Commentary | Wages Incomes and Wealth

Eight million workers to lose overtime

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Opinion pieces and speeches by EPI staff and associates.

[ THIS PIECE ORIGINALLY APPEARED IN  WORCESTER (MASS.) BUSINESS JOURNAL ON JULY 14, 2003 ]

Eight million workers to lose overtime

By  Ross Eisenbrey

The Bush administration is trying to quietly and unilaterally change that establishes workers’ right to overtime pay whenever they put in more than 40 hours a week. The administration maintains that moreworkers will receive overtime pay. But they know full well that theirrules will accomplish just the opposite: Millions of workers will end upworking longer hours for less pay.

In March, the Department of Labor proposed to amend the regulations thatfor 65 years have governed the right of workers to be paid time-and-half for work beyond the normal 40-hour workweek. But a thorough examinationof the effects of the rule change on 78 occupations shows that it islikely to result in the loss of overtime pay for more than eight million workers.

The Department of Labor appears to be expanding various exemptions untilthey bear no resemblance to the original intent of Congress. The threemain exemptions from the right to overtime pay are for professional (doctors, lawyers, etc.), executives (bosses and top managers), andadministrators (financial analysts, human resource managers, etc.)Congress excluded them from protection in 1938 because they are the decision-makers in business and don’t need protection.

Under the new rules, millions of additional workers making as little as$22,100 (less than a poverty level salary in Alaska, and less thanmiddle class everywhere else) will be ineligible for overtime pay. Lowlevel supervisors, who do not even have the power to hire or fire andwho spend most of their time doing the same work as the two people they”supervise” will be declared “executives.” Technical assistants with nodiscretion in their work and no decision-making authority will be deemed”administrators.” And millions of workers who do not have college degrees, let alone advanced degrees, will be treated as “professionals.”All of them will be denied the right to overtime pay.

Employers are more than twice as likely to assign overtime work toexempt workers, as to protected workers, and may forego hiring in favorof working their exempt staff longer hours.

The new rules have one good feature: they raise the salary floor below which employees must be paid overtime from $155 a week (less than the minimum wage) to $425 a week. This will protect 1.3 million workers. But because the salary level is not indexed for inflation, it will protect fewer and fewer workers in the years ahead.

The new rules will not provide clarity. Substituting vague concepts like “position of responsibility” and “substantial importance” for the current rule’s “independent judgment and discretion” will merely replace known and thoroughly litigated concepts with unknown concepts. The Department of Labor’s Wage and Hour Administrator predicts a deluge of lawsuits as employees and employers press for clarifications.

These rules might be cheaper for some employers, but for working Americans and the American economy, they can be summed up thus: lower pay, lost family time, and, as more workers are stretched to the breaking point, a less productive and less prosperous economy.

Ross Eisenbrey is vice president of the Economic Policy Institute in Washington, D.C.


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