Labor law revisions could slash overtime for higher-paid worker

WASHINGTON -- Heeding the complaints of business, the Bush administration is revamping decades-old labor regulations in an overhaul that could force many higher-income Americans to work longer hours without overtime pay.

The Labor Department argues that the pillars of American labor law, which established the 40-hour work week, a minimum wage and overtime pay, are antiquated.

The administration says low-wage workers could see an income boost under the plan. But labor unions fear changes would severely restrict who is legally required to be paid for overtime work.

"Nothing prohibits employers from requiring as many hours as they want," said Chris Owens, public policy director for the AFL-CIO. "The overtime pay requirement is the only thing that acts as a brake on excessive work hours."

It is just one of several changes the administration is pursuing to workplace regulations and programs, including the Family Medical Leave Act, job training programs and unemployment insurance.

The overtime changes are confined to a section of the 1938 Fair Labor Standards Act that defines blue-collar and white-collar workers and determines who must be paid an hourly rate of time-and-a-half for working beyond 40 hours a week. About 80 million workers now are covered by the overtime rules.

Under current regulations, employees are only exempted from the overtime rules if they meet several criteria, including salary, management and other administrative responsibilities and whether jobs require advanced "intellectual" skills and training.

Under the salary test, last updated in 1975, workers earning more than $8,060 a year, who also meet other criteria, may be exempt from overtime. The administration wants to raise that salary level.

Low-wage workers are being hurt under the current overtime pay regulations, said Tammy McCutchen, administrator of the Labor Department's wage and hour division. She said a minimum-wage worker logging 40 hours a week earns more than $10,700 a year.

"If this minimum level is raised, more employees automatically will be entitled to overtime, thus providing additional protections to low-wage workers," she said.

Examing job duties

At the same time, however, the department is clarifying and simplifying job descriptions and duties tests. That could move many higher paid workers into the exempt category, though McCutchen said she could not quantify the impact.

"If the changes result in moving an employee who previously received overtime into exempt status not entitled to overtime, the law would no longer require the employer to pay overtime," she said.

Employer groups such as the Chamber of Commerce complain that under the complex rules involving job duties and salary levels, many highly skilled, well-paid, professional workers are required to get overtime pay. A surge in overtime pay litigation aimed at employers also is a concern.

The law "was created to protect those workers who had the least economic leverage," said Randy Johnson, the chamber's labor vice president. "Now it's been distorted to provide overtime to engineers making over $80,000 a year."

The Labor Department is expected to issue the new overtime pay rules for public comment by the end of March. Congressional action is not required.

Unions acknowledge that the overtime regulations, known as "white-collar exemptions," are outdated and confusing -- they have essentially remained unchanged for 50 years.

"They're so difficult to interpret that they generate more class-action lawsuits in the workplace than anti-discrimination laws," Labor Secretary Elaine Chao said this week. "We're going to change that by bringing these regulations into conformity with the realities of the 21st century workplace."

Workers filed 79 federal collective-action lawsuits seeking overtime pay in 2001, surpassing for the first time class-action suits against employers for job discrimination, according to the American Bar Association.

Also on the Bush administration's labor agenda this year is an overhaul of the department's job training programs, established under the Workforce Investment Act that Congress must renew this year.

President Bush is proposing to eliminate most employment and training programs in his 2004 budget being released Monday. That funding would be consolidated into two programs -- for youth and adults. The administration wants to eliminate overlap of services and provide more flexibility. He has proposed $2 billion to fund new re-employment accounts to help workers pay for job search expenses.

A review of the Family Medical Leave Act, which marks its 10-year anniversary on Wednesday, also is under way. The law gives most workers 12 weeks of unpaid leave for the birth or adoption of child, or a serious health condition of the employee, parent, child or spouse.

Employer groups want leave restricted only to serious health conditions, and they object to the inclusion of what they consider to be minor ailments that they say allow some workers to abuse the law.

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On the Net

Overtime exemptions fact sheet: www.dol.gov/esa/regs/compliance/whd/whdfs17.htm

Overtime requirements fact sheet: www.dol.gov/esa/regs/compliance/whd/whdfs23.htm