Though Labor Secretary Elaine Chao says relatively few workers will be adversely affected by major changes to the nation's overtime rules, Democratic critics believe the total could reach into the millions.
Facing political heat, the Labor Department said Tuesday is creating a new enforcement task force it says will focus on protecting workers' eligibility rights. And Chao was scheduled to testify Wednesday on Capitol Hill.
With the secretary due for an appearance, Congressional Democrats signaled Tuesday a fresh determination to contest key portions of the Bush administration’s revised overtime regulations, adding the issue to election-year labor struggles over the minimum wage and unemployment benefits.
“It’s clear that they’re trying to suggest that these regulations really don’t harm anyone,” Rep. George Miller, D-Calif., said of the administration. “The fact of the matter is they harm a huge number of people making between $23,000 and $100,000.”
Democratic aides said a former Labor Department investigator would testify to that effect Wednesday at a hearing where Chao headed the witness list.
“There has been a lot of happy talk out of the Department of Labor, but the fact is that this regulation is riddled with loopholes, potentially making millions of Americans earning as little as $23,660 vulnerable to losing their overtime,” added Sen. Tom Harkin, D-Iowa. Senate Democrats said they hoped for a vote as early as next week on Harkin’s proposal to block any portion of the regulation that would strip workers of their overtime eligibility.
House Republicans invited Chao to testify at the committee hearing designed to showcase the revised rules, which the Labor Department says would provide overtime protection for millions of workers, including police, firefighters and other first responders as well as lower-paid white-collar employees making up to $23,660 a year. The revisions also include an explicit statement that blue-collar workers such as carpenters, plumbers and electricians are entitled to overtime.
Task force planned
The department's new rule, issued last week, overhauls the regulations that determine what white collar workers are eligible for overtime pay under the 1938 Fair Labor Standards Act. The rule takes effect in August and does not require approval from Congress.
It marks the first comprehensive overhaul of the government’s overtime rules in decades.
Overall, the department says overtime rights will be strengthened for workers paid between $23,600 and $100,000, leaving only 107,000 employees paid above that level at risk.
The new rule and the task force "reinforce our proven commitment to protecting workers' rights," Chao said in a statement.
The task force, made up of Wage and Hour Division officials, is being created because of "our concern that the massive misinformation campaign against the new overtime security rules could undermine efforts to make employers live up to their new obligations under the rule and jeopardize workers' overtime pay protections," Chao said.
AFL-CIO officials said the task force could be useful, but that Chao also should promise when she testifies at a House hearing Wednesday that new regulations will not exempt overtime to any worker currently eligible.
"The strongest and clearest way to reassure workers that they will not lose overtime protections under these regulations will be for the secretary to make a statement to that effect when she testifies," said Chris Owens, the AFL-CIO's policy director.
Unions see broad impact
The AFL-CIO and other critics say their own initial analyses of the regulations indicated several provisions that could mean the loss of overtime protection for millions of workers.
Among them, they said, was a provision that said that an “employee who leads a team of other employees assigned to complete major projects for the employer” generally could be exempted from overtime. The AFL-CIO has described this provision as “an enormous new loophole,” and Democrats pointed to a memo from an MIT management professor, Tom Kochan, that said as many as 1.5 million workers could be affected.
The memo says employers “routinely have difficulty recruiting employees to take on the role of team leaders. To now penalize those employees who are willing to take on this critical role by stripping them of overtime protection will make it more difficult for employers to recruit” them, it said.
Labor Department officials declined several requests over two days to respond to the charges in an interview, pointing instead to the regulations and several related documents.
In the regulations, the agency said the section related to team leaders was added to reflect the “modern practice of a company forming cross-functional or multi-department teams to complete major projects.”
The AFL-CIO and Democratic critics also pointed to sections in the regulations saying insurance claims adjusters would be exempt from overtime, as would many workers in the financial service, computer and other industries. The regulations say these provisions were in keeping with existing regulations or court rulings.
The department first proposed changes to the regulations in March 2003, which were criticized by labor unions and Democrats as an attempt to take away overtime eligibility for workers. The department said its plan would have cut overtime pay for about 644,000 workers, while critics said the number was closer to 8 million.
Department officials heavily revised the plan. But critics say their concerns about overtime takeaways remain because exemptions are being expanded in the new rule that will cover more workers. But they don't yet have an estimate on how many they think could lose eligibility.
More than 340,000 workers received a record $212.5 million in back wages as a result of Wage and Hour Division investigations last year, the department said. That compares with 263,593 workers who received $175.6 million in back pay in 2002.
The Associated Press contributed to this report.