US labor secretary seeks review of proposed overtime rules
Employers and employees who are anxiously awaiting the government's new overtime rules will have to wait longer.
US Secretary of Labor Elaine Chao has asked the Office of Management and Budget to review regulations that will guarantee overtime pay to an estimated 1.3 million low-wage employees but disqualify large numbers of white-collar workers from receiving time-and-a-half pay after logging 40 hours a week.
The proposed regulations, subject to a review of up to 90 days, are expected to raise the salary level below which workers qualify for overtime payments from $155 a week to $425 per week, the first increase in 28 years, according to the Labor Department. The new rules were expected to be released today but were not received by the OMB until Friday.
The hotly debated proposal has sparked questions over the number of US workers likely to be affected by the Bush administration's change, which revises overtime rules promulgated under the Fair Labor Standards Act of 1938. Currently, 110 million American employees are covered by the act. Of those, approximately 39 million are salaried employees
The federal government contends that about 644,000 white-collar workers will be exempted from overtime pay under the new provision, including professionals, executives, and administrative employees earning a minimum of $65,000 per year. In addition, some federal employees will be affected by the change.
By contrast, the Economic Policy Institute, a liberal research group backed by labor, reports that as many as 8 million white-collar workers will be affected, including individuals who may not have an extensive amount of education but have jobs and perform duties that, under the proposal, could be reclassified as exempt from overtime.
Specialists attribute the vast gap between the two estimates to the complexity of the existing regulation and confusion over how it should be reinterpreted to fit the modern workplace.
''The numbers are really hard to get a handle on," said Michael Eastman, director of labor law policy at the US Chamber of Commerce, which backs the revisions. ''I have tried to study what the Labor Department did and what EPI did and it is not an easy thing."
Business groups have lobbied for the revisions. One reason: class action lawsuits brought under the FLSA have risen in recent years, increasing 230 percent between 1997 and 2003, according to the US Chamber of Commerce.
But labor advocates and others say there is another reason: Employers could save millions of dollars on overtime pay in an uncertain economy.
''No employer is being forced to deny people overtime, but that is what many employers will do when given the choice," said Ross Eisenbrey, vice president and policy director of the Economic Policy Institute. ''Individuals won't know until after it happens. A lot of people who are paid a salary do not even realize that they are entitled to overtime, but six months from now they could get a notice from their supervisor that the government has exempted them from overtime, and the company is no longer paying it."
Eisenbrey said the institute concluded that 8 million people will be affected after analyzing a government study on overtime that was released last year.
''We looked at 78 occupations out of 257 identified by the government as white collar," he said. ''We also noticed that in the proposed rule, the government says that there are 2.5 million people who could be more readily identified as exempt in addition to the 644,000 whose jobs will be automatically converted to salaried positions and exempted."
He said many others, who are not professionals but hold two-year degrees and salaried jobs, could also be exempted from overtime pay, including some federal employees. US workers covered by union agreements requiring overtime pay would not be affected. However, unions would have to bargain for the benefit after their contracts expire.
Robert Gaudette of Biddeford, Maine, says he is worried. Gaudette, 48, is an engineering technician at a naval yard in Portsmouth that tests submarines. He logged 800 hours of overtime last year, earning an extra $30,000. He worries that he will lose that money after the rules go into effect. Gaudette relies on the overtime to pay his children's college bills.
''My oldest one is at Brown University," he said. ''The youngest is at Worcester Polytechnic Institute. I have three more years of college payments. I want to give my sons the opportunity to go to those schools."
Federal employees are required by Congress to adhere to any rule changes the Labor Department makes under the labor law. The requirement will take about a year to go into effect for such workers, however.
Diane E. Lewis can be reached at dlewis@globe.com.
