheduled work week.
 Example given in the proposed regulations: If the weekly salary level is
$921, an exempt employee guaranteed compensation of at least $1,000
for any week in which the employee performs any work, and who
normally works four or five shifts each week, may be paid $300 per shift
without violating the salary basis requirement.

4. HARRISON & HELD, LLP
MEMORANDUM
4
 The reasonable relationship test applies only if the employee’s pay is
computed on an hourly, daily or shift basis.
Fee Basis
The amount paid to the employee will be tested by determining the time worked on the job and
whether the fee payment is at a rate which is equal to the minimum required salary per week if the
employee worked 40 hours.
 Example given in the proposed regulations: If the salary level were $921, an artist
paid $500 for a picture that took 20 hours to complete meets the minimum salary
requirements for exemption since earnings at this rate would yield the artist $1000 if
40 hours were worked.
If you have any questions concerning the proposed revisions to the overtime regulations, contact:
Steven C. Filipowski
Harrison & Held, LLP
333 West Wacker Dr. – Suite 1700
Chicago, IL 60606
(312) 621-5222
(312) 332-1150 (fax)
sfilipowski@harrisonheld.com