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Employment: Is Bush Trying to Eliminate Overtime?


The Left Says:

"As early as March 2004, President George W. Bush could take away working people's hard-fought 40-hour workweek and overtime -- with no meaningful increased flexibility to help workers balance demands of jobs and family."

Source: "Overtime Pay Under Attack," AFL-CIO, February 29, 2004, at www.aflcio.org/yourjobeconomy/overtimepay/underattack.cfm


What Conservatives Think:

The President is doing no such thing. Under a Labor Department proposal to update and reform the 1938 Fair Labor Standards Act, the 40 hour workweek would remain in place, and so would overtime pay.

Here's how the Department of Labor describes what its proposal would do:

"For the first time since 1975, the Department's proposed regulations would raise the salary threshold -- below which workers would automatically qualify for overtime -- from $155 a week to $425 a week, or $8,060 per year, to $22,100 per year The impact of this revision will be to increase the wages of 1.3 million lower-income workers and reduce the number of low-wage salaried workers currently being denied overtime pay. Other proposed changes include revising job duties required to qualify for the exemption to better correspond to 21st century workplace realities. The old regulations, written in 1949, mention job classifications that no longer exist, such as key punch operators, straw bosses, leg men and gang leaders. Clarifying which job duties qualify for overtime pay will help workers and employers easily determine overtime entitlement for millions of workers whose status is currently unclear." (1)

Secretary of Labor Elaine Chao is adamant that organized labor's scare campaign represents what the DOL calls "myths, distortions and inaccuracies": "The Department's overtime reform proposal will not eliminate overtime protections for 8 million workers, will not eliminate overtime protections for police officers, firefighters, paramedics and other first responders, will not eliminate overtime protections for nurses, will not eliminate overtime protections for carpenters, electricians, mechanics, plumbers, laborers, teamsters, construction workers, production line workers and other blue-collar employees; and will not affect union workers covered by collective bargaining agreements. The Department's reform will strengthen overtime protections for millions of low-wage and middle-class workers, will empower workers to understand and insist on their overtime rights, will enable the Department of Labor to vigorously enforce the law, will prevent unscrupulous employers from playing games with workers' overtime pay, and will put an end to the lawsuit lottery that is delaying justice for workers and stifling our economy with billions of dollars in needless litigation."(2)

Analyst Paul Kersey of the Heritage Foundation agrees: "by raising the minimum salary level needed for 'white collar' status, the Labor Department is returning to the original intent of the Fair Labor Standards Act - to protect unskilled manual laborers from the dangers of overwork. By limiting work hours, Congress meant to reduce the dangers of fatigue and workplace accidents and allow workers more time for recreation, family and education. Executives, administrators and professionals were excluded because they were seen as having both higher compensation and greater job security, giving them better control over their own work hours."

Kersey adds: "The drafters of the original Fair Labor Standards Act probably would be shocked to learn that, under today's rules, a cook earning $13,000 a year can be considered an executive because he supervises two kitchen workers, while a technician with a $70,000 salary can receive mandatory overtime pay. More straightforward regulations will make enforcement of the wage-and-hour laws easier. Thus unskilled workers, the employees who have the least control over their working hours and conditions, will receive the maximum level of protection. Under the new rule, any worker receiving a salary of less than $20,000 will be eligible for overtime, regardless of his or her job duties."(3)

Heritage Foundation President Ed Feulner says "Chao [is] trying to make life better for low-income laborers... Today, companies can classify employees who make just $8,061 per year as 'exempt' meaning they would be ineligible for overtime. Chao has proposed raising that threshold to $22,000, a step that would immediately make an additional 1.2 million workers eligible for time-and-a-half. While that change would help the poorest laborers, it wouldn't hurt most blue-collar workers. Union members who work under collective bargaining agreements would make at least as much under the new proposal as they do today. This includes most firefighters, nurses and police officers."

So why the fuss over a proposal designed to help low-income workers?

Feulner pins responsibility on a group that benefits financially from the current outdated system: Trial lawyers.

Feulner writes: "Because current law is so confusing, many companies struggle to determine which jobs are eligible for overtime, and which are not. Trial lawyers exploit this confusion: They pore over work roles until they find groups that seem mislabeled, and then file class-action lawsuits. It's a booming business. In 2001 there were more suits filed over overtime pay than suits alleging discrimination in the workplace. And why not? If a lawyer can convince a court to agree that a company has made a mistake, he can force that company to shell out millions of dollars in back pay. For example, two years ago, the Farmers Insurance Exchange of California was slapped with a $90 million judgment because it hadn't been paying overtime to its claims adjusters. More recently, Radio Shack and Starbucks surrendered without a fight. Those companies coughed up $30 million and $18 million, respectively, to settle out of court with store managers."

Concludes Feulner: "Under Chao's changes, those white-collar workers who make more than $65,000 would lose their right to overtime under the new laws. But keep in mind the original reason for such laws: To benefit poor laborers. Middle-class managers and professionals were never supposed to be covered."(4)

Sources:

(1) "Labor Secretary Elaine L. Chao Testifies in Support of Proposal to Update Overtime Protections for White-Collar Workers," Department of Labor Press Release, January 20, 2004, www.dol.gov/opa/media/press/opa/OPA2004063.htm

(2) Ibid.

(3) Paul Kersey, "Overdue on Overtime," Heritage Foundation Commentary, February 16, 2004, available at www.heritage.org/Press/Commentary/ed021704b.cfm

(4) Ed Feulner, "Laboring for Overtime," Heritage Foundation Commentary, July 31, 2003, available at www.heritage.org/Press/Commentary/ed073003b.cfm

Author's note: The Department of Labor has published online a convenient side-by-side comparison of the current rules versus the DOL's proposed changes at www.dol.gov/_sec/media/speeches/541_Side_By_Side.htm.

Issue Date: March 1, 2004
Author: Amy Ridenour