COMMENTS BY:THE SOUTHEASTERN ALLIANCE OF CHILD CARE ASSOCIATIONSREGARDING PROPOSED REVISIONS OF 29 C.F.R. PART 541

(RIN 1235-AA11)

On Behalf Of:

Florida Association for Child North Carolina LicensedCare Management Child Care Association908 S. Andrews Ave. 2801 Nash St. N.W., Suite DFort Lauderdale, Florida 33316 Wilson, North Carolina 27896

Georgia Child Care Association South Carolina Association for5490 McGinnis Village Place Early Care and EducationSuite 215 1 Windsor Cove, Suite 305Alpharetta, Georgia 30005 Columbia, South Carolina 29223

Child Care Association of LouisianaP.O. Box 80053Baton Rouge, Louisiana 70898

Prepared and Submitted By:

/s/ Matthew R. SimpsonD. Albert Brannen, Esq.Matthew R. Simpson, Esq.FISHER & PHILLIPS LLP1075 Peachtree Street N.E.Suite 3500Atlanta, Georgia 30309

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The Florida Association for Child Care Management, Georgia Child Care

Association, Child Care Association of Louisiana, North Carolina Licensed Child Care

Association, and South Carolina Association for Early Care and Education (collectively,

the “Southeastern Alliance of Child Care Associations” or “SACCA”), by and through

counsel, respectfully submit the following comments to the United States Department of

Labor’s (“USDOL”) Notice of Proposed Rulemaking (“NOPR”) published on July 6, 2015.1

I. Introduction

The Southeastern Alliance of Child Care Associations’ membership consists of

thousands of child care centers across the Southeast, including family child care homes,

group child care homes, pre-kindergarten programs, military family child care homes,

and Head Start sites. While SACCA’s centers are best recognized for providing cognitive

and social development, school readiness, and health and well-being to their students,

their benefits extend much farther. The child care industry enables parents to engage in

the workforce, allowing them to care for their families financially as well as to contribute

federal, state, and local taxes that, in turn, provide needed goods and services to the

population at large. This benefit is particularly important in low-income regions of the

country, where studies suggest that the availability of early child care leads to reduced

worker absenteeism and turnover, increased satisfaction with work and children,

increased educational attainment, and reduced crime rates among parents.

With an acute understanding of these benefits and the general importance of child

care to our nation’s well-being, President Obama announced in his State of the Union,

“In today’s economy, when having both parents in the workforce is an economic necessity

1 Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Salesand Computer Employees, 80 Fed. Reg. 38516 (Proposed July 6, 2015) (to be codified at 29 C.F.R.Pt. 86).

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for many families, we need affordable, high-quality child care more than ever. It’s not a

nice-to-have – it’s a must-have.”2 As President Obama noted, child care is “a national

economic priority that is for all of us.”3

Unfortunately, USDOL’s proposed regulations raising the minimum salary level

necessary to satisfy the executive, administrative, and professional exemptions to the

Fair Labor Standards Acts (“FLSA”) have the unintended consequence of undermining

this key priority in many of the states and communities where it is needed most.

Although the child care industry provides an invaluable public service, the

operation of a child care center is not necessarily a lucrative business. A significant

percentage of SACCA’s centers do just over $500,000 in business in any given year, the

threshold for FLSA enterprise coverage, and the vast majority fail to exceed $1,000,000

in business done for a year. As a result, while SACCA’s centers pay salaries that are

competitive according to their respective size and geographical areas, even the most

highly compensated employee in any given center typically earns below $50,000 per

year. If USDOL’s proposed regulations are made final in their current form, most (if not

all) of SACCA’s centers will be required to either: (1) reclassify key employees as “non-

exempt,” thereby placing an incredible strain on centers to manage employee time in an

industry where hours are notoriously unpredictable; or (2) raise key employees’ salaries

by as much as 100%, an unsustainable increase in a business where margins are already

razor thin.

The Southeastern Alliance of Child Care Associations therefore submits the

following comment requesting that USDOL rescind and revise its proposed regulations as

set forth below. In commenting, SACCA will use terms such as “exempt,” “exemption,”

2 Remarks by the President in State of the Union Address, President Barack Obama (January 20,2015), https://www.whitehouse.gov/the-press-office/2015/01/20/remarks-president-state-union-address-january-20-2015.3 Id.

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“exemptions,” “exempt employees,” “nonexempt,” “nonexempt employees,” etc. to

reference the so-called “white collar” exemptions provided for at 29 U.S.C. § 213(a)(1),

except where noted otherwise.

SACCA will also refer to three historical USDOL documents relating to the

exemptions at issue, each of which is entitled “Report and Recommendations of the

Presiding Officer at Public Hearings on Proposed Revisions of Regulations, Part 541.”

These reports were produced by Harold Stein in 1940 (“Stein Report”),4 Harry Weiss in

1949 (“Weiss Report”),5 and Harry S. Kantor in 1958 (“Kantor Report”).6 The page

numbers cited herein refer USDOL to the corresponding location in the actual report,

rather than to any reproduction of the report.

II. The Southeastern Alliance of Child Care Associations’ Comment toUSDOL’s Proposed Regulations Regarding the “White-Collar” Exemptions

A. The Proper Scope of These Proceedings

Prior to making substantive comments to USDOL’s proposed regulations, it is

important to note the role of the rulemaking process generally. As USDOL is aware,

Congress made the judgment that executive, administrative, professional, and outside

sales employees would be exempt from the FLSA's minimum-wage and overtime

requirements. USDOL is responsible for defining and delimiting these exemptions to carry

out Congress’ judgment by “amplifying and describing more precisely the type of

employees to whom the exemption would be applicable.”7 This entails articulating the

4 Harold Stein, Presiding Officer, Wage and Hour and Public Contracts Divisions, U.S. Departmentof Labor, Report and Recommendations to Redefinition of “Executive, Administrative,Professional…Outside Salesman”, 2 (Oct. 10, 1940).5 Harry Weiss, Presiding Officer, Wage and Hour and Public Contracts Divisions, U.S. Departmentof Labor, Report and Recommendations on Proposed Revisions of Regulations, Part 541, Under theFair Labor Standards Act, 11 -12 (June 30, 1949).6 Harry S. Kantor, Presiding Officer, Wage and Hour and Public Contracts Divisions, U.S.Department of Labor, Report and Recommendations on Proposed Revisions of Regulations, Part541, Under the Fair Labor Standards Act, 5 (Mar. 3, 1958).7 Stein Report at 2.

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nature and essential qualities of employees occupying executive, administrative,

professional, or outside sales positions.

While USDOL’s role will of course have an indirect effect upon who is and is not

exempt, USDOL does not have authority to craft the applicable criteria for the purpose of

excluding employees from the exemptions and cannot tailor factors defining and

delimiting the exemptions with the goal of increasing or otherwise affecting the wages

received by workers. As USDOL has previously recognized:

The Administrator is not authorized to set wages or salaries for executive,administrative, and professional employees. Consequently, improving theconditions of such employees is not the objective of the regulations. Thesalary tests . . . are essentially guides in distinguishing bona fide executive,administrative, and professional employees from those who were notintended by Congress to come within these categories. Any increase in thesalary levels . . . must, therefore, have as its primary objective the drawingof a line separating exempt from nonexempt employees rather than theimprovement of the status of such employees.8

With this in mind, SACCA notes its concern with statements made by the Secretary

of Labor and others within USDOL to the effect that the proposed regulations, “once final,

would extend overtime protections to roughly 5 million workers.”9 USDOL does not have

authority to revise the factors for satisfying the exemptions in order to “extend overtime

protections.” Moreover, statements by USDOL that assume the proposed regulations will

be in substantially the same form “once final” suggest that USDOL has already made up

its mind to incorporate the proposed regulations as is, prior to accepting and considering

comment from the public as it is required to do pursuant to the Administrative Procedure

Act.

Any final regulations issued by USDOL with respect to the administrative,

executive, professional, and outside sales exemptions to the FLSA must therefore be

8 Weiss Report at 11 (emphasis added).9 Mandy Craft, Secretary Perez Answers Overtime Story Writers, Dep’t of Labor Blog (Sept. 3,2015), https://blog.dol.gov/2015/08/21/secretary-perez-answers-overtime-story-writers/.

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drafted with an eye towards who currently satisfies the exemptions as determined by

Congress, not who should satisfy the exemptions in the opinion of USDOL. To do so,

USDOL must take into consideration and incorporate the comments of the public at large

before making any proclamations as to what is or is not “final.”

B. Proposed Increase in the Minimum Salary Level

The principal purpose of the salary test has historically been to serve as a “guide[]

to help” or as a “useful adjunct[]” in drawing the line between exempt and nonexempt

employees.10 USDOL has therefore consistently stated that “the [salary] level selected

must serve as a guide to the classification [of exempt employees] and not as a barrier to

their exemption.”11

The reason is clear: the ultimate task in applying the exemptions is restricted to

reaching the proper conclusion as to whether an employee's working circumstances are

consistent with Congress’ intent in including those exemptions. It has been long

recognized that this purpose is best served “if the salary level [is] selected carefully and

. . . approximate[s] the prevailing minimum salaries for this type of personnel and are

above the generally prevailing levels for nonexempt occupations.”12

USDOL must also give “appropriate consideration . . . to the fact that the same

salary cannot operate with equal effect as a test in high-wage and low-wage industries

and regions, and in metropolitan and rural areas, in an economy as complex and

diversified as that of the United States.”13 The salary test's history shows that the regular

10 Weiss Report at 11-12.11 Id. at 15 (emphasis added).12 Id. at 11-12 (emphasis added) (recognizing that the earlier level had been “a relatively lowfigure” and concluding that “[a]ny new figure recommended should also be somewhere near thelower end of the range of prevailing salaries” for potentially exempt employees).13 Kantor Report at 5.

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practice in establishing dollar levels has therefore been to set them “at points near the

lower end of the current range of salaries for each of the categories.”14

USDOL has departed from this practice by proposing setting the minimum salary

necessary to satisfy the executive, administrative, and professional exemptions to the

FLSA at the “40th percentile of earnings for full-time salaried workers.”15 USDOL projects

that the “40th percentile of earnings for full-time salaried workers” in 2016 will be $970

per workweek or $50,440 per year, which is more than double the current minimum

salary level and constitutes more than 10% of the dollar volume for business done to

establish enterprise coverage under the FLSA.16

For the reasons set forth below, the Southeastern Alliance of Child Care

Associations has serious concerns with the data and processes used to formulate USDOL’s

proposal, in addition to the conclusions derived therefrom, and therefore requests that

the proposal be rescinded so that more accurate and reliable data may be collected and

considered by the public. If USDOL will not rescind its proposal, SACCA requests that

USDOL set the minimum salary level according to the method utilized by USDOL in 2004

(which USDOL estimates would result in a minimum salary of $577 per workweek, or

$30,000 per year, based on the data included in the proposed regulations) or,

alternatively, the Kantor method (which USDOL estimates would result in a minimum

salary level of $657 per workweek, or $34,176 per year, based on the data included in

the proposed regulations).

14 Id. (emphasis added).15 80 Fed. Reg. at 38517.16 Compare id. at 38517 n. 1 with 29 C.F.R.§ 541.600(a) and 29 U.S.C. § 203(s).

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1. USDOL’s Data Does Not Accurately Reflect the Salaries Paid toExempt Employees and Therefore Should Not Be Used to Set theMinimum Salary Level for the White-Collar Exemptions

USDOL recognized as early as 1949 that “[a]ctual data showing the increases in

the prevailing minimum salary levels of bona fide executive, administrative and

professional employees . . . would be the best evidence of the appropriate salary

increases for the revised regulations.”17 If these data were available, they were used.18

Data relating to wages and earnings among nonexempt employees were resorted to

where “no direct evidence was available or where the available data were fragmentary .

. .”19 Even then, this was done against the backdrop of an intention to establish a salary

level “near the lower end” of the range so modeled.20

By 1958, these decisions were informed by figures from the Wage and Hour

Division on “salaries paid to employees who qualified for exemption” which were

published before rulemaking began.21 They included “tabulations of salaries grouped by

major geographic regions, by number of employees in the establishment, by size of city,

and by broad industry groups.”22 This “most direct evidence of actual salaries paid,”

“obtained as a by-product of the Divisions’ regular investigation program rather than as

a special statistical survey23 was seen to “reflect[] the salary patterns with reasonable

accuracy.”24 USDOL relied upon similar information again in 1963 and in 1970.25

17 Weiss Report at 12.18 Id.19 Id.20 Id.21 Kantor Report at 6.22 Id.23 Id.24 Id.25 Executive, Administrative and Profession Exemptions, 28 Fed. Reg. 7002 (Proposed July 9,1963)(To be codified at 20 C.F.R. pt. 541); Defining and Delimiting the Terms “Any EmployeeEmployed in a Bona Fide Executive, Administrative, or Professional Capacity (Including AnyEmployee Employed in the Capacity of Academic Administrative Personnel or Teacher inElementary or Secondary Schools), or in the Capacity of Outside Salesman,” 35 Fed. Reg. 883,884-885 (Jan. 22, 1970).

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Nonetheless, USDOL now declines to employ such methods as a basis for

determining the minimum salary level because:

[I]n order to create such a pool of likely-exempt salaried employees onewould have to rely upon 'uncertain assumptions regarding which employeesare actually exempt.' In addition, the Department used CPS data ratherthan salary data from the limited pool of our own investigations becausethere would have been too few observations from these investigations toyield statistically meaningful results.26

SACCA cannot judge or comment upon whether information from USDOL's investigations

would have been statistically significant in the absence of the opportunity to review such

information. Likewise, with respect to any “uncertain assumptions” to be made about

salary-and-exemption information USDOL has accumulated internally, SACCA notes that

the Agency’s reliance upon such evaluations has proven historically acceptable.27

Regardless, the data and methods used in the present proceedings are on their

face unreliable. A close-reading of the proposed regulations reveals that the data upon

which USDOL proposes to rely in setting the minimum salary level for exempt employees

is actually based upon wages paid to “full-time . . . non-hourly paid employees,”28 many

of whom are undoubtedly nonexempt and are not paid on a salary basis, notwithstanding

USDOL’s repeated references to “actual salaries paid to employees,” “all full-time salaried

employees,” “salary levels throughout the economy,” etc.29 SACCA finds it confusing and

26 80 Fed. Reg. at 38529, 38532, 38557, 38560 n. 82.27 SACCA further notes that USDOL has selectively employed such evaluations in connection withthe present proceedings. See, e.g., 80 Fed. Reg. at 38529, 38532, 38557, 38560 n. 82. Part VIIof USDOL's explanation and its Appendix A reveal that the Agency has conducted an elaborateevaluation of “weekly earnings” and a determination of “whether a worker met the duties test”based upon “an analysis performed by officials from the [Wage and Hour Division] . . .” forpurposes of estimating the number of employees likely to be affected by the proposed salary level.80 Fed. Reg. at 38553. This included the assignment of “probability codes” designed to provide alikelihood that incumbents in an occupation met the duties tests for an exemption. Id. USDOLhas also estimated (i) the number of “salaried white collar workers” whose salaries are higher than“a specific salary level” but who “do not pass” the duties tests, and (ii) the number of “salariedwhite collar workers” who “satisfy” the duties tests but whose salaries are lower than “a specificstandard salary level.” 80 Fed. Reg. at 38559.28 See, e.g., 80 Fed. Reg. at 38517 n. 1, 38527 n. 20, 38540 n. 37, 38548 n. 54 (all emphasisadded).29 80 Fed. Reg. at 38516.

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misleading to use “salary” or “salaried” repeatedly when actually referring to “non-hourly”

wages, particularly given that “salary” is not a generic term in the current context, but is

instead a term-of-art.30 SACCA therefore respectfully submits that USDOL’s use of the

term “salaried” employees when it actually means “non-hourly paid employees” is

inappropriate.

SACCA further states that USDOL’s use of data relating to “non-hourly” wages is

an improper basis for setting the minimum salary level for exempt employees. Indeed,

the “non-hourly” employees sampled might be paid on a commission basis, a day-rate

basis, a job-rate basis, a piece-rate basis, a salary-for-40-hours basis, a fluctuating-

workweek basis, via a combination of methods, or in a variety of other ways. “Non-

hourly” wages could likewise include wages for overtime pay, commissions, tips, and cash

bonuses. In either case, the data does not provide an accurate indication of the actual

salaries paid to exempt employees, which is necessary for USDOL to create a meaningful

minimum salary level for the exemptions.

The Southeastern Alliance of Child Care Associations therefore respectfully

requests that USDOL:

¸� Rescind its proposed regulations;

¸� Conduct an entirely new evaluation and make a different proposalon the basis of USDOL’s internal, exemption-specific information andanalysis; and

¸� Publish a detailed report on both the contents and results of theexemption-specific analysis prior to issuing any new proposals.

30 29 C.F.R. § 541.602 (2014).

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2. The Minimum Salary Level Should Not Operate as a “Barrier” to theExemptions for Those in Comparatively Lower-Income Regions andLower-Wage Industries.

Regardless of the data ultimately used, USDOL must also give “appropriate

consideration . . . to the fact that the same salary [level] cannot operate with equal

effect as a test in high-wage and low-wage industries and regions, and in metropolitan

and rural areas, in an economy as complex and diversified as that of the United States.”31

USDOL must therefore set the minimum salary level “at points near the lower end of the

current range of salaries for each of the categories.”32

USDOL has, however, declined to do so here.33 This departs from decades of

practice in setting the salary level. USDOL contends that its proposed methodology

“already accounts for” and “adequately protects low-wage industries and areas” by

selecting a 40th percentile to apply to the data it has selected.34 On the contrary, SACCA

has concerns whether (i) this has in fact recognized the pertinent characteristics of lower-

wage regions35 and industries,36 and (ii) USDOL has actually done an adequate analysis

of the matter.

USDOL's “low wage” information is derived from undescribed “estimated . . .

distributions” of unstated “weekly earnings” of two groups from which unspecified

“alternate salary levels” were “identified” by applying “pre-determined percentiles,”

presumably the percentile figures used by USDOL in 2004 or pursuant to the Kantor

31 Kantor Report at 5.32 Id. (emphasis added).33 See, e.g., 80 Fed. Reg. at 38528.34 See, e.g., Id. at 38532, 38541.35 USDOL states that it “considered” non-Metropolitan Statistical Area regions to be lower-wageones in choosing the proposed salary level. 80 Fed. Reg. at 38557. However, USDOL does notdiscuss whether it made appropriate use of these statistical divisions, whether they were correctlyused in those ways, or whether the fact that the delineations do not represent an urban/ruraldistinction might be a pertinent consideration. See OMB Bulletin No. 13-01 (February 2013).36 USDOL appears to have considered only three industries to be “low-wage” ones: “Leisure andhospitality, other services, and public administration.” 80 Fed. Reg. at 38557. While it is unclearwhat these labels actually encompass, they clearly do not include the child care industry.

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methodology.37 This information generated weekly minimum salary figures of either

$577 per workweek (according to the methodology utilized by USDOL in 2004) or $657

per workweek (according to the Kantor method).38

USDOL nonetheless disregards these figures on the basis that its analysis of “the

historical relationship between the 40th percentile benchmark and the CPI-U” has led

USDOL to determine “that the data does not substantiate . . . past concerns about the

likely effects on low-wage regions and industries . . .”39 But USDOL’s analysis of the

“historical relationship” is based upon a false comparison:

¸� CPI-U “is designed to measure inflation for the U.S. urban populationand thus may not accurately reflect the experience of people livingin rural areas.”40 While it is said to include “approximately 87percent of the total population,”41 the statistic provides noinformation about the percentage of jobs or workers falling withinthe U.S. non-urban population, which are likely to bedisproportionately lower-wage ones and in which a significantpercentage of SACCA’s members reside; and

¸� CPI-U is unrelated to industries, lower-wage or otherwise.

SACCA therefore submits that use of a 40th percentile does not “account for” or

“adequately protect” its members operating in a comparatively lower-wage region and

industry, and that either the method utilized by USDOL in 2004 (resulting in a minimum

salary level of $577 per workweek, or $30,000 per year, based on USDOL’s data) or the

Kantor method (resulting in a minimum salary level of $657 per workweek, or $34,176

per year, based on USDOL’s data) would more closely align with the actual salaries paid

to exempt child care employees in Georgia, Florida, Louisiana, North Carolina, and South

Carolina.

37 80 Fed. Reg. at 38557.38 Id. at 38558.39 Id. at 38541.40 Consumer Price Index: Frequently Asked Questions, Dep’t of Labor Bureau of Labor Statistics,(Sept. 3, 2015), http://stats.bls.gov/cpi/cpifaq.htm#Question_21.41 Consumer Price Index, Dep’t of Labor Bureau of Labor Statistics, (Sept. 3, 2015),http://stats.bls.gov/cpi/cpiovrvw.htm#item2.

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Take, for example, the director of a child care center, who is in almost all instances

the highest-ranking employee at the center and easily satisfies the duties requirements

of both the executive and administrative exemptions.42 Based on informal surveys of

some of its centers’ members, SACCA estimates that up to 80% of child care directors in

the Southeast are paid less than USDOL’s proposed projected minimum salary level of

$50,440 per year,43 and that more than half of child care directors in the Southeast are

paid less than $35,000 per year.

These salaries are not arbitrarily set. Rather, they reflect the market value for a

child care director’s services and, most importantly, the center’s available resources to

pay for such services. As previously stated, while the child care industry provides an

invaluable public service, the operation of a child care center is not necessarily a lucrative

business. A significant percentage of SACCA’s centers do just over $500,000 in business

in any given year, and the vast majority fail to exceed $1,000,000 in business done for

a year. Simply put, the majority of SACCA’s child care centers cannot afford to pay

directors more than $35,000 per year.

USDOL’s proposed regulations put these centers in an impossible situation. A

center that does $500,000 in business annually is subject to enterprise coverage under

the FLSA.44 If the minimum salary level for exempt employees in 2016 annualizes to

$50,440, as projected by USDOL, the center will have to devote more than 10% of its

entire operating budget to just one employee in order for that employee to be exempt

42 See, e.g., Occupational Outlook Handbook, Preschool and Childcare Center Directors, Dep’t ofLabor Bureau of Labor Statistics (Sept. 3, 2015), http://www.bls.gov/ooh/management/preschool-and-childcare-center-directors.htm (“Preschool and childcare center directors direct and leadstaffs, oversee daily activities, and prepare plans and budgets. They are responsible for all aspectsof their center’s program”).43 According to the Bureau of Labor Statistics, the national median salary for child care directors is$43,950.00 per year, which is also well below USDOL’s proposed projected minimum salary levelof $50,440 per year. Id.44 These centers may also be subject to enterprise coverage as a “school” or “preschool,” regardlessof the amount of their annual business done. 29 U.S.C. § 203(s)(1)(B) (2014).

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from the FLSA’s minimum wage and overtime requirements. That proposition is

untenable, and is plainly not what Congress intended when enacting the FLSA and its

accompanying exemptions.45

A center does not resolve the issue by simply reclassifying its director as

nonexempt. As USDOL acknowledges, “When childcare centers are open, a director must

always be on staff . . .”46 Indeed, directors are responsible for ensuring the health and

safety of the center’s students, which means that directors must often keep centers open

late to accommodate parent schedules and other unforeseen events. If a student is not

picked-up from the center on time, the director cannot clock-out and stop working;

rather, the director must remain with the student to ensure that she is properly cared for

at all times. This unpredictability makes budgeting for overtime hours unfeasible. The

center does not know when a director may be able to go home early or be required to

stay late, and therefore cannot properly account or plan for the overtime that the director

may incur in any given workweek.

USDOL’s proposed regulations therefore make the management and staffing of a

child care center nearly impossible by excluding its highest-ranking employee (and,

consequentially, nearly all other center employees) from exempt status. Since the

director’s responsibilities include “[e]stablish[ing] budgets and set[ting] fees for

programs,” USDOL’s proposed regulations create the perverse result of having a

nonexempt director manage and oversee the budget, payroll, and timekeeping

responsibilities for herself and all other center employees.47 Since the director’s

responsibilities include “[s]upervis[ing] preschool teachers,” USDOL’s proposed

45 H.R. Rep. No. 101-63 (1989) (noting Congress’ intent to “exempt small businesses” from theFLSA and the need to raise minimum wage and overtime thresholds only with “a commensurateincrease in the enterprise test threshold”).46 Occupational Outlook Handbook, supra note 42.47 Id.

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regulations may additionally cause the unusual outcome of a nonexempt director having

to supervise an exempt teacher.48 The impractical real world consequences of USDOL’s

proposed regulations on the child care industry are endless.

These concerns are neither hypothetical nor “perceive[d],” nor are they

constrained to an insignificant percentage of the population.49 Given that the national

median salary of child care directors is approximately $43,950.00 per year and USDOL’s

projected minimum salary level is $50,440.00 per year, USDOL’s proposed regulations

will render more than half of the directors in child care centers throughout the nation

nonexempt, and will have an even more significant impact on child care centers in rural,

low-wage regions throughout the Southeast. This will in turn have a devastating impact

on the child care industry generally, and will jeopardize initiatives to make child care “a

national economic priority that is for all of us.”50

If USDOL is committed to a single standard rate for nationwide application, then

it must weigh more heavily the fact that a one-size-fits-all salary level that eliminates

“obviously nonexempt employees”51 in high-income regions or industries, will in turn

operate as a “barrier”52 to the exemption for many more employees who meet the duties

tests but reside in lower-income regions or work in lower-wage industries.53 It is for this

very reason that USDOL has set a lower-end salary in the past, and that the Agency must

48 Id.; see also, Field Operations Handbook, Dep’t of Labor, Sec. 22d08 (“bona fide teachers inpreschool and kindergarten settings may qualify for exemption under the same conditions as ateacher in an elementary or secondary school, i.e., if they meet the primary duty test for a teacherand are employed and engaged in this activity as a teacher in a qualifying ‘educationalestablishment’”).49 See 80 Fed. Reg. at 38564 (“Employers in non-MSAs and low-wage industries may perceive agreater impact . . . However, because the vast majority of potentially affected workers reside inMSAs and do not work in low-wage industries, the Department believes that the proposed salarylevel is appropriate”).50 Remarks by the President in State of the Union Address, supra note 2.51 Weiss Report at 18.52 Id. at 15.53 This result will be particularly felt by SACCA’s members, which both reside in a lower-incomeregion and are engaged in a lower-wage industry.

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do so again. Whatever nationwide figure is established must be set so as to, as Mr.

Kantor put it, exclude a relatively small percentage “of those in the lowest-range region,

or in the smallest size establishment group, or in the smallest-sized city group, or in the

lowest-wage industry of each of the categories . . .”54

The Southeastern Alliance of Child Care Associations therefore respectfully

requests that:

¸� The proposed minimum salary level be withdrawn;

¸� USDOL conduct an entirely new evaluation and make a differentproposal on the basis of its internal, exemption-specific information(as updated, if need be) and analysis;

¸� USDOL publish a detailed report on both the contents and results ofthe exemption-specific analysis prior to issuing new proposedregulations based upon such data; and

¸� USDOL return to either the methodology utilized in 2004 or,alternatively, the Kantor method in setting the minimum salary levelso as not to impose a “barrier” to exempt status for employees inlower-wage regions and industries.

C. Proposed Automatic “Update”

USDOL additionally proposes to include a mechanism in the final regulations that

would automatically update the exemptions’ salary threshold on an annual basis using

either a fixed percentile of wages or CPI-U.55 SACCA objects to any proposal that would

automatically update the salary test. SACCA further notes that, because USDOL “is not

proposing specific regulatory text,”56 the adoption of any such indexing mechanism would

be unlawful and without effect under the Administrative Procedure Act.

As an initial matter, “the line of demarcation” provided by the salary test “cannot

be reduced to a standard formula.”57 Yet, that is precisely what this proposal involves:

54 Kantor Report at 6-7.55 80 Fed. Reg. at 38517.56 Id. at 38539.57 Id. at 38527.

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taking whatever the most-recent setting of the salary level turns out to be and then

annually extrapolating it into the indefinite future based upon “a standard formula.”

More concerning, the proposal does not contemplate any substantive salary re-

evaluations in the future, thereby leaving whatever mechanism is implemented as the

result of this rulemaking (as well as its unintended consequences) in place for years to

come. Consequently, there is reason to fear that the underlying determinations leading

to the coming figure will go un-reconsidered indefinitely, thus leaving whatever the figure

is to the cumulative impact of annually setting a level by: (1) statistically locating the

40th percentile of a data set; or (2) calculating a CPI-U-derived percentage increase in

the predicate salary. Of course, this amounts to nothing more than setting the salary

level for an indefinite period of time by using “a standard formula.”

While USDOL contends that “frequent updates are imperative to keep pace with

changing employee salary levels,”58 there is nothing to suggest that such updates cannot

be accomplished by initiating the rulemaking process when necessary, as has always

been the case.59 The proposal makes multiple references to the historically-uneven and

sometimes-long intervals between adjustments in the salary levels, but this merely has

to do with how USDOL has chosen to administer itself. Moreover, SACCA notes that

although USDOL last increased the minimum salary threshold in 2004, Congress has not

updated the basis for enterprise coverage since 1989. To the extent USDOL contemplates

further increases in the minimum salary level, there should at least be discussion and

opportunity for Congress to “review the enterprise test again to determine whether it

continues to exempt small business as Congress intended.”60

58 80 Fed. Reg. 38539.59 For reasons already discussed in Section B(1), which of multiple meanings USDOL intends byusing the word “salary” is unclear, whereas stating the specific meaning would shed importantlight upon the substance of what is being said. See Sec. II(B)(1), supra.60 H.R. Rep. No. 101-63 (1989).

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USDOL also refers to considerations of competing regulatory priorities; overall

agency workload; and the time- and resource-intensive nature of notice-and-comment

rulemaking.61 SACCA respectfully submits that these concerns may be better addressed

by properly ranking Agency priorities, effectively allocating resources, and engaging in

the proper discussions with Congress about appropriations, as opposed to annually

increasing the minimum salary level according to a standard formula without committing

to future reconsiderations of the formula or its consequences.

Nonetheless, if USDOL chooses to implement an indexing procedure to update the

minimum salary levels as part of its final regulations, the Southeastern Alliance of Child

Care Associations suggests that USDOL include the following features.

1. The Minimum Salary Level Should Not Be Updated Annually

SACCA submits that any changes to the minimum salary level should not occur

yearly. As part of the education industry, SACCA’s centers rely heavily on the use of

annual employment contracts for directors and other key employees. These contracts

typically correspond to a school, rather than calendar, year. Annual revisions to the

minimum salary level on a calendar year basis will not only interfere with such contracts,

but will also complicate both centers’ and employees’ ability to formulate short-term and

longer-term budgets and create a stable employment relationship that lasts the duration

of the school year.

SACCA therefore recommends that any such re-evaluation period be not less than

every three years. It also recommends that the period of advance notice be extended to

180 days. This would allow SACCA’s members adequate time to enter into mutually

beneficial contracts with its key employees that meet minimum salary requirements at

the time of drafting, as well as at the time of implementation.

61 80 Fed. Reg. 38539.

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2. Any Increases to the Minimum Salary Level Should be Capped

USDOL states that an index approach is intended to replace “more drastic” changes

with “gradual changes,” but no safeguards have been proposed to protect against drastic

increases (or decreases) in the salary level.62 SACCA recommends that the change in

salary level be no more than five percent of the prior salary level. This is slightly higher

than the annualized increase in the salary level over the exemptions' history.

3. USDOL Should Provide for a “Safety Valve” in Case of Exceptional orUnforeseen Circumstances

There could also be times of national emergency for any number of reasons,

episodes of extraordinarily high unemployment, or a host of other exigencies that would

render automatic salary indexing undesirable and untenable for at least some period.

The day might well come when the actual or threatened effects of the indexing

mechanism, whether or not they are foreseen or foreseeable today, should not be

permitted to persist or occur. For instance, there might again be a period of high inflation

comparable to or even worse than that of the late 1970s, or conceivably there might

someday even be a period of prolonged and exacerbated deflation.

SACCA recommends that the Secretary of Labor or the Wage and Hour

Administrator be expressly authorized to modify or suspend any “update” procedure for

such reasons, in such ways, and for such periods as are justified under the circumstances.

4. Any Updates Should be Based Upon USDOL’s Internal Data ReflectingActual Salaries Paid to Exempt Employees

USDOL has proposed that any “update” to the minimum salary level be based upon

either: (1) the 40th percentile of what it refers to as “all full-time salaried workers;” or

(2) changes in the CPI-U as applied to a predicate salary level.63 USDOL seeks comments

62 Id. at 38523.63 Id. at 38540.

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on both methods, including as to which is “better suited” to the undertaking.64 SACCA

respectfully submits that neither method is an appropriate way to index future salary

levels.

This comment has already discussed the concerns of selecting a 40th percentile,

and therefore will not repeat those points here. However, what the percentile would be

applied to is also ambiguous; USDOL refers without citation to “[t]he chosen population

– all full-time salaried workers” and to “the BLS data for this pool . . ..”65 It says that

the “pool” would purportedly “be based upon actual salaries that employers are currently

paying,” but the actual citations are only to information about “non-hourly paid

employees.”66 Whatever else those data do or do not represent, they are in no relevant

way representative of “actual salaries that employers are currently paying” on a “salary

basis” to employees who do or might also meet the exemptions’ duties tests.67

The only data set USDOL specifically cites and appears to intend to use has to do

with a Bureau of Labor Statistics “table of deciles of the weekly wages of full-time salaried

workers, calculated using CPS data . . .”68 But, again, neither of these data “specifically

identify salaried workers” and certainly not employees paid on a “salary basis.” They

instead include unverified, unverifiable, and unspecified “usual weekly earnings before

taxes and other deductions and include any overtime pay, commissions, or tips usually

received” as given by “workers who do not report being paid an hourly rate.”69 What else

these “earnings” might consist of is unstated and probably unknowable.70 And whereas

64 Id. at 38541.65 Id. at 38540.66 Id.67 Id.68 Id. at 38540 n. 37.69 Labor Force Statistics from the Current Population Survey, Dep’t of Labor Bureau of LaborStatistics, http://www.bls.gov/cps/research_series_earnings_nonhourly_workers.htm (last visitedSept. 3, 2015).70 Id.

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USDOL refers elsewhere to a sample of 60,000 “households,” these data represent a sub-

sample of only “one-fourth of the CPS monthly sample,” or presumably as few as 15,000

“households.”71

Furthermore, by initially increasing the minimum salary level to the 40th percentile

of the “salaried workers” data set, USDOL will also skew those very data in favor of

substantial increases when future adjustments are made. For example, assuming for the

moment that the 40th percentile of “salaried workers” in 2016 is the projected $970 per

workweek, employers will overwhelmingly (1) convert employees who are currently paid

on a salary basis at a lower rate to nonexempt, hourly-paid ones; and/or (2) increase the

salaries of employees who will remain exempt to at least $970 per workweek, along with

raising the salaries of more-highly-paid employees to prevent or mitigate

compression. The first option will necessarily reduce the proportion of exempt employees

paid on a “salary basis” in the “salaried workers” data pool USDOL proposes to use, and

the second will substantially increase the amount which that remaining pool is paid. In

sum, USDOL's proposal will result in a smaller group of “salaried workers” who will in turn

be paid at higher salary levels, thereby artificially and unduly influencing the “prevailing

minimum salary levels” used to compute the new minimum salary for exempt status.

As for the CPI-U approach, USDOL itself recognizes, “inflation has been used as a

method for setting the precise salary level only in the breach . . .”72 The Agency

summarizes some of the “prior concern[s]” among its predecessors with an inflation-

based approach, and it “acknowledges these concerns.”73 However, USDOL apparently

believes that these difficulties are overcome by applying the CPI-U to the salary level to

be proposed, because (i) this will be done only prospectively; and (ii) the salary level will

71 Id.72 Id. at 38533 (emphasis added).73 Id. at 38540.

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be set “using current data on wages being paid to full-time salaried workers . . .”74 On

the contrary, this simply layers one ill-founded proposition upon another, including that

those “current data” do not reveal specific information about “salaries” generally

speaking, or about employees paid on a “salary basis,” or about exempt employees, and

setting the salary level based upon some nebulous composite of “wages” is not proper.75

For largely the same reasons given in Section B(1), USDOL should instead make

a different proposal to conduct an “update” via the use of internal, exemption-specific

information. If USDOL maintains a contemporaneous database of such information, then

this would dispense with the need to set the salary level according to any measure other

than the amounts of actual salaries actually paid on a “salary basis” to employees who

are or are likely to be exempt, taking into account lower-wage regions and industries.

D. Hypothetical Changes in the Duties Tests

USDOL says that, while “it is not proposing specific regulatory changes at this

time, [it] is seeking additional information on the duties tests for consideration in the

Final Rule.”76 Whether or not USDOL intended such an implication, this sentence may

fairly be read to suggest that in the Final Rule USDOL will purport to make actual changes

in those portions of Part 541 relating to these requirements. Post-publication remarks

made by Wage and Hour Administrator David Weil appear to mean that no such changes

will be made. With that understanding, SACCA offers the following discussions.

1. USDOL Should Refrain from Implementing Strict Time Requirementsto a Qualitative Primary-Duties Test

USDOL’s Questions B and C deal with largely the same consideration: whether

there should there be a requirement that an employee spend a minimum amount of time

74 Id. (emphasis added).75 USDOL's formulation about “whether the CPI-U will accurately track the actual salaries andincomes . . .” reveals a similar flaw in its reasoning. Id. (emphasis added).76 80 Fed. Reg. 38543.

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in the requisite primary duty in order to be exempt.77 SACCA submits that there should

be no such minimum.

Since 1938, USDOL has deemed it appropriate and entirely workable to view the

primary-duty test as being an ultimately-qualitative one. Whether an employee spends

more than 50% of his or her time in work of the requisite kind has been no more than a

“good rule of thumb” or a “useful guide,” but did not “seem reasonable in all situations.”78

As a result, this consideration has always been only one of a number of factors to

consider.

In 2004, USDOL recognized this long history and properly rejected the idea that

there should be a minimum percentage. It did so with reference to a proposal that the

threshold be 50%, but the same reasoning would apply to any particular percentage:

Adopting a strict 50-percent rule for the first time would not be appropriate. . . because of the difficulties of tracking the amount of time spent onexempt tasks.

Such a rule would require employers to perform a moment-by-momentexamination of an exempt employee’s specific daily and weekly tasks, thusimposing significant new monitoring requirements (and, indirectly, newrecordkeeping burdens).79

USDOL’s remarks were in part based upon its earlier observation that there was no

timekeeping requirement for exempt employees,80 and that remains the case today.81

In light of the decades-long practice of evaluating “primary duty” on a qualitative

basis, USDOL, the courts, and other interested members of the public have become

familiar with these principles and have developed approaches to applying them. USDOL

now questions whether this 75-year period of policy and practice should be abandoned

77 Id.78 Weiss Report at 51.79 Defining and Delimiting the Exemptions for Executive, Administrative, Professional, OutsideSales and Computer Employees, 69 Fed. Reg. 22122, 22186 (Apr. 23, 2004) (to be codified at 29C.F.R. pt. 541).80 69 Fed. Reg. at 22126.81 29 C.F.R. § 516.3 (2014).

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because of some concern that some employees might be “spending a significant amount

of their work time performing non-exempt work” and that, “at some point, a

disproportionate amount of time spent on nonexempt duties may call into question

whether an employee is, in fact, a bona fide EAP employee.”82 Another apparent Agency

concern is that these and similar matters “can lead to varying results.”83

Whether, and to what extent, some employees are or are not spending “a

significant amount” of time or “a disproportionate amount” of time on nonexempt work

so as to call their exempt status into question are matters that have always existed but

that have been appropriately dealt with by engaging in the qualitative analysis of exempt

vs. nonexempt work required under the law. The fact that “varying results” might flow

from the assessment of these issues is just as true of many other duties tests, that is, it

is an inescapable aspect of applying Section 13(a)(1)'s ambiguous terms to an endless

variety of inherently-uncertain facts and circumstances.

Again, consider the example of a child care center director. As stated previously,

“When childcare centers are open, a director must always be on staff . . .”84 This will

frequently cause the director to be the only employee (or one of a select few) to be

present at the center at any given moment. During these times, the director should not

be discouraged from the performance of various nonexempt tasks. For example, if the

director must stay late to wait for a parent, the director may choose to answer phones,

clean the classroom, or prepare meals for the next morning to assist other employees in

their duties and encourage the orderly operation of the center. SACCA is concerned that

the imposition of strict time requirements on the performance of exempt vs. nonexempt

82 80 Fed. Reg. 38543; It is also true that, while the concept of “primary duty” and the impact ofnonexempt work are of course related, they are nevertheless different considerations entailingseparate analysis and evaluation. Compare, e.g., 29 C.F.R. § 541.700 with 29 C.F.R. § 541.702.83 80 Fed. Reg. 38543.84 Occupational Outlook Handbook, supra note 42.

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work would discourage such activities, complicate business operations, and shift a greater

burden to nonexempt employees to perform all nonexempt work so as not to jeopardize

their supervisors’ exempt status.

As for whether USDOL should look to California wage orders to adopt a 50%

threshold, the Southeastern Alliance of Child Care Associations’ members do not do

business in the State of California, and SACCA therefore cannot speculate as to the effects

of invoking California’s wage-hour requirements on a nationwide basis.

2. No Modifications to the “Concurrent Duties” Concept Is Required

USDOL asks whether 29 C.F.R. § 541.106 “is working appropriately” or instead

“needs to be modified.”85 SACCA’s comments relating to “primary duty” apply equally

here.

The current Section 541.106 relating to the performance of concurrent duties was

adopted in 2004 but did nothing more than incorporate a longstanding concept.86 Indeed,

the performance of concurrent duties were embraced at least as long ago as 1949.87

Thus, it is not the case that the regulation was somehow conceived, designed, and

implemented in recent times. USDOL, the courts, and other interested parties who are

familiar with the concept's parameters have become accustomed to it over many decades

and have long experience with applying it.

Furthermore, the concurrent performance of exempt and nonexempt work has to

do with whether an employee meets the “primary duty” requirement – not whether the

employee is supposedly performing “too much” nonexempt work.88 Therefore, the

85 Id.86 See, e.g., 69 Fed. Reg. at 22136-37; Opinion Letter of Deputy Wage-Hour AdministratorFLSA2005-19 (August 2, 2005) (section was “not a change in the Department's position”).87 Weiss Report at 35.88 29 C.F.R. § 541.106(a) (“Whether an employee meets the requirements of § 541.100 when theemployee performs concurrent duties is . . . based on the factors set forth in §541.700.”(emphasis added)).

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principle is not an exemption requirement in itself, and it simply has a bearing upon the

evaluation of a requirement that is well-suited as it stands. This in itself “avoid[s]

sweeping nonexempt employees into the exemption.”89

USDOL's formulation of Section 541.106 further “avoid[s] sweeping nonexempt

employees into the exemption” by articulating qualitative ways to distinguish between

instances in which nonexempt work is performed concurrently with exempt work from

those in which it is not:

Generally, exempt executives make the decision regarding when to performnonexempt duties and remain responsible for the success or failure ofbusiness operations under their management while performing thenonexempt work. In contrast, the nonexempt employee generally isdirected by a supervisor to perform the exempt work or performs theexempt work for defined time periods. An employee whose primary duty isordinary production work or routine, recurrent or repetitive tasks cannotqualify for exemption as an executive.90

Taken along with the illustrations that follow this passage, the character and impact of

concurrent performance can be evaluated with no more difficulty than is presented by

other duties requirements.

The “concurrent duties” concept is of particular relevance to the child care

industry. Consider, as an illustration, a director who, in cleaning and/or feeding a young

student, simultaneously trains a new teacher on how students are to be cleaned and/or

fed in compliance with state regulatory requirements. Or, consider a director who, while

inspecting whether a kitchen meets applicable health and safety codes, sweeps the floor

or puts dishes in the dishwasher. While the director’s duties may, at times, appear to

encompass some nonexempt work, they would not affect the ultimate nature of her job

duties or the importance of her exempt status.

89 80 Fed. Reg. 38543.90 29 C.F.R. § 541.106(a) (2014).

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Finally, USDOL has asked “[t]o what extent . . . exempt lower-level executive

employees [are] performing nonexempt work.”91 SACCA respectfully submits that

USDOL has answered its own question: if these hypothetical employees are exempt, then

how much nonexempt work they are doing is irrelevant.

3. USDOL Should Not Reinstate a Long Duty Test

USDOL says throughout its proposals that its charge includes modernizing and

simplifying the regulations, making them easier to understand, increasing the

“efficiencies” of their application, and reducing the frequency and amount of FLSA

litigation. These aims would not appear to be served by re-introducing a more-

complicated “long/short duties test structure” that was formulated nearly 75 years ago

and was dispensed with more than 10 years ago.92

SACCA presumes that USDOL is referring to adopting something along the lines of

the pre-2004 exemption structure so as to impose a “long test” percentage limitation

upon nonexempt work. While this had and would have a superficial appearance of a

rigorous numerical standard, in truth any such impression was and would be only an

illusion. Stating such a percentage accomplishes nothing in itself; this simply moves

the uncertainty to a different area and reveals why this approach was and again would

be ineffectual.

From practically these exemptions’ earliest days, USDOL, the courts, and the

relevant public faced intractable difficulties in discerning what “nonexempt work”

consisted of in the first place.93 The concept of work that is “directly and closely related”

to exempt duties evolved from an effort to provide more clarity.94

91 Id.92 Stein Report at 14-15; 80 Fed. Reg. 38543.93 See, e.g., Weiss Report at 29-31.94 Id. at 32.

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The long test persisted for a while thereafter largely by virtue of historical inertia

(including that it had largely ceased to have any practical function for probably more than

two decades) until it was wisely and appropriately eliminated in 2004. This occurred in

significant part in recognition of the fact that experience had shown the test not to

contribute in any appreciable or effective way to distinguishing between exempt

employees and nonexempt ones. At the same time, the principle of identifying activities

that are “directly and closely related” to exempt work was preserved and remains in

effect; it is incorporated into the meaning of “exempt work;” and both are integral parts

of “primary duty,” where the inquiry properly belongs.95 This arrangement is historically

well-founded and analytically elegant, and the exercise of determining exempt status will

not be served by superimposing another layer upon it.

As USDOL rightly recognized in 2004, a qualitative discernment of “nonexempt

work” is one thing; undertaking to measure quantitatively how much of it is done from

hour-to-hour, workday-to-workday, and workweek-to-workweek is quite another

altogether.96 There is currently no requirement to maintain any records of the amount

of such work, and there is serious reason to doubt that the quantification could be done

in any useful and reliable way. Furthermore, if a percentage limitation were re-imposed

on a workweek basis, as it applied before, the exacerbated practical burdens imposed by

trying to measure these things (even if that can be done) and by dealing with possible

exempt-one-workweek/nonexempt-the-next-workweek scenarios are too obvious to

warrant more discussion. For instance, in just the couple of common “concurrent duties”

situations SACCA posed in the preceding section, untangling and quantifying “exempt”

work and “nonexempt” work in those scenarios even once would be daunting at best and

95 Compare 29 C.F.R. § 541.700 with § 541.702 and § 541.703.96 69 Fed. Reg. at 22126-27.

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unreliable in result, not to mention the probable impossibility of doing so in an meaningful

way on a workweek-by-workweek basis.

In short, there is no reason to re-impose the long-test, whereas there are many

reasons not to do so. Such a requirement would accomplish nothing that a competent

evaluation of the existing principles cannot achieve. Instead, any such step:

¸� Would not “simplify” the exemptions’ application but wouldcomplicate it;

¸� Would not “modernize” the exemptions but would instead revive arequirement that history has shown to be unnecessary andunworkable;

¸� Would make the requirements harder to understand;

¸� Would introduce inefficiencies that do not exist today, including withrespect to USDOL’s investigative efforts;

¸� Would increase uncertainty in the exemptions’ application;

¸� Would produce “varying results” in the courts to a greater extent;and

¸� Would increase the frequency and volume of litigation.

E. The Effective Date

The Southeastern Alliance of Child Care Associations finally wishes to address the

effective date of any final regulations issued by USDOL. If the current proposal is not

withdrawn, then SACCA’s members will need considerable time to evaluate alternatives

and to make and implement important business decisions about how to arrange their

affairs in light of the revisions.

As just a selection of illustrations, SACCA’s child care centers will find it necessary

to:

¸� Evaluate how the changes will affect their businesses in the near- andintermediate terms, including determining who will continue to be treatedas exempt and what the resulting cost will be of salary increases (both thosefor at-the-new-threshold employees and those necessitated by the need toavoid compensation compression);

29

¸� Design and reduce the units of compensation for employees who willthereafter be treated as nonexempt;

¸� Determine to what extent to reduce or eliminate benefits and otheremoluments of employment (such as paid-leave allotments, tuitionreimbursement, on-premises meals, transportation supplements, or child-care paid for or provided, as just a few illustrations) to offset compositeincreases in labor costs;

¸� Determine whether or to what extent immediate workforce reductionsmight be required;

¸� Determine whether or to what extent hiring freezes or delayed or canceledpromotions are called for;

¸� Determine whether or to what extent to close centers or to postpone orcancel expansion plans; and/or

¸� Develop communication plans to explain to employees (especiallyadversely-affected ones) that these changes are the result of USDOL'srevisions.

In addition to these considerations, which will no doubt be prevalent in any

industry, SACCA’s members must consider the effect of USDOL’s final regulations on any

existing employment contracts. As discussed above, SACCA’s centers rely heavily on the

use of annual employment contracts for their directors and other key employees which

are typically based on a school, not calendar, year. To the extent that USDOL’s final

regulations are published in the middle of the school year, SACCA’s centers must be

afforded sufficient time to evaluate how to rescind and/or revise existing employment

contracts to comply with USDOL’s final regulations.

The Southeastern Alliance of Child Care Associations therefore recommends that

any revisions to the minimum salary level not be implemented until at least one year

after the regulations incorporating such revised minimum salary levels are published in

their final form.97 This would allow SACCA members’ current contracts to expire, and

97 Notably, this still is significantly less time than Congress provided in 2007 when, after nearly adecade at $5.15, it ultimately increased the federal minimum wage by approximately 40% fromJuly 23, 2007 to July 24, 2009. See 29 U.S.C. § 206(a)(1).

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give all parties an opportunity to draft revised contracts that meet minimum salary

requirements at the time of drafting, as well as at the time of implementation.

III. Conclusion

For the reasons set forth above, the Southeastern Alliance of Child Care

Associations therefore submits the foregoing comment requesting that USDOL rescind

and revise its proposed regulations. To the extent USDOL wishes to discuss any of

SACCA’s comments and/or proposals in greater detail, SACCA is available to address any

questions USDOL may have.