- The Washington Times - Thursday, August 19, 2004

Federal overtime rules that take effect Monday could mean bigger paychecks for the nation’s lowest-paid employees.

But critics say the rules may give employers a loophole to avoid paying overtime to millions of middle-income earners.

Meanwhile, the Bush administration’s stated goal of clarifying the rules is caught up in a whirlwind of partisan politics and differing interpretations.

Employers are “going to need to pay more workers overtime, not less,” Steven J. Law, the Labor Department’s deputy secretary, said during a press conference this week to explain the new rules.

About 1.3 million more low-wage workers would qualify immediately to receive overtime, Mr. Law said. Another 5 million — such as police officers and nurses — might qualify, depending on how their jobs fit into new definitions of exempt employees.

The main differences between the current rules and the new “Fair Pay” regulations are the pay scales that determine when overtime must be paid.

Time-and-a-half pay beyond 40 hours of work per week will be required for nearly anyone earning less than $23,660 a year, regardless of whether they are classified as salaried or hourly employees. Since 1975, the threshold for mandatory overtime was $8,660.

The confusion centers on exemptions for middle-income workers.

Employers can withhold overtime pay if employees earn more than $23,660 per year and have “professional, administrative or executive” responsibilities or are “team leaders.”

Professional and administrative employees earning at least $100,000 a year are exempt from overtime pay, even if they are paid on an hourly basis.

Labor unions and Democratic opponents of the Bush administration policy say the exemptions are too easily abused by employers.

Employers could redefine many blue-collar workers as supervisors to avoid paying them overtime, according to the AFL-CIO national labor federation.

“Now all those people flipping burgers who supervise other people would be exempt so they wouldn’t get overtime,” said Lane Windham, AFL-CIO spokeswoman. “There’s a lot of ambiguous language in the regulations, so there’s going to be a flood of lawsuits.”

The AFL-CIO estimates that 6 million workers could lose their rights to overtime.

The Labor Department downplays the criticism as misguided.

“The misinformation directed against the rule has in fact created confusion and that confusion could hurt workers’ rights,” Mr. Law said.

The regulations will be enforced by government agencies such as the D.C. Office of Wages and Hours.

Pam Banks, the office’s associate director, said her review of the new regulations indicates it would be hard for employers to evade their obligations to pay overtime.

“I don’t see that happening,” Mrs. Banks said. “I think the definitions became more stringent.”

However, there is nearly universal support among government officials and labor unions on the new earnings cap used to qualify low-wage workers.

Regardless of whether they are managers, full-time employees earning less than $23,660 a year, or $455 a week, qualify for overtime. The previous limit was $155 a week.

A Labor Department analysis of the new rules estimated the cost to employers at $1.1 billion in the first year and $375 million each subsequent year.

Although the Labor Department announced the regulations in April, a study by Hewitt Associates, a human resources consulting firm, showed 20 percent of more than 150 companies surveyed said they would not be able to comply with the regulations by Monday’s deadline.

Confusion over how to implement the rules was a primary reason.

President Bush is proposing other changes to the 1938 Fair Labor Standards Act. He said he would ask Congress to modify the federal law so employers could offer compensatory time instead of overtime pay.

“Government ought to allow employers to say to an employee, ‘If you take some time off and work different hours, you’re allowed to do so if you want to accumulate time to spend with your families,’” Mr. Bush said this month during a campaign stop in Ohio. “It would help American families better juggle the demands of work and home.”

Sen. John Kerry of Massachusetts, his Democratic opponent, said Mr. Bush’s comp-time plan would “do more harm than good” to families caught in a “middle-class squeeze.”

The liberal Economic Policy Institute also endorsed the new limits.

“From the standpoint of employees, this is the only positive change of any significance in the final rule,” institute policy director Ross Eisenbrey wrote in a report last month.


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