Both Wisconsin law and the federal Fair Labor Standards Act (FLSA) contain exemptions from overtime pay requirements for certain employees meeting the definition of executive, administrative, or professional employees. See generally Wis. Admin. Code § DWD 274.04; see also 29 C.F.R. Part 541. While these exemptions are generally known as the “white-collar” exemptions under both laws, and refer to the same categories of employees, the regulations surrounding each law’s exemptions suggest that different analyses apply to each. Compare Wis. Admin Code § 274.04(1) with 29 C.F.R. §§ 541.100-541.304.

However, the introductory language to Wisconsin’s overtime exemption regulations – stating that “these exemptions shall be interpreted in such a manner as to be consistent with the Federal Fair Labor Standards Act and the Code of Federal Regulations as amended” – often causes a misstep in the analysis of Wisconsin’s white-collar exemptions. Wis. Admin. Code § DWD 274.04. While that language leads some to interpret Wisconsin’s white-collar exemption requirements as being met as long as those of the FLSA’s white-collar exemptions have been, Wisconsin’s white-collar exemptions actually vary in substance and analysis from those of the FLSA. While 2004 brought substantial revisions to the FLSA’s white-collar exemption analysis, Wisconsin law did not move in lockstep with the FLSA even prior to that time. Understanding the differences between both laws requires careful consideration of the history of the white-collar exemptions under each law as well as the subtle differences in the regulatory language which guide those exemptions.

Short and Long Tests: FLSA’s White-collar Exemptions prior to 2004

The task of defining the executive, administrative, and professional exemptions under the FLSA was delegated by Congress to the Secretary of Labor. See 29 U.S.C. § 213(a)(1). However, as noted by the Seventh Circuit in Kennedy v. Commonwealth Edison Co., 410 F.3d 365, 369 (2005), changes to those definitions were few and far between. While the Department of Labor (DOL) introduced substantially rewritten regulations in 2004, the FLSA’s white-collar exemptions were to be interpreted under one of two tests – conveniently referred to as the “short test” and “long test” – prior to 2004. Id. at 369-70.

Under the long test, multiple factors were analyzed to determine whether a minimum weekly salary and several particular duties requirements were met, and thereby exempted an employee from the FLSA’s overtime pay requirements. See generally 29 C.F.R. Part 541 (2003). However, the long test’s analysis could be replaced by that of the short test for any executive, administrative, or professional employee earning at least $250 per week immediately prior to the adoption of the 2004 regulations. See 29 C.F.R. §§ 541.119, 541.214, and 541.315 (2003). Under the short test, the increased weekly salary resulted in a truncated duties test, which focused in large part on what the potentially exempt employee’s primary duty was. See 29 C.F.R. §§ 541.119, 541.214, and 541.315 (2003).

The First Circuit Court of Appeals astutely addressed the differences between the two FLSA tests in Donovan v. Burger King Corp., 672 F.2d 221 (1982). When considering whether the FLSA’s executive exemption applied to assistant managers at various Burger King restaurants, the court applied either the short or long test to particular employees at issue based on differing weekly salary amounts. Id. at 223-29. In doing so, the court noted that “[t]he elements of the [long] test are stated in the conjunctive, and therefore each element must be met to qualify for the exemption.” Id. at 227. Further addressing the conflation of the short test’s primary duty analysis and the long test’s limitations on non-exempt work, the court stated that “[s]omeone whose primary duty is management may still fail to qualify under the long test if his managerial status coexists with the performance of a significant amount of menial work.” Id. at 228.

Still, despite the separate analyses applied under the FLSA’s former short and long tests, the majority of FLSA case law applying the pre-2004 regulations is silent as to the long test due to the low salary threshold required to invoke the alternative, short test analysis.

Similar but Distinct: Wisconsin’s White-collar Exemptions

In 1977, Wisconsin followed the FLSA’s lead in adapting white-collar exemptions to Wisconsin law’s overtime pay requirements. See Order of Dept. of Industry, Labor and Human Relations (Feb. 9, 1977). Wisconsin’s white-collar exemptions adopted a multifactor duties test – which was substantially similar to the duties analysis of the FLSA long test that was in effect at that time – to determine if an employee was exempt from overtime pay. Compare Order of Dept. of Industry, Labor and Human Relations (Feb. 9, 1977) with 29 C.F.R. Part 541 (2003). However, when it came to the salary requirements for Wisconsin’s white-collar exemptions, Wisconsin law distinguished itself from both the FLSA’s long and short test and adopted a separate, minimum monthly salary standard. Id.

In 1980, Wisconsin’s white-collar exemptions were updated to include language directing those exemptions to be interpreted consistently with comparable federal laws and regulations. See Order of Dept. of Industry, Labor and Human Relations (Nov. 14, 1980). Despite this language, Wisconsin law’s salary basis requirements continued to differ from similar requirements under the FLSA’s short or long tests.

When the white-collar exemption regulations were rewritten under the FLSA in 2004, Wisconsin did not follow suit. Rather, at the time, the Department of Workforce Development (DWD) made clear that, although Wisconsin law’s analysis “very closely paralleled” the former, similar FLSA regulations, Wisconsin employers needed to ensure compliance with both Wisconsin law and the FLSA – if both applied – in light of the changes soon-to-be adopted under the FLSA. See Impact of Changes to the “White Collar” Exemptions in the Federal Fair Labor Standards Act on Wisconsin Employers, Department of Workforce Development (Aug. 17, 2004).

The differences between the FLSA and Wisconsin law’s white-collar overtime exemptions continue to exist today. In light of the currently enjoined 2015 updates to the FLSA’s minimum salary requirements, the DWD issued a fact sheet addressing the differences between Wisconsin law and the FLSA with regard to their respective white-collar exemptions. See New Federal Overtime Regulations Effective December 1, 2016, Department of Workforce Development (last visited May 30, 2017). In doing so, the DWD explicitly stated that Wisconsin’s white-collar exemption analysis is “similar to the pre-2004 federal ‘long test’ that – for most employers – make the federal duties test inapplicable.” Id.

Great Diligence Needed to Understand the Differences

While a quick reading of Wisconsin’s white-collar exemption regulations may lead some to focus their compliance efforts in FLSA case law and regulations, such a task should be undertaken with great diligence. It is necessary to understand the ways that both the FLSA and Wisconsin law have developed over time with respect to their similar, yet distinct white-collar exemptions to ensure that instructive FLSA cases are identified and overtime compensation is properly paid pursuant to Wisconsin law.

If you have questions about whether you are properly being paid under federal or Wisconsin law, please contact one of our attorneys as soon as possible to set up a free initial consultation.

* Note: This blog was originally published on the State Bar of Wisconsin’s Labor & Employment Blog and can be found here.

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Timothy Maynard