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Published by The National Center for Public Policy Research
Employment: Is Bush Trying
to Eliminate Overtime?
Here's how the Department of Labor describes
what its proposal would do:
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 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."
(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