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News from EPI NewsFlash: Senate Proposal Strips Pay, Protections for Millions of Workers

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NewsFlash: October 19, 2005

Millions of Workers to Lose Pay, Protections under Minimum Wage Proposal

by  Ross Eisenbrey, policy director of the Economic Policy Institute

The minimum wage amendment proposed by Sen. Michael Enzi, which is expected to come to a vote on Wednesday, October 19, would harm far more workers than it helps.

The Economic Policy Institute estimates that a straightforward raise of $1.10 in the minimum wage could directly benefit about 1.8 million workers. The Enzi proposal, however, is anything but straightforward. Other provisions would take away minimum wage eligibility and overtime rights, and would overrule higher state standards for workers who earn tips. Many millions of workers would stand to lose pay and protections to which current law entitles them.

WEAKENING FLSA COVERAGE: Employees of businesses with revenues of more than $500,000 and all workers who engage in interstate commerce now have important protections under the Fair Labor Standards Act (FLSA), such as the right to be paid a minimum wage and to receive overtime pay when they work more than 40 hours a week. The Enzi amendment eliminates FLSA protections for all workers at businesses with revenues up to $1,000,000. In 1997, 6.8 million employees worked at firms with revenues of between $500,000 and $1 million. In addition, the amendment eliminates individual FLSA coverage, which protects many of the more than 8 million employees in firms with less than $500,000 of revenues.

CUTTING OVERTIME PAY:The Enzi amendment abolishes the 40-hour work week and replaces it with an 80-hour, two-week work period. Today, those who work 50 hours in one week and 30 the next receive 10 hours of time-and-a-half overtime pay. Under the amendment, such workers would no longer get overtime pay, making mandatory overtime cheaper for employers. This change encourages employers to overwork employees in busy periods and cut their hours when things are less busy, leaving workers less able to control their work hours and to balance work and family. Construction workers, for example, whose work hours often vary from week to week, will be particularly hard hit. Currently about 100 million workers are eligible to receive overtime pay.

WORKING FOR TIPS ONLY: The Enzi amendment invalidates the laws of seven states that require employers to pay the full minimum wage to tipped employees. In convoluted language, the amendment prohibits states and local governments from enforcing any state or local minimum wage law or ordinance that requires all of tipped employees’ wages to be paid in cash by the employer. Tipped employees include a wide range of workers such as taxi drivers, porters, hotel cleaning staff, and the like. Restaurant wait staff alone currently number about 2 million.

WEAKENING SAFETY & OTHER PROTECTIONS:The Enzi amendment excuses millions of employers from paying fines for violations of federal safety and health, pension, and labor regulations. First violations of “information collection requirements” – even if knowing and willful – will be excused for the more than 5 million businesses with revenues under $7 million a year. Information collection requirements include a broad class of notices and postings required in order to inform and protect employees, such as hazardous material warnings, training requirements, and information about pension and health benefit plans.

For more on EPI policy director Ross Eisenbrey, click here.

For more EPI work on the minimum wage, click here.

For more information or to schedule an interview, contact EPI at news@epi.org.


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