Fewer Commissioned Employees Eligible for Overtime Under New Employer-Friendly Department of Labor Rule

The United States Department of Labor (DOL) issued revised regulations on May 18, 2020, effectively expanding the exemptions under Section 7(i) of the Fair Labor Standards Act (FLSA), which permits certain commissioned employees of “retail or service establishments” to be considered exempt from overtime. Designed to “reduce confusion,” the new rule, which takes effect immediately, removes from the existing regulations two lists: a partial list of industries that were presumed to have “no retail concept” and a non-exhaustive list of business that “may be recognized as retail.”¹ By doing so, certain businesses previously on the non-retail list may now qualify for the Section 7(i) exemption if they otherwise meet the DOL’s criteria for the exemption. In other words, all businesses, regardless of their industry, will be treated consistently. This change therefore may increase the number of employers that qualify as “retail” businesses falling under the Section 7(i) exemption.