|
|
|
|
Extra
Overhaul redefines overtime pay rules
More lower-income workers are guaranteed overtime pay, but workers such as chefs, journalists and software engineers are not, and the ceiling on eligibility is set at $100,000 a year.
By MSN Money staff and news services
The Bush administration, under election-year pressure from both sides of the aisle, has announced the first major changes in decades to the federal rules governing overtime pay across the country.
While generally considered a slight victory for corporate interests, the revisions bring three major shifts: The number of different professions that are guaranteed overtime pay has shrunk; the income range of lower-pay employees who are guaranteed overtime wages has widened; and a new income cap now means that employees earning more than $100,000 won't be guaranteed overtime pay, which generally is awarded at time-and-a-half wages.
The rules also triple, to $23,660, the amount that white-collar workers can earn and be guaranteed overtime pay. That change alone, the administration said, would increase by 1.3 million the number of low-income employees guaranteed overtime protection. The $100,000 provision, meantime, is more permissive than earlier drafts of the rules, which called for removal of overtime eligibility at $65,000.
That said, there are both winners and losers in the changes, and both labor and corporate interests are bemoaning certain compromises.
Among the apparent winners: lower-wage retail and restaurant managers. Middle-income workers such as office workers, cooks, inspectors, paralegals, licensed practical nurses and technicians "will have their rights better protected," the Department of Labor said. In addition, the department said the rules specifically state that blue-collar workers, police officers, firefighters and other so-called first responders are entitled to overtime protection, which had earlier been a point of contention.
Who loses? Pharmacists, funeral directors, embalmers, journalists, financial services industry workers, insurance claims adjusters and human resource managers. All are specifically exempted from the rules. So are management consultants, executive and administrative assistants, dental hygienists, physician assistants, accountants, computer analysts, programmers and engineers, as are chefs, athletic trainers with degrees or specialized training, or any employee with a two-year degree.
"The devil is in the details, and we just got the details," said Sen. Tom Harkin, D-Iowa, who led Senate opposition to the earlier version of the proposed regulations.
Related news and resources on MSN
Critics say rules can be manipulated
With the regulations set to take effect in 120 days following publication in the Federal Register, likely on Friday, business and Republican lawmakers contended the regulations would update and clarify antiquated work rules for white-collar workers.
But labor and some Democratic lawmakers challenged Labor Secretary Elaine Chao's claims that the rules now protect more workers than ever before, and they voiced fear the rules could be manipulated to deny overtime pay. They point to administration documents that suggest employers can avoid paying workers more by cutting hourly wages and adding overtime to equal the original salary; or by raising salaries to the new $23,660 annual (or $455 a week) threshold, making them ineligible.
The Labor Department proposed regulations last year and revised them after public comment and opposition in the U.S. Congress, mostly from Democrats who charged the initial proposal could cost more than 8 million Americans overtime pay and vowed to make it an issue in the November election.
The Labor Department projected that only about 100,000 workers would lose overtime protection, virtually all of them earning more than $100,000 a year.
Harkin said an initial review of the new regulations finds "blanket exemptions for workers in the financial services industry, computer networkers, Internet and data base administrators."
The Labor Department denied any such exemptions.
Fewer lawsuits, bigger payrolls
The 1938 Fair Labor Standards Act created the 40-hour work week by guaranteeing overtime pay for each additional hour. It exempted administrative, professional and executive workers based on duties tests, which the new regulations, in many cases, revised or updated.
"For 25 years, every administration has made reform of these regulations a priority, but none has been successful until now," said Randel Johnson, a vice president at the U.S. Chamber of Commerce.
AFL-CIO President John Sweeney, whose labor group has said it may challenge the regulations in court, said, "Americans should demand immediate repeal of any part of the . . . plan that cuts overtime pay."
Business groups sought the changes as relief from lawsuits by workers challenging their overtime eligibility status.
"Employers have spent too many years trying to shoehorn modern jobs into regulations that haven't been updated since Elvis was a teen-ager. We've finally got regulations that will mean something in the 21st century workplace," said Katherine Lugar, the National Retail Federation's vice president for legislative and political affairs.
The regulations could save employers $250 million to $500 million annually in penalties or damages from those suits, Labor Department officials said. The department estimated the cost of increased wages under the new rules at $375 million a year.
"The idea that this is an attempt to take overtime away from anyone it was intended to cover in the first place is just plain fiction," Lugar said. "Just the change in dollar levels alone means that employers are going to have to pay overtime to more workers. This will cost businesses money but most would rather spend money on wages that benefit their employees than spend millions of dollars defending themselves in court time and time again."
|
|
|
|
