updated 4/20/2004 10:55:18 AM ET 2004-04-20T14:55:18

With an eye toward November’s election, the Bush administration is retreating on its planned overhaul of the nation’s overtime rules to allow more white-collar workers, including those earning up to $100,000 a year, to continue collecting the premium pay if they log more than 40 hours a week.

The plan, previewed Tuesday by Labor Secretary Elaine Chao, also would make more white-collar, lower-income workers newly eligible for overtime, according to a Labor Department news release. Police, firefighters and emergency medical technicians are identified as jobs that will not lose overtime eligibility.

“When workers know their rights and employers know how to pay workers, everybody wins,” Chao said in a statement.

The changes come at a time when jobs and pocketbook issues are among the top concerns for voters. President Bush has improved his standing in polls on domestic issues, but questions linger about the strength of the labor market and his plan to create jobs.

The new overtime rule will take effect in 120 days.

Chao proposed the overhaul to the Fair Labor Standards Act in March 2003 at the urging of businesses and employer groups, which sought relief from mounting lawsuits by workers challenging their overtime status. The plan immediately drew ferocious criticism from organized labor, Democrats and some Republicans.

The Senate voted last year to stop the administration from issuing the final regulation, but that provision was later dropped under White House pressure. Congressional approval is not needed for the changes to take effect.

Under the revised new rules, up to 107,000 workers could lose their overtime protection, but 6.7 million workers would be guaranteed eligibility.

By contrast, under Chao’s initial proposal, the Labor Department said 644,000 white-collar workers could have lost protection, and 1.3 million could gain it.

Democrats challenged her initial estimates of who could potentially lose eligibility, citing their own analysis of up to 8 million workers.

The regulations will not apply to workers covered by labor contracts, although union officials said they feared the changes would strengthen the hand of companies in future bargaining.

“The fact that President Bush is slashing overtime pay for even a single worker is outrageous,” AFL-CIO spokeswoman Lane Windham said.

The revisions, made after the Labor Department received more than 75,000 comments, would deny overtime pay to white-collar workers who earn more than $100,000 annually and perform some professional, administrative or executive duties, the department said. The initial plan put the salary ceiling at $65,000 annually.

The changes also would guarantee premium pay to white-collar workers earning less than $23,660 a year.

That’s up from the $22,100 initially proposed, which the department said would have made 1.3 million workers newly eligible for overtime pay. However, the department in its plan last year suggested ways employers could avoid paying the extra money, including cutting those workers’ hourly wages and adding the overtime to equal the original salary, or raising salaries to the new threshold, making them ineligible.

The regulations are designed to meet the concerns of employers arguing that outdated and confusing rules failed to address the modern workplace and opened the door to lawsuits.

“I really believe the redefinition of the regs is not about carving out more workers to not get overtime,” said lawyer Camille Olson, a Chicago-based partner at firm Seyfarth Shaw. “It’s about having clear answers.”

Rep. John Boehner, R-Ohio, chairman of the House Education and Workforce Committee, will invite Chao to testify on the issue next week, a spokesman said.

Sen. Tom Harkin, D-Iowa, who has led a Senate effort to block provisions in the rule taking away overtime pay, said he was wary about the impact of the changes.

“The Bush administration is not trustworthy on this issue, and I am beyond skeptical about these so-called revisions,” Harkin said.

The U.S. Chamber of Commerce, which has lobbied for an overhaul that would provide litigation relief to employers, wasn’t ready to judge the plan.

“It all comes back to our initial goal, to cut down on lawsuits,” said Michael Eastman, labor law policy director. “It’s hard to answer that question until I see the fine print.”

The proposed revisions spell out that police, firefighters, emergency medical technicians and other “first responders” would not lose overtime eligibility. Department officials had said that was clear from the initial proposal, but critics disputed them.

The plan also makes clear that military veterans would not lose overtime pay. The initial plan would have let employers count military training toward classifying workers as professionals who are exempt from overtime pay. Democrats and labor unions had criticized that provision as trying to take away premium pay from military veterans.

Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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