The U.S. Department of Labor (DOL) published an updated rulemaking for the overtime exemptions for executive, administrative, and professional (EAP) employees on May 23, 2016, with an effective date of December 1, 2016. However, on November 22, 2016, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction blocking the implementation of the rule. In its ruling, the District Court concluded, in part, that DOL does not have the legal authority to use a salary level test as part of defining the EAP exemptions. Subsequently, on December 1, 2016, the Department of Justice (DOJ), on behalf of DOL, filed a notice to appeal the injunction to the U.S. Court of Appeals for the Fifth Circuit. On June 30, 2017, DOJ filed its reply brief in the case and requested that the Court of Appeals reverse the judgment of the district court (related to the legal authority of DOL to use salary level as part of the EAP exemption) but not rule on the validity of the salary level set in the 2016 rule. Finally, on August 31, 2017, the U.S. District Court for the Eastern District of Texas ruled that DOL exceeded its authority by setting the threshold at the salary level in the 2016 rule and thus invalidated the 2016 rule. Subsequently, DOJ dropped its June 30 appeal of the original district court ruling. DOL issued a request for information (RFI) related to the EAP exemptions on July 25, 2017. Specifically, DOL's RFI seeks information from the public regarding the EAP exemptions to assist in formulating a proposal to revise them. The Fair Labor Standards Act (FLSA) is the primary federal statute providing labor standards for most, but not all, private and public sector employees. Its major provisions include a federal minimum wage, overtime pay requirements, child labor protections, and recordkeeping requirements. The FLSA also created the Wage and Hour Division (WHD) within DOL to administer and enforce the act. The FLSA was enacted in 1938 and has been amended numerous times, primarily for the purposes of expanding coverage or increasing the federal minimum wage rate. In enacting the FLSA, Congress noted the "existence, in industries engaged in commerce or in the production of goods for commerce, of labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers." As such, the FLSA was intended to "correct and as rapidly as practicable to eliminate" these detrimental conditions "without substantially curtailing employment or earning power." The correction of detrimental conditions was to be achieved through the establishment of a federal minimum wage, overtime pay requirements, and child labor protections. The FLSA applies to employees who have an "employment relationship" with an employer. That is, the FLSA covers most workers but does not include individuals not considered employees (e.g., independent contractors). FLSA provisions are extended to individuals under two types of coverage—"enterprise coverage" and "individual coverage." An individual is covered if they meet the criteria for either category. Around 132 million workers, or 83% of the labor force, are currently covered by the FLSA. It is important to note that while the FLSA sets standards for minimum wages, overtime pay, and child labor, it does not regulate many other employment practices. For example, the FLSA does not require certain practices or benefits often associated with an employment relationship, such as paid time off, premium pay for weekend work, or fringe benefits. In addition, the FLSA does not limit the number of hours an employee may be required to work in a day or a week. Rather, it requires that a covered employee be compensated with premium pay for overtime hours worked. Section 7(a) of the FLSA specifies requirements for overtime pay for weekly hours worked in excess of the maximum hours. In general, unless an employee is specifically exempted in the FLSA, he or she is considered to be a covered nonexempt employee and must receive pay at the rate of one-and-a-half times ("time-and-a-half") the regular rate for any hours worked in excess of 40 hours in a workweek. Employers may choose to pay more than time-and-a-half for overtime or to pay overtime to employees who are exempt from overtime pay requirements under the FLSA. Although coverage is generally widespread, the FLSA exempts certain employers and employees from all or parts of the FLSA. For example, exemptions are provided to EAP employees, individuals employed at retail stores that do not have interstate operations, and agricultural employees. The focus of this report is on the EAP exemptions provided in the FLSA. While the FLSA now extends broad minimum wage, overtime pay, and child labor protections to all individuals "employed by an employer," coverage was not as common when the law was enacted in 1938. Currently, the FLSA covers more than 80% of the labor force. Initially, the FLSA did not cover employees in entire sectors, including farm labor, retail trade, domestic and personal service, or public service, nor did it cover the self-employed. At the time of enactment, it was estimated that the FLSA covered about 11 million employees, or roughly one-third of wage and salary earners in the United States. The vast majority, or about 9.3 million, of these 11 million employees were in manufacturing, transportation, or mineral industries. Later amendments to the FLSA, most notably in 1961 and 1966, increased the scope of coverage so that most employees are now covered by the provisions of the FLSA. At the time the FLSA was enacted in 1938, employment was mostly in manual, or "blue-collar," occupations. Even though changes in data collection and occupational and industrial classification make comparing employment composition over time difficult, based on data from the Bureau of Labor Statistics (BLS), the broad trend in the past 80 years has clearly been toward an increasing share of employment in service occupations, many of which are "white-collar." Illustrative of this trend, employment in the "professional, technical, and kindred" occupations increased from less than 5% in 1910 to nearly 25% by 2000. More broadly, in their analysis of the 11 major occupation groups over time, Wyatt and Hecker find that Five of the major occupation groups increased as a share of the total, while six declined. All of the ones that declined, except for private household workers, consist of occupations that produce, repair, or transport goods and are concentrated in the agriculture, mining, construction, manufacturing, and transportation industries. The five that increased are the so-called white-collar occupations, plus service workers, except private household. The four major groups that are white-collar occupations include mostly occupations having to do with information, ideas, or people (many in the service group also work with people); are more concentrated in services-producing industries; and, at least for professional and managerial occupations, have higher-than-average education requirements. In aggregate, the five groups that increased [white-collar occupations] went from 24 percent to 75 percent of total employment, while the six groups that declined went from 76 percent to 25 percent over the 90-year period [1910-2000]. Putting the original estimates of FLSA coverage together with the changing occupational composition of the workforce since the FLSA was enacted indicates a workforce that is vastly different now than it was in 1938. While white-collar occupations are not a perfect proxy for those covered by the EAP exemptions in the FLSA (as will be discussed below), the increase of white-collar occupations and the decrease of blue-collar occupations since 1938 has implications for the EAP exemptions. This is discussed in more detail in subsequent sections of this report, but, in essence, an exemption enacted in 1938 that was designed to cover a portion (i.e., executive, administrative, and professional employees) of a minority of the workforce (white-collar occupations) is now relevant for a considerably higher share of the workforce. Section 13(a)(1) of the FLSA states, in part, that the minimum wage (Section 6) and overtime (Section 7) provisions of the act "shall not apply with respect" to any employee employed in a bona fide executive, administrative, or professional capacity (including any employee employed in the capacity of academic administrative personnel or teacher in elementary or secondary schools), or in the capacity of outside salesman ( as such terms are defined and delimited from time to time by regulations of the Secretary . (Italics added.) Rather than define the terms "executive," "administrative," or "professional," the FLSA authorizes the Secretary of Labor to define and delimit these terms "from time to time" through regulations. The legislative history of the EAP exemptions does not provide much information on their intended scope. Although not necessarily elaborated upon at the time of enactment, the general rationale for including the EAP exemptions in the FLSA is often construed to be related to the type of work and the presumed labor market power of EAP employees: (1) the nature of the work performed by EAP employees seemed to make standardization difficult, and thus the output of EAP employees was not as clearly associated with hours of work per day as the output for typical nonexempt work (e.g., manual labor); and (2) bona fide EAP employees were considered to have other forms of compensation (e.g., above-average benefits, greater opportunities for advancement, greater job security, greater mobility) not available to nonexempt workers. Thus, the compensating advantages of being an EAP employee in 1938 (a small portion of the workforce) could have been seen as a tradeoff for being exempt from the overtime protections of the FLSA.