Paul DeCamp Quoted in “‘Befuddling’ FLSA Exemptions Continue to Plague Employers”

The overtime exemptions under the Fair Labor Standards Act are facing renewed scrutiny in Congress and the courts, highlighting unresolved questions about the role of salaries, what fits into each exemption, and how racism has shaped the rules for certain occupations.

The divide and inevitable gray areas concerning the nature of a worker's pay remains a fraught area of wage and hour law, attorneys say.

"The white collar exemptions have been befuddling employers and courts for about 80 years," said Paul DeCamp, a former administrator of the DOL's Wage and Hour Division and current co-chair of Epstein Becker & Green PC's wage and hour practice group. …

Here, Law360 takes a look at the state of debate on FLSA exemptions.

What's in a Salary?

Salary does not an exempt employee make, but it is a significant factor in determining a worker's status.

That is a key issue before a Fifth Circuit en banc panel in Michael J. Hewitt v. Helix Energy Solutions Group Inc. et al. The judges are revisiting a split appellate panel's December ruling that day rate workers can only be considered salaried and overtime-exempt if two conditions are met: a guaranteed minimum weekly pay regardless of hours worked and a "reasonable relationship" between the pay and the amount of work expected. …

However, DeCamp said he thinks the rig worker's arguments don't carry a lot of weight.

"In a lot of ways, the question for the court is going to be how loosely or how tightly the court construed the 'reasonable relationship' portion of the regulations," he said. …

Part of the confusion with certain FLSA exemptions is driven by the wording of the statute and the regulations, DeCamp said. But it's also the nature of litigation.

"Current employees want to be exempt," DeCamp said. "Former employees want to be nonexempt."

What is a 'Fair Reading'?

The current reading of the FLSA's exemptions has perplexed some employers and attorneys, who argue that the way the regulations were written may not line up with how courts must interpret the provisions.

What muddied the landscape was the U.S. Supreme Court decision in Encino Motorcars LLC v. Hector Navarro et al., which found that service advisers at car dealerships were not entitled to overtime pay as exempt salesmen servicing automobiles, DeCamp said.

The court rejected the principle that the exemptions should be construed narrowly and instead said the FLSA exemptions should be given a "fair reading," according to the 2018 opinion.

"The regulations that define the FLSA exemptions were enacted at a time when the construct was narrow interpretation of exemptions," DeCamp said. "Now there's a question as to whether the entire regulatory scheme goes out the window because it's structured in a way that's inconsistent with how the Supreme Court now looks at exemptions."

This situation results in a lot of uncertainty, DeCamp said.