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Myths and Facts on the Bush Administration's New Overtime Regulation
MYTH: Under the Bush Administration's new overtime laws, very few if any workers making between $23,660 and $100,000 a year will lose overtime eligibility.
FACT: The new Bush Administration overtime laws are written such that many workers who currently earn overtime pay in this pay range are likely to lose it. For example:
Concurrent Duties--Under the old rule, an employee who spent a substantial amount of his or her time on nonexempt work but who also performed some exempt supervisory duties generally remained eligible for overtime pay (under old rule 541.116). Under the new rule, that person will generally be an exempt executive, and not eligible for overtime pay. (New section 541.106)
EXAMPLE--An assistant manager in fast-food, grocery or retail may spend most of his or her time performing "line" duties, like burger flipping or ringing up customers, but still be "in charge" of other workers at the same time. Under the old rule, many of these workers still received overtime pay. Under the new rule, they may very well lose their overtime pay, even if they make as little as $23,660 a year--a wage that qualifies a family for food stamps.
Salary Basis Test--The old rule required an employer to pay a worker a salary in order to deprive the worker of the right to overtime pay. The new rule (541.604) defines salary as an hourly wage, so long as the employer guarantees a minimum wage that bear a loose relationship to hourly compensation.
EXAMPLE--Registered nurses (RNs) are very likely to lose their overtime pay rights. RNs' work satisfies the duties test for professionals, but they are paid hourly, and they don't have much freedom to come and go. If they come in to work late, they are docked an hour's pay, for example. They used to receive overtime pay for the many hours of overtime they are required to perform. Under the new rule, they are likely to lose that right.
There are many other examples of how workers in this salary range are likely to lose overtime pay rights. In general, the final overtime regulation will have an especially large impact on workers with minimal supervisory or "leadership" responsibilities, workers who perform minimal amounts of administrative work, workers with special skills, and certain kinds of employees in the computer field.
MYTH: The new Bush Administration overtime law merely clarifies murky law, thus eliminating unnecessary lawsuits. The law is part of its "proven commitment to protecting workers' rights."
FACT: The new Bush Administration overtime law, in fact, lays out in the regulation exemptions which corporations have not been able to win in the courts. For example:
Journalists--There has been a lot of litigation over whether journalists have the right to receive overtime pay. Courts ruled both ways, based on the facts of each case, and many decisions prohibited journalists from losing the right to overtime. The Bush Administration points to the cases in which journalists have lost the right to overtime as the basis for their new rule, which now makes it much harder for journalists to get overtime pay. In fact, there's a big difference between court cases in a limited number of jurisdictions and the new Bush Administration federal rule, which broadens the exemption nationwide for all journalists. (New section 541.302)
Insurance claims adjusters--Again, court cases on whether insurance claims employees receive overtime pay have gone both ways--some courts have said they are exempt and other have said they should receive overtime pay. This is a very heavily-litigated field, and corporations have not been able to win a blanket victory. The Bush Administration has handed them that victory by changing the nationwide regulation to specify that these employees are generally disqualified from receiving overtime pay. (New Section 541.203(a)) A quarter of insurance claims adjusters make less than $35,000 a year.
MYTH: The Bush Administration merely updated the rules to reflect today's modern workplace, but did not strip workers of overtime pay rights.
FACT: The Bush Administration could have supported the Harkin Amendment which allows them to make any updates to the rules, as long as no worker loses overtime pay. In fact, the Bush Administration has made it MORE difficult for many workers in the structure of today's workplace to receive overtime pay.
Team leaders--Many workplaces are moving toward having a team leader structure under which co-workers oversee one another's work. In the old overtime law, the only people disqualified from receiving overtime pay were "staff" who oversaw "special projects." The new Bush Administration overtime law changes that language so that people who do "line" work--whether it's turning out hamburgers or ringing up sales--and who oversee "major projects" will be likely to lose overtime pay rights. "Special projects" implied that there was a definite start and end to the project, whereas the new "major projects" could go on indefinitely, thus knocking many team leaders out of overtime pay rights.
MYTH: The Bush Administration has cut back on the number of lawsuits which will arise over overtime pay.
FACT: The 500 plus page rule and preamble is very likely to lead to MORE, not LESS, litigation. The rule is, at best, ambiguous. It essentially invites employers to push on these ambiguities, forcing workers who lose overtime pay to challenge their new status in court.
Copyright © 2004 AFL-CIO
