The Truth Behind the Administration’s Numbers on Overtime Pay
The U.S. Department of Labor (DOL) readily admits that its major overhaul of the regulations governing the right to overtime pay could cause the loss of overtime pay for 644,000 employees who are currently earning it. But the Economic Policy Institute estimates that more that more than eight million workers would lose overtime protection. Why are these estimates so radically different? It’s because DOL is only counting a fraction of those affected.
DOL chose not to count all of the workers who will lose their federal right to receive overtime pay when they work more than 40 hours in a week. Instead, the only workers DOL includes in its estimate are those who are actually working overtime hours now and are getting paid for it. DOL did not count the vastly larger group of workers who, although eligible for overtime pay, aren’t currently receiving it because they are not working overtime hours. The way DOL estimates the impact of the rule, a worker who isn’t working overtime today, but will work overtime hours next month or next year, isn’t counted as losing anything. DOL only counts the loss of current overtime pay, not the loss of the right to receive overtime pay. Only about 11 million workers currently earn overtime pay, whereas 80 million are covered by the law’s overtime protection.
EPI, on the other hand, uses the measure GAO used in 1999 when it published its report on the Fair Labor Standards Act. The real issue is how many people who now benefit from the law’s protection will no longer have that protection if the new DOL rule takes effect.
Whose measure is right? Which measure more accurately reflects what American workers will lose if the DOL overtime rule takes effect? If the Bush Administration proposed to repeal the entire Fair Labor Standards Act, they would say that 11 million workers would lose their right to overtime pay, but the truth would be that all 80 million covered by the Act would lose their rights.
The FLSA’s beneficiaries are not just the workers currently receiving overtime pay, but all the million of workers who are not working overtime because the law discourages excessive hours by making employers pay a penalty for every hour beyond 40 they assign in a week. If the FLSA and its overtime protections were repealed, employers would be free to work all employees as many hours as they saw fit, at no additional cost. The FLSA prevents that today, and it is the primary reason only 20% of covered workers actually work overtime hours, versus 44% for exempt workers.
Clearly, if the DOL were to be honest with the American public on the full impact of their proposed regulation, they would look at the total number of workers who will lose overtime protection, and not the far smaller number relating only to those who would lose the overtime pay they were receiving at the time of the Department of Labor survey.
Overtime rights in peril: Read all of EPI’s recent work on this issue.