———————————————————————————————————————————————————————————————————————————————

29 CFR 541 Timeline

Regulations Defining and Delimiting the Terms "Any Employee Employed in a Bona Fide Executive, Administrative, Professional, or Local Retailing Capacity, or in the Capacity of Outside Salesman" Pursuant to Section 13 (a) (1) of the Fair Labor Standards Act

===============================================================================================================================================================================

Before the Fair Labor Standards Act (FLSA)

June 16, 1933: President Franklin D. Roosevelt signed the National Industrial Recovery Act (Pub.L. 73–67, 48 Stat. 195). The law contained language removing employees in "executive, administrative, and supervisory positions" from the requirement that "no individual directly employed on any such project shall be permitted to work more than thirty hours in anyone week"

SEC. 206. All contracts let for construction projects and all loans and grants pursuant to this title shall contain such provisions as are necessary to insure (1) that no convict labor shall be employed on any such project; (2) that (except in executive, administrative, and supervisory positions), so far as practicable and feasible, no individual directly employed on any such project shall be permitted to work more than thirty hours in anyone week; [NOTE: Underlining added]

(See "National Industrial Recovery Act (1933)" on the National Archives Internet site. Accessed June 17, 2023 at https://www.archives.gov/milestone-documents/national-industrial-recovery-act.)

Regulations under the Walsh-Healey Act afforded some grounds for anticipating that all employees might be deemed executive or administrative workers whose chief function was to give, or to supervise the carrying out of, general orders.

(See Frank E. Cooper, The Coverage of the Fair Labor Standards Act and Other Problems in its Interpretation, 6 Law and Contemporary Problems 333-352 (Summer 1939) Downloaded January 7, 2023 from: https://scholarship.law.duke.edu/lcp/vol6/iss3/3)

May 24, 1937 to June 25, 1938 - Evolution of the exemption during Congressional debate and passage of the FLSA

May 24, 1937: The Fair Labor Standards Act of 1937, drafted by the Department of Labor, was introduced in the Senate (S. 2475) by Hugo Black (D-AL), and in the House of Representatives (H. R. 7200) by William Connery Jr. (D-MA).

As introduced, the bill did not include an exemption for executive, administrative, and professional employees. Instead, in Section 2 - "Definitions" - it was specified that "(7) "Employee" includes any individual employed and any individual whose work has ceased as a consequence of, or in connection with, any current labor dispute or because of any unlawful discharge, and who has not obtained any other regular and substantially equivalent employment, but shall not include any person employed in an executive, administrative, supervisory, or professional capacity or as an agricultural laborer as such terms are defined and delimited by regulations of the Board." (NOTE: Underline added)

(See: page 4 of S. 2475 and H. R 7200).

June 14, 1938: The House of Representatives approved the Fair Labor Standards Act of 1938 by a vote of 291 to 89, [CR, Volume 83, Part 8, page 9266], and the Senate approved the bill on a voice vote. [CR, Volume 83, Part 8, page 9266]

The language of the exemption read: "Sec. 13. (a) The provisions of sections 6 and 7 shall not apply with respect to (1) any employee employed in a bona fide executive, administrative, professional, or local retailing capacity, or in the capacity of outside salesman (as such terms are defined and delimited by regulations of the Administrator);" (NOTE: Underline added)

July 31, 1937: The Senate approved the Fair Labor Standards Act of 1937 by a vote of 56 to 28. [CR 75, Volume 81, Part 7, page 7957]

May 24, 1938: The House of Representatives approved the Conference Report for the Fair Labor Standards Act by a vote of 314 to 97 (17 did not vote). [CR75 Vol. 83 - Part 7, page 7449]

June 14, 1938: The House of Representatives approved the Conference Committee Report by a vote of 291 to 89. [CR75 Vol. 83, Part 8, page 9266]

June 14, 1938: The Senate approved the Conference Committee Report without a vote.

June 25, 1938: President Roosevelt signed the Fair Labor Standards Act.

[For additional information see May 24, 1937 to June 25, 1938 - Evolution of the exemption during Congressional debate and passage of the FLSA]

June 26, 1938 to October 24, 1938 - Drafting and issuing the first version of 29 CFR 541

"Establishing a Standard (1938) - The act was to become effective October 24, 1938, which allowed four months in which to establish an administrative structure, prepare interpretive materials, and be ready to enforce compliance with the new federal wage/hour standards—of which the EAP exemption was only one small portion. As Administrator, President Franklin Roosevelt selected Elmer F. Andrews, Industrial Commissioner for the state of New York. By mid-August of 1938, Andrews was on duty at the Department and had begun to assemble his staff."

(See CRS Report RL32088, page 2.)

Creating a Structure and Process: Beyond the statutory language (that bona fide executive, administrative and professional employees were to be exempt), Congress provided the new Administrator with little guidance. The concepts—bona fide executive, administrative and professional—were not defined. No reference was made, in the statute, to salaried as opposed to hourly paid workers; nor was any distinction made between manual and non-manual work. While Andrews could draw from the experience of the National Recovery Administration (1933-1935) in which more highly paid workers appear to have been excluded from wage and hour standards, he was under no obligation to do so.⁴

(FOOTNOTE 4:

(See Federal Register, March 31, 2003, pp.15560-15561;

Leon C. Marshall, Hours and Wages Provisions in NRA Codes (Washington: The Brookings Institution, 1935), p. 16; and

Margaret H. Schoenfeld, “Analysis of the Labor Provisions of the N.R.A. Codes,” Monthly Labor Review, March 1935, p. 583. Schoenfeld states: “In contrast with the code wage provisions, which cover for the most pabrt only the unskilled classes of labor, [NRA] restrictions upon working time affect all but a small group of administrative employees and executives falling in the higher earnings brackets ....”

(See CRS Report RL32088, page 2.)

September 29, 1938 - During a presentation before the Southern States Industrial Council in Birmingham, Alabama, September 29, 1938, Andrews was asked if he had taken any action with respect to Section 13(a)(1), to which he responded: “No. I have had that in mind more than anything else, and we will have that for you within the next week or two.” He discussed his experience with the issue in New York state—pointing out how some employers had attempted to circumvent the state law by too broadly defining their workforce as executive or administrative or professional. “... [I]t is very difficult to say ... where a worker leaves off and a professional or executive begins.”⁶ (FOOTNOTE 6: DOL/WH/R-Series, transcript of question and answer session, Birmingham, Alabama, September 29, 1938, pp. 3-4.

(See CRS Report RL32088, page 2.)

Fall 1938 - During the fall of 1938, Andrews, with a draft in hand, “called a conference of representatives of industry and labor to ascertain their views” on the definition of the several terms.⁷ (FOOTNOTE 7: [U.S. Department of Labor, Wage and Hour Division, Executive, Administrative, Professional ... Outside Salesman” Redefined: Report and Recommendations of the Presiding Officer at Hearings Preliminary to Redefinition (Washington: U.S. Govt. Print. Off., 1940), p. 1. (Hereafter cited as The Stein Report.))

(See CRS Report RL32088, page 2.)

October 19, 1938 - On October 19, 1938, five days before the act was to go into effect, the Department announced that the Administrator, “in consultation with the legal branch of the division,” had reached a determination.⁸

(FOOTNOTE 8: [U.S. Department of Labor,Wage and Hour Division, Executive, Administrative, Professional ... OutsideSalesman” Redefined: Report and Recommendations of the Presiding Officerat Hearings Preliminary to Redefinition (Washington: U.S. Govt. Print.Off., 1940), p. 1. (Hereafter cited as The Stein Report.))

(See CRS Report RL32088, page 3.)

October 20, 1938 - The first version of Regulation 29 CFR 541 was issued [See Federal Register, October 20, 1938, p. 2518 and Wage Hour Press Release R-40]

"The terms executive and administrative would have a single definition. Among other elements, they were to have the “primary duty” of “management of the establishment” and do “no substantial amount of work of the same nature as that performed by nonexempt employees of the employer.” The concept of professional was to be characterized by work that was “predominantly intellectual and varied in character as opposed to routine mental, manual, mechanical or physical work” and was to involve “discretion and judgment both as to the manner and time of performance, as opposed to work subject to active direction and supervision.” The education of a professional was to be based upon “a specially organized body of knowledge as distinguished from a general academic education and from an apprenticeship” or other routine training. He (or she) was not to do any “substantial amount of work of the same nature as that performed by non-exempt employees of the employer.”⁹"

(FOOTNOTE 9: Federal Register, October 20, 1938, p. 2518. Available online at https://www.govinfo.gov/content/pkg/FR-1938-10-20/pdf/FR-1938-10-20.pdf)

(See CRS Report RL32088, page 3.)

"The entire regulation, including introductory comments by Andrews, took up two columns in the Federal Register. But, much of the language, at least in skeletal form, would remain central to the EAP regulation and to the proposed rule of March 31, 2003. Whatever the understanding may have been, the concept of salaried was not specified—other than that an executive or administrator would need to earn “not less than $30” for a work week. No earnings threshold was set for a professional."

(See CRS Report RL32088, page 3.)

October 24, 1938: - The Fair Labor Standards Act went into effect.

[For additional information see June 26, 1938 to October 20, 1938 - Drafting and issuing the first version of 29 CFR 541]

October 25, 1938 to 1940

[For additional information see June 26, 1938 to October 20, 1938 - Drafting and issuing the first version of 29 CFR 541]

1940

March 18, 1940: It would not be until the spring of 1940 that pressure began to mount for the Administrator to take more specific action with respect to the EAP exemption (though earlier regulations had been promulgated). See U.S. Department of Labor, Wage and Hour Division, Press Releases, March 18, 1940,. (The collected set, running to at least 11 bound volumes, is hereafter cited as DOL/WH/R-Series.)

(See footnote 2 on page 5 of CRS Report RL32088, page 3.)

April 10, 1940: A press release was issued announcing that revisions to the definition of a "…bona fide executive, as applied to the wholesale distributing rades, was to be taken up today in a pubic hearing before Harold Stein, Assistant Director of the Hearings Branch, Wage and Hour Division…" [Click here for a full-text searchable copy]

June 21, 1940: A press release was issued providing notice that a public hearing would begin on July 9, 1940, to receive testimony regarding revisions to the definition of "…regulations defining and delimiting the terms "executive, administrative, professional, …(and) …outside salesman," [Click here for a full-text searchable copy]

October 10, 1940: The Stein Report was approved.

"1940 Rule: The Secretary of Labor updated the salary level for the EAP exemptions for the first time in 1940 (following the initial tests established at the time the FLSA became effective in 1938). The Secretary maintained the salary level for executive employees ($30 per week), increased it for administrative employees (from $30 to $50 per week), and added a salary level for a new category, professional employees ($50 per week).⁵⁵ (FOOTNOTE 55: 5 U.S. Department of Labor, Wage and Hour Division, “Defining and Delimiting the Terms ‘Any Employee Employed in a Bona Fide Executive, Administrative, Professional, or Local Retailing Capacity, or in the Capacity of Outside Salesman’,” 5 Federal Register 4077-4078, October 15, 1940. In addition, DOL analysis supporting the Final Rule is in Stein.) [The Stein Report, page 21]

[For additional information see October 24, 1938 to 1940]

October 14, 1940: A press release was issued announcing that a new version of 29 CFR 541 was would become effective on October 24, 1940. [Click here for a full-text searchable copy]

The Weiss Report - 1949

"During the years since 1940 the Divisions gradually became aware of a number of problems which indicated that there might be need for some revision to the regulations. These problems were brought to the attention of the Divisions in part by questions coming into the National Office directly from employers and employees. In the main, however, suggestions for changes in the regulations and requests for explanatory material came from the Divisions' field staff as a result of their accumulated experience acquired in the course of applying the regulations in many thousands of establishments. On the basis of recommendations by the regional directors the Administrator ordered an investigation of the operation of the present regulations to determine whether and to what extent changes and clarifications were needed. There was considerable preliminary study including consultation with the field staff and with an informal labor-management advisory committee. As a result of this study a number of specific proposals for amending the regulations were formulated and, together with some general questions, served as the subjects of the hearing held before me pursuant to notice published in the Federal Register, October 22, 1941." (FOOTNOTE 3: 12 Federal Register 6896.)

1958 - The Kantor Report

March 31, 2003: Proposed update of the Section 13(a)(1) regulation published in the Federal Register.

April 23, 2004: DOL issued the rule in final form (Federal Register) to take effect the last week of August 2004.

===============================================================================================================================================================================

RESOURCES

"Analysis of the Labor Provisions of N. R. A. Codes", by Margaret H. Schoenfeld. Monthly Labor Review, Vol. 40, No. 3 (March 1935), pp. 574-603.

Executive, Administrative, Professional . . . Outside Salesman" Redefined. Effective October 24, 1940. Report and Recommendations of the Presiding Officer at Hearings Preliminary to Redefintion (The Stein Report - 1940). Wage and Hour Division. U. S. Department of Labor.

Hours and wages provisions in NRA codes; a compilation organized by Leon C. Marshall. Washington, D.C., The Brookings Institution, 1935.

Overtime Exemptions in the Fair Labor Standards Act for White-Collar Employees: Frequently Asked Questions. (CRS Report R45722) Congressional Research Service. Updated October 11, 2019. (This report is available through the Congressional Research Service site at: "Search CRSReports" at https://crsreports.congress.gov/)

Overtime Exemptions in the Fair Labor Standards Act for White-Collar Employees: Frequently Asked Questions.Updated October 31, 2017. (R45007) (This report is available through the Congressional Research Service site at: "Search CRSReports" at https://crsreports.congress.gov/)

Report and Recommendations on Proposed Revision of Regulations, Part 541 under the Fair Labor Standards Act Defining the Terms "Executive" "Administrative" "Professional" "Local Retailing Capacity" "Outside Salesman" (The Kantor Report - 1958). Wage and Hour and Public Contracts Divisions, U. S. Department of Labor. March 1958.

Report and Recommendations on Proposed Revision of Regulations, Part 541. Defining the Terms "Executive" "Administrative" "Professional" "Local Retailing Capacity" "Outside Salesman" ••••• as contained in Section 13 (a) (1) of the Fair Labor Standards Act of 1938, providing exemptions from the wage and hour provisions of the act. (The Weiss Report - 1949) Wage and Hour and Public Contracts Divisions, U. S. Department of Labor.

The Fair Labor Standards Act: A Historical Sketch of the Overtime Pay Requirements of Section 13(a)(1). By William G. Whittaker, Specialist in Labor Economics. Domestic Social Policy Division, Congressional Research Service. [CRS Report RL32088, page 2.] August 28, 2007. This report is available through the Congressional Research Service site at: "Search CRS Reports" at https://crsreports.congress.gov/.

The Fair Labor Standards Act: Exemption of “Executive, Administrative and Professional” Employees Under Section 13(a)(1). (RL31995) Congressional Research Service, July 17, 2003. (This report is available through the Congressional Research Service site at: "Search CRSReports" at https://crsreports.congress.gov/)

United States, Wage and Hour Division, U. S. Department of Labor. 29 CFR Part 541 RIN 1235–AA20, Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees. 84 Fed. Reg. 10900 (March 22, 2019).