If you believe the Bush administration, its new overtime regulations set to take effect next month are ?FairPay rules? that ?strengthen overtime protections.?
If you believe two new studies, the rules strengthen protections all right ? for businesses, not for workers. And the Labor Department, both studies say, is flat-out wrong in the figures it uses about how many workers will be helped ? or hurt ? by the rules.
One study, by the Economic Policy Institute, details how at least 6 million American workers could lose overtime pay they now receive. ?Almost every one of these changes will weaken the rights of employees to earn overtime pay,? says Ross Eisenbrey, vice president of EPI and author of its study.
?This is the most significant rollback in employee rights in the last 50 years,? Eisenbrey says. ?The Department of Labor is not responding to the needs of workers; it?s responding to the demands of employers.?
Rules ?harm? workers
The second study, conducted for the AFL-CIO by three former Labor Department officials, says the new overtime rules overwhelmingly weaken protections for workers. In fact, the study says, the rules vastly expand the number of workers to whom businesses can refuse to pay overtime.
Using the Labor Department?s own statistics, this study speculates that the new rules could deny overtime eligibility to 40 percent of the U.S. workforce, compared with 15 percent today.
The study?s authors ? Gail Coleman, John Fraser, and Monica Gallagher ? say updating the rules is absolutely necessary, but also say ??doing something should not mean that doing anything is acceptable.? They conclude that ?implementation of these new regulations will harm rather than promote and protect the interests of U.S. workers and their families.?
Labor Department sticks to its claims
These assessments are the exact opposite of Labor Department claims that the new rules ?will strengthen overtime rights for 6.7 million American workers.? The Labor Department, for example, claims the new rules will directly benefit ?1.3 million low-wage workers who were denied overtime under the old rules.?
Eisenbrey says that number is ?wildly inflated?; he calculates that only 400,000 workers who don?t get overtime now will qualify under the new rules.
Labor Department spokesman Ed Frank told the Kansas City Star the studies are ?a rehash of misinformation put out by the AFL-CIO and its allies.? He continued to insist ?that millions of workers will benefit from the department?s strong new overtime guarantees.?
House refuses to block rules
The conflicting claims surround revised rules under the Fair Labor Standards Act, which determine which workers must be paid at least the minimum wage, which must be paid time-and-a-half when they work more than 40 hours a week, and which types of employees can be denied overtime pay.
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The changes take effect Aug. 23 ? unless Congress acts to block the new rules before it adjourns July 23. The Senate has passed legislation preventing any worker from losing overtime eligibility, but the House has rebuffed every recent attempt to pass similar legislation. In fact, the House Appropriations Committee on July 14 rejected a proposal by Wisconsin Rep. David Obey to protect overtime pay; all Democrats voted to support the proposal, while all Republicans voted against it.
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New salary standards created
The Labor Department?s new rules do three basic things:
? Require that workers who makes less than $455 a week receive overtime pay when working more than 40 hours in a week.
? Rewrite guidelines, or duties tests, under which employees can be denied overtime if their company can classify them as ?executive,? ?administrative? or ?professional.?
? Automatically deny overtime to most employees making at least $100,000 a year.
Requiring overtime pay for virtually any worker making less than $455 a week ? roughly $11.37 an hour ? is about the only change that benefits workers, both studies say. This new income level replaces the current level ? $155 a week for most workers, which has been in place since 1975.
But the $455 figure is not indexed to inflation, EPI?s Eisenbrey points out. That means, as the years go by, fewer and fewer workers will qualify under this rule. Further, the $455 figure doesn?t make up for inflation in the last 29 years.
If it did, the AFL-CIO study says, the threshold would be at least $530, and perhaps as high as $855 under the rules that are the most directly comparable with the new regulations.
Further, the $455 threshold does not apply to some notable job categories, such as nursery school teachers, who do not qualify for overtime pay or even the minimum wage under the new regulations, Eisenbrey says.
On the other end, the $100,000 threshold for ?highly compensated employees? almost guarantees these workers will lose overtime pay, Eisenbrey says, because their jobs have to include only a single duty that can classify them as ?executive,? ?administrative? or ?professional.? This $100,000 figure isn?t indexed to inflation, either; again, that means more and more workers will cross this threshold as years go by.
Exempting workers in the middle
But it is the new ?duties tests? affecting the middle range of jobs that will hurt most workers, the studies say. The new rules set up all kinds of guidelines to help companies determine whether jobs paying between $23,600 and $100,000 are exempt from time-and-a-half pay under the ?executive,? ?administrative? or ?professional? categories.
One result, Eisenbrey predicts, is that there will be an ?explosion of executives? in the U.S. workforce.
It won?t be executives as most people understand the term ? suit-and-tie types in corporate offices. Instead, workers who supervise as few as two co-workers, such as a shift manager in the toy department of a Wal-Mart, could be reclassified as ?executive? and lose overtime eligibility, Eisenbrey said.
There?s more. Companies can exempt more than one ?executive? for the same workers, as long as they maintain a 2:1 ratio of exempt and nonexempt employees. Supervising doesn?t have to include the right to hire and fire, or even take up the majority of the ?executive?s? time, under the new rules.
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?You can spend virtually all day serving customers, sweeping the floor, or doing the same things your co-workers do and still be exempt,? Eisenbrey said.
Similarly, the new rules create a broad new exemption called ?team leader? that can exclude workers from overtime pay under the ?administrative? classification. Eisenbrey calls this a ?huge loophole?; team leaders who have ?no supervisory authority at all? still can be made exempt, he said.
The exemptions for ?professional? employees also expand so that, in some cases, workers who have only a high-school education, not a college degree, can lose overtime pay eligibility based on their work experience and knowledge. The new rules also make it easier to exempt workers in financial services and computer-related occupations, among other job categories.
Ambiguous definitions
Workers covered by union contracts do not lose overtime eligibility, but once their contract expires, they will have to successfully renegotiate to keep their overtime rights, Eisenbrey says. In the meantime, he says, ?you don?t have federal law behind you.?
The AFL-CIO study also criticizes the Labor Department for writing ?rules that are vague and internally inconsistent? and failing to achieve its own stated goals to ?simplify, clarify and better organize the regulations.? The result, the study?s authors predict, is that the rules ?will likely result in greater confusion and profusion of litigation ? outcomes that the Department explicitly sought to avoid.?
Much of the confusion will result from how terms such as ?primary duty,? ?major project,? ?customarily and regularly,? ?discretion and independent judgment,? ?directly related to management or general business operations,? ?matters of significance,? and ?advanced knowledge? are applied to try to deny workers overtime eligibility.
?Ambiguity will almost never favor employees, and will almost always favor employers,? Eisenbrey said. Because the Labor Department fails to define many key terms and makes minor changes in many of the definitions it does provide, decades of case law no longer directly apply, he said.
The new terms, he said, ?will be defined on the shop floor and in various workplaces. Employers will designate and make exemptions.? That leaves it up to an employee to decide whether to challenge his boss and file a case with the local Department of Labor office or through a private attorney.
A court may make a final decision, he said, but courts tend not to second-guess companies. ?Usually, the reasonable judgment of an employer will stand.?
For more information
Visit these websites:
? Department of Labor: www.dol.gov/esa/regs/compliance/whd/fairpay/main.htm
? Economic Policy Institute?s study, Longer Hours, Less Pay www.epinet.org/briefingpapers/152/bp152.pdf
? AFL-CIO study, www.unionvoice.org/ct/W11B1191U1VF
Share
If you believe the Bush administration, its new overtime regulations set to take effect next month are ?FairPay rules? that ?strengthen overtime protections.?
If you believe two new studies, the rules strengthen protections all right ? for businesses, not for workers. And the Labor Department, both studies say, is flat-out wrong in the figures it uses about how many workers will be helped ? or hurt ? by the rules.
One study, by the Economic Policy Institute, details how at least 6 million American workers could lose overtime pay they now receive. ?Almost every one of these changes will weaken the rights of employees to earn overtime pay,? says Ross Eisenbrey, vice president of EPI and author of its study.
?This is the most significant rollback in employee rights in the last 50 years,? Eisenbrey says. ?The Department of Labor is not responding to the needs of workers; it?s responding to the demands of employers.?
Rules ?harm? workers
The second study, conducted for the AFL-CIO by three former Labor Department officials, says the new overtime rules overwhelmingly weaken protections for workers. In fact, the study says, the rules vastly expand the number of workers to whom businesses can refuse to pay overtime.
Using the Labor Department?s own statistics, this study speculates that the new rules could deny overtime eligibility to 40 percent of the U.S. workforce, compared with 15 percent today.
The study?s authors ? Gail Coleman, John Fraser, and Monica Gallagher ? say updating the rules is absolutely necessary, but also say ??doing something should not mean that doing anything is acceptable.? They conclude that ?implementation of these new regulations will harm rather than promote and protect the interests of U.S. workers and their families.?
Labor Department sticks to its claims
These assessments are the exact opposite of Labor Department claims that the new rules ?will strengthen overtime rights for 6.7 million American workers.? The Labor Department, for example, claims the new rules will directly benefit ?1.3 million low-wage workers who were denied overtime under the old rules.?
Eisenbrey says that number is ?wildly inflated?; he calculates that only 400,000 workers who don?t get overtime now will qualify under the new rules.
Labor Department spokesman Ed Frank told the Kansas City Star the studies are ?a rehash of misinformation put out by the AFL-CIO and its allies.? He continued to insist ?that millions of workers will benefit from the department?s strong new overtime guarantees.?
House refuses to block rules
The conflicting claims surround revised rules under the Fair Labor Standards Act, which determine which workers must be paid at least the minimum wage, which must be paid time-and-a-half when they work more than 40 hours a week, and which types of employees can be denied overtime pay.
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The changes take effect Aug. 23 ? unless Congress acts to block the new rules before it adjourns July 23. The Senate has passed legislation preventing any worker from losing overtime eligibility, but the House has rebuffed every recent attempt to pass similar legislation. In fact, the House Appropriations Committee on July 14 rejected a proposal by Wisconsin Rep. David Obey to protect overtime pay; all Democrats voted to support the proposal, while all Republicans voted against it.
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New salary standards created
The Labor Department?s new rules do three basic things:
? Require that workers who makes less than $455 a week receive overtime pay when working more than 40 hours in a week.
? Rewrite guidelines, or duties tests, under which employees can be denied overtime if their company can classify them as ?executive,? ?administrative? or ?professional.?
? Automatically deny overtime to most employees making at least $100,000 a year.
Requiring overtime pay for virtually any worker making less than $455 a week ? roughly $11.37 an hour ? is about the only change that benefits workers, both studies say. This new income level replaces the current level ? $155 a week for most workers, which has been in place since 1975.
But the $455 figure is not indexed to inflation, EPI?s Eisenbrey points out. That means, as the years go by, fewer and fewer workers will qualify under this rule. Further, the $455 figure doesn?t make up for inflation in the last 29 years.
If it did, the AFL-CIO study says, the threshold would be at least $530, and perhaps as high as $855 under the rules that are the most directly comparable with the new regulations.
Further, the $455 threshold does not apply to some notable job categories, such as nursery school teachers, who do not qualify for overtime pay or even the minimum wage under the new regulations, Eisenbrey says.
On the other end, the $100,000 threshold for ?highly compensated employees? almost guarantees these workers will lose overtime pay, Eisenbrey says, because their jobs have to include only a single duty that can classify them as ?executive,? ?administrative? or ?professional.? This $100,000 figure isn?t indexed to inflation, either; again, that means more and more workers will cross this threshold as years go by.
Exempting workers in the middle
But it is the new ?duties tests? affecting the middle range of jobs that will hurt most workers, the studies say. The new rules set up all kinds of guidelines to help companies determine whether jobs paying between $23,600 and $100,000 are exempt from time-and-a-half pay under the ?executive,? ?administrative? or ?professional? categories.
One result, Eisenbrey predicts, is that there will be an ?explosion of executives? in the U.S. workforce.
It won?t be executives as most people understand the term ? suit-and-tie types in corporate offices. Instead, workers who supervise as few as two co-workers, such as a shift manager in the toy department of a Wal-Mart, could be reclassified as ?executive? and lose overtime eligibility, Eisenbrey said.
There?s more. Companies can exempt more than one ?executive? for the same workers, as long as they maintain a 2:1 ratio of exempt and nonexempt employees. Supervising doesn?t have to include the right to hire and fire, or even take up the majority of the ?executive?s? time, under the new rules.
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?You can spend virtually all day serving customers, sweeping the floor, or doing the same things your co-workers do and still be exempt,? Eisenbrey said.
Similarly, the new rules create a broad new exemption called ?team leader? that can exclude workers from overtime pay under the ?administrative? classification. Eisenbrey calls this a ?huge loophole?; team leaders who have ?no supervisory authority at all? still can be made exempt, he said.
The exemptions for ?professional? employees also expand so that, in some cases, workers who have only a high-school education, not a college degree, can lose overtime pay eligibility based on their work experience and knowledge. The new rules also make it easier to exempt workers in financial services and computer-related occupations, among other job categories.
Ambiguous definitions
Workers covered by union contracts do not lose overtime eligibility, but once their contract expires, they will have to successfully renegotiate to keep their overtime rights, Eisenbrey says. In the meantime, he says, ?you don?t have federal law behind you.?
The AFL-CIO study also criticizes the Labor Department for writing ?rules that are vague and internally inconsistent? and failing to achieve its own stated goals to ?simplify, clarify and better organize the regulations.? The result, the study?s authors predict, is that the rules ?will likely result in greater confusion and profusion of litigation ? outcomes that the Department explicitly sought to avoid.?
Much of the confusion will result from how terms such as ?primary duty,? ?major project,? ?customarily and regularly,? ?discretion and independent judgment,? ?directly related to management or general business operations,? ?matters of significance,? and ?advanced knowledge? are applied to try to deny workers overtime eligibility.
?Ambiguity will almost never favor employees, and will almost always favor employers,? Eisenbrey said. Because the Labor Department fails to define many key terms and makes minor changes in many of the definitions it does provide, decades of case law no longer directly apply, he said.
The new terms, he said, ?will be defined on the shop floor and in various workplaces. Employers will designate and make exemptions.? That leaves it up to an employee to decide whether to challenge his boss and file a case with the local Department of Labor office or through a private attorney.
A court may make a final decision, he said, but courts tend not to second-guess companies. ?Usually, the reasonable judgment of an employer will stand.?
For more information
Visit these websites:
? Department of Labor: www.dol.gov/esa/regs/compliance/whd/fairpay/main.htm
? Economic Policy Institute?s study, Longer Hours, Less Pay www.epinet.org/briefingpapers/152/bp152.pdf
? AFL-CIO study, www.unionvoice.org/ct/W11B1191U1VF