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Montana Administrative Register Notice 24-16-241 No. 5   03/11/2010    
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BEFORE THE DEPARTMENT OF LABOR AND INDUSTRY

STATE OF MONTANA

 

In the matter of the adoption of NEW RULE I, and the repeal of ARM 24.16.201, 24.16.202, 24.16.203, 24.16.204, 24.16.205, and 24.16.206, regarding employment of persons in an executive, administrative, or professional capacity

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NOTICE OF PUBLIC HEARING ON PROPOSED ADOPTION AND REPEAL

 

TO:  All Concerned Persons

 

            1.  On April 2, 2010, at 10:00 a.m., the Department of Labor and Industry (department) will hold a public hearing to be held in the auditorium of the DPHHS Building, 111 North Sanders, Helena, Montana, to consider the proposed adoption and repeal of the above-stated rules.

 

            2.  The department will make reasonable accommodations for persons with disabilities who wish to participate in this public hearing or need an alternative accessible format of this notice.  If you require an accommodation, contact the department no later than 5:00 p.m., on March 26, 2010, to advise us of the nature of the accommodation that you need.  Please contact the Labor Standards Bureau, Employment Relations Division, Department of Labor and Industry, Attn: Pamila McDaniel, P.O. Box 201503, Helena, MT  59620-1503; telephone (406) 444-4663; fax (406) 444-7071; TDD (406) 444-0532; or e-mail pmcdaniel@mt.gov.

 

            3.  The rule proposed to be adopted provides as follows:

 

            NEW RULE I  EXECUTIVE, ADMINISTRATIVE, AND PROFESSIONAL EMPLOYEES  (1)  As used in this rule, including in those materials incorporated by reference, the following definitions apply:

            (a)  "Act" means the minimum wage and overtime laws, as found at Title 39, chapter 3, part 4, MCA.

            (b)  "Administrator" means the administrator of the employment relations division of the department.

            (c)  "Commissioner" means the commission of labor and industry.

            (d)  "Department" means the Department of Labor and Industry.

            (2)  In order to ease any disparity between state and federal requirements, and to make it easier for employers and employees to understand the wage and hour provisions applicable to bona-fide executive, administrative, professional employees, and for persons employed in an outside sales capacity, the commissioner finds that it is appropriate that Montana harmonize its treatment of those employees under state wage and hour laws with the federal treatment of those same classes of persons under the Fair Labor Standards Act, 29 USC 201, et seq.

            (3)  The following federal regulations are adopted by reference:

            (a)  29 CFR part 541, subpart A, as in effect on July 1, 2009.

            (b)  29 CFR part 541, subpart B, as in effect on July 1, 2009, except the dollar threshold amount in 29 CFR 541.100(a)(1) is changed to the amount specified in (5).

            (c)  29 CFR part 541, subpart C, as in effect on July 1, 2009, except the dollar threshold amount in 29 CFR 541.200(a)(1) is changed to the amount specified in (5).

            (d)  29 CFR part 541, subpart D, as in effect on July 1, 2009, except the dollar threshold amount in 29 CFR 541.300(a)(1) is changed to the amount specified in (5).

            (e)  29 CFR part 541, subpart F, as in effect on July 1, 2003.

            (f)  29 CFR part 541, subpart G, as in effect on July 1, 2009, except:

            (i)  the dollar threshold amount in 29 CFR 541.600(a) is changed to the amount specified in (5);

            (ii)  the amounts in 29 CFR 541.600(b) are adjusted to a comparable amount based on a minimum weekly salary of the amount specified in (5); and

            (iii)  the dollar threshold amount in 24 CFR 541.601(b) is changed to the amount specified in (5).

            (g)  29 CFR part 541, subpart H, as in effect on July 1, 2009.

            (4)  Section 39-3-406, MCA, does not recognize a minimum wage or overtime exemption for certain computer employees, as described in 29 CFR part 541, subpart E.  Accordingly, the references to exemptions for computer employees that are contained in the following rules do not apply in Montana:

            (a)  29 CFR 541.600;

            (b)  29 CFR 541.702;

            (c)  29 CFR 541.705;

            (d)  29 CFR 541.708; and

            (e)  29 CFR 541.710.

            (5)  The dollar threshold amount to be used in each rule is a weekly salary rate equal to the state's average weekly wage, as established annually by the department.

            (6)  Copies of the regulations incorporated by reference are available as follows:

            (a)  A printed copy of the regulations incorporated by reference is available for inspection and purchase at cost from the department and the U.S. Government printing office.  The address for the department is:  Montana Department of Labor and Industry, Employment Relations Division, Labor Standard Bureau, 1805 Prospect Avenue, P.O. Box 201503, Helena, Montana, 59620-1503.  The address of the U.S. Government printing office is:  U.S. Government Bookstore, 710 North Capitol Street N.W., Washington, D.C.

            (b)  An electronic copy of the regulations incorporated by reference is available via the internet by following the links at the following web sites:

            (i)  http://erd.dli.mt.gov/ (Montana Department of Labor and Industry web site); and

            (ii)  http://www.dol.gov/dol/allcfr/ESA/Title_29/Part_541/toc.htm (U.S. Department of Labor web site).

 

AUTH:  39-3-403, MCA

IMP:  39-3-401, 39-3-406, 39-3-408, MCA

 

REASON:  There is reasonable necessity to adopt NEW RULE I in order to harmonize Montana law regarding the treatment of persons employed in a bona fide capacity as executive, administrative, or professional employee, and of persons employed in an outside sales capacity with the treatment of those individuals as it exists under the federal Fair Labor Standards Act, 29 USC §§ 201, et. seq. ("the FLSA").  Montana's administrative treatment of these classes of workers has, until a few years ago, historically mirrored federal practices and regulations.  The Montana Department of Administration is currently reviewing and revising a number of its policies.  The proposed rule changes are made in response to the concerns recently expressed by the Department of Administration regarding the interplay between current federal FLSA regulations and the existing Montana administrative rules, particularly with respect to the Department of Administration's "salary basis policy."

 

The department notes that it is specifically not incorporating by reference the federal regulations found in 29 CFR part 541, subpart E, pertaining to computer professionals.  Section 39-3-406(1)(j), MCA, does not include "computer employees", as described in 29 CFR part 541, as members of the class of persons exempted from Montana's minimum wage and overtime laws, and therefore the department believes that it lacks statutory authority to adopt by incorporation those federal "computer employees" regulations.  There is reasonable necessity to make reference in NEW RULE I to clarify that other references to exemptions for "computer employees" in rules that are incorporated by reference do not apply in Montana, so as not to confuse or mislead employers or employees.

 

The department also notes that it is proposing to incorporate by reference the 2003 version of 29 CFR Part 541, subpart F, rather than the current version of the rules, due to the specific reference contained in § 39-3-406(1)(j) to persons employed "in an outside sales capacity, as defined in 29 CFR 541.5."  In 2004, 29 CFR 541.5 was repealed, and the definition of "an employee employed in the capacity of an outside salesman" was moved from 29 CFR 541.5 to 29 CFR 541.500.  While the department believes that the intent of pre-2004 definition is similar to the post-2004 definition in the federal rules, the department concludes it is constrained by the express statutory reference in Montana law to use the previous version of the federal regulations relating to outside sales employees.

 

The department concludes that there is reasonable necessity to adopt a higher minimum weekly salary than provided for under federal law in order to qualify as a bona fide executive, administrative, or professional employee who is exempt from Montana's minimum wage and overtime laws because the federal salary rate is based upon national 2002 wage data, which has not been adjusted for wage growth since that time.  The Montana state's average weekly wage (for wage earners) applicable in state fiscal year 2010 is $626, and represents an approximate 38% wage growth over the 2002 state's average weekly wage.  Adjusting for wage growth by the same percentage, the federal rate would now equal $627.39 per week, which is nearly identical to the state's average weekly wage.  Accordingly the department finds that the state's average weekly wage reasonably approximates the amount of wages which would be reflected if the federal rates had been adjusted by the percentage of wage growth.

 

The department also notes that the public policy of the state of Montana, as expressed in 39-3-401, MCA, is that its minimum wage and overtime laws are designed to:

 

            (1)  establish minimum wage and overtime compensation standards for workers at levels consistent with their health, efficiency, and general well-being;

            (2)  safeguard existing minimum wage and overtime compensation standards which are adequate to maintain the health, efficiency, and general well-being of workers against the unfair competition of wage and hour standards which do not provide such adequate standards of living; and

            (3)  sustain purchasing power and increase employment opportunities.

 

The department concludes that the public policy considerations of Montana minimum wage and overtime laws are furthered by limiting the exceptions from those laws to situations involving bona fide executive, administrative, and professional employees who are paid a weekly salary that is at least equal to the state's average weekly wage.

 

            4.  The department proposes to repeal the following rules:

 

            24.16.201  EXECUTIVE, found at page 24-937 of the Administrative Rules of Montana (ARM).

 

            AUTH:  39-3-403, MCA

            IMP:  39-3-406(1)(j), MCA

 

            24.16.202  ADMINISTRATIVE, found at ARM pages 24-937 and 24-938.

 

            AUTH:  39-3-403, MCA

            IMP:  39-3-406(1)(j), MCA

 

            24.16.203  PROFESSIONAL, found at ARM pages 24-938 and 24-939.

 

            AUTH:  39-3-403, MCA

            IMP:  39-3-406(1)(j), MCA

 

            24.16.204  EMPLOYEE EMPLOYED IN A BONA FIDE EXECUTIVE CAPACITY, found at ARM pages 24-939 through 24-955.

 

            AUTH:  39-3-403, MCA

            IMP:  39-3-406(1)(j), MCA

 

            24.16.205  EMPLOYEE EMPLOYED IN A BONA FIDE ADMINISTRATIVE CAPACITY, found at ARM pages 24-955 through 24-969.

 

            AUTH:  39-3-403, MCA

            IMP:  39-3-406(1)(j), MCA

 

            24.16.206  EMPLOYEE EMPLOYED IN A BONA FIDE PROFESSIONAL CAPACITY, found at ARM pages 24-969 through 24-977.

 

            AUTH:  39-3-403, MCA

            IMP:  39-3-406(1)(j), MCA

 

REASON:  There is reasonable necessity to repeal the six existing rules so they do not conflict with the federal regulations proposed to be incorporated by reference in NEW RULE I.  The rules proposed for repeal are based on (or repeat verbatim) pre-2004 versions of various federal regulations implementing the Fair Labor Standards Act.

 

            5.  A copy of the rules proposed for repeal can be obtained by contacting the person whose name and address are in paragraph 2, or via the internet at http://www.mtrules.org/ by entering the rule number for each rule sought.

 

            6.  Concerned persons may present their data, views, or arguments, either orally or in writing, at the hearing.  Written data, views, or arguments may also be submitted to:  Labor Standards Bureau, Employment Relations Division, Department of Labor and Industry, Attn: Pamila McDaniel, P.O. Box 201503, Helena, MT  59620-1503; fax (406) 444-7071; TDD (406) 444-0532; or e-mailed to pmcdaniel@mt.gov, and must be received no later than 5:00 p.m., April 9, 2010.

 

            7.  An electronic copy of this Notice of Public Hearing is available through the department's web site at http://dli.mt.gov/events/calendar.asp, under the Calendar of Events, Administrative Rules Hearings Section.  The department strives to make the electronic copy of this Notice of Public Hearing conform to the official version of the Notice, as printed in the Montana Administrative Register, but advises all concerned persons that in the event of a discrepancy between the official printed text of the Notice and the electronic version of the Notice, only the official printed text will be considered.  In addition, although the department strives to keep its web site accessible at all times, concerned persons should be aware that the web site may be unavailable during some periods, due to system maintenance or technical problems, and that a person's difficulties in sending an e-mail do not excuse late submission of comments.

 

            8.  The department maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency.  Persons who wish to have their name added to the list shall make a written request that includes the name, e-mail, and mailing address of the person to receive notices and specifies for which program or areas of law the person wishes to receive notices.  Notices will be sent by e-mail unless a mailing preference is noted in the request.  Such written request may be mailed or delivered to the Department of Labor and Industry, attention:  Mark Cadwallader, 1327 Lockey Avenue, P.O. Box 1728, Helena, Montana  59624-1728, faxed to the department at (406) 444-1394, e-mailed to mcadwallader@mt.gov, or may be made by completing a request form at any rules hearing held by the agency.

 

            9.  The bill sponsor contact requirements of 2-4-302, MCA, do not apply.

 

            10.  The department's Hearings Bureau has been designated to preside over and conduct this hearing.

 

 

 

/s/  MARK CADWALLADER           /s/  KEITH KELLY

Mark Cadwallader                            Keith Kelly, Commissioner

Alternate Rule Reviewer                   DEPARTMENT OF LABOR AND INDUSTRY

 

 

Certified to the Secretary of State March 1, 2010

 

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