Login To  

Client Portal

New FLSA Regulation - Retail Exemption

The U.S. Department of Labor today announced a final rule to provide greater simplicity and flexibility to retail industry employers.

Provisions in the Fair Labor Standards Act (FLSA) allow employers in retail and service industries to exempt certain employees paid primarily on a commission basis from overtime.

Today’s rule withdraws two provisions from the Department’s Wage and Hour Division regulations. The first listed industries that the Department previously viewed as having “no retail concept,” which made them ineligible to claim the exemption. The second listed industries that, in the Department’s view, “may be recognized as retail,” and were potentially eligible for the exemption. As the rule explains, some courts have questioned whether these lists lack any rational basis.

By withdrawing these two lists, establishments in industries that had been on the non-retail list may now assert that they have a retail concept and—if they meet the existing definition of retail and other criteria—may now qualify for the exemption. Insofar as these establishments were deterred from availing themselves of the exemption and its flexibilities, they may now do so if they qualify—including by having more flexibility to work with workers on commission-based pay arrangements. For these employers and workers, they could consider whether, for instance, more commission-based pay is sensible.

DOL Press Release: https://www.dol.gov/newsroom/releases/whd/whd20200518

Read the final rule here: https://www.federalregister.gov/documents/2020/05/19/2020-10250/partial-lists-of-establishments-that-lack-or-may-have-a-retail-concept-under-the-fair-labor.