More than five months after the Labor Department released its plan to overhaul the rules that govern Americans’ overtime pay, details about the new rules remain frustratingly vague. Who exactly will it affect? A war of numbers hasn’t helped answer that.
Barely a ripple surfaced when the Bush administration released its proposal in March. But public attention gelled this summer, fueled in part by an estimate that 8 million Americans could lose their overtime rights and in part by grumbling that the proposal was intended to slip under the wire without lawmakers’ scrutiny.
Though the Senate voted 54-45 last Wednesday to bar the Labor Department from enacting the rules, Labor Secretary Elaine Chao and other administration officials have stuck to their guns, hoping to enact a plan they view as a vital overhaul of 50-year-old rules.
They contend that 1.3 million low-wage workers would be granted overtime under the new rules, while about 640,000 stand to lose overtime rights. Administration officials and business groups continue to dispute the 8 million figure put out in June by the labor-affiliated Economic Policy Institute. (The number reflects those eligible for overtime, not necessarily those actually receiving it.)
For its part, EPI has tried to poke holes in the 1.3 million number, which it claims includes blue-collar workers who already qualify for overtime as well as the white-collar workers who could gain from the rules. “It’s a fraud,” says EPI’s Ross Eisenbrey. “They made up the number.”
By EPI’s new calculations, the Labor Department’s figure includes only 737,000 white-collar workers who would be made eligible. The government has not flinched from its original estimate.
Why unions care
Organized labor was enthralled with the Senate vote, but unions’ role in this fight is a bit tricky. For most union workers under contract, changes in the overtime rules would have no immediate effect.
What really worries them is the rules’ eventual impact. Many union contracts have overtime provisions tied to the federal Fair Labor Standards Act, which would be rewritten by the new rules. New overtime rules could automatically change the terms of many union contracts, especially for government workers.
And overtime for many white-collar jobs that are partially unionized — engineers’ assistants, for example — could be hard to win the next time contracts are negotiated. Similar problems arise for factory shift supervisors, whose overtime-earning jobs could fall under the new rules. “We’ve already been told by employers,” says Kelly Ross, legislative representative for AFL-CIO, “that in the next round of discussions it’s going to be on the table.”
New lawsuits likely
If the changes pass, the benefits to companies are hard to quantify. The business community says the new rules will untangle decades of conflicting case law from federal courts. The vagaries of the original overtime rules, last updated in 1954, have led to what attorney Katharine Houlihan of law firm Morgan Lewis & Bockius calls “a cottage industry” in lawsuits against employers; businesses have told the government they’ll willingly absorb the estimated costs of the new rules — at least $235 million, by Labor Department estimates — if it means fewer lawsuits.
But the new rules would also blank the slate for a lot of overtime case law; new lawsuits are almost certain to emerge. “Any time you change regulations that have been interpreted for over 60 years, that’s going to breed litigation,” says employment attorney Greg McGillivary, who often represents workers suing their company.
Even businesses agree they’re likely to spend more time in court at first. “Anybody who doesn’t think that is just being naïve,” says Jim Coleman, general counsel for the National Council of Chain Restaurants.
Plus, federal overtime rules can be superceded by more-stringent state rules, so workers who lose federal protections may still keep them on the state level. Other questions linger because the proposed rules have not yet been released in final form. Since the Labor Department released its draft, it received some 80,000 comments and proposed changes.
The rules’ future is murky. A congressional conference must reconcile the Senate measure with the House’s 213-210 vote last July to support the rules. The White House has threatened a veto if the final version blocks the changes. Negotiators face a challenge; some GOP lawmakers oppose the rules but don’t want to deliver a political dud to President Bush.
So who will be impacted?
The list of industries is long, but certain professions are persistently swept into the debate. A small sampling:
Police officers and firefighters: Democrats and other opponents of the changes have jumped on the argument that “first responders” could lose overtime. The administration has argued all along this won’t happen. Opinion is split among officers, too. After a Labor Day meeting with President Bush, the president of the Fraternal Order of Police told members he had “full confidence” they would keep overtime and possibly even gain more. But the International Union of Police Associations maintains 200,000 officers could lose overtime. Unions also worry some specialized positions — police investigators or academy trainers — might lose overtime. Protections for emergency medical technicians also remain unclear, since some believe their training makes them exempt under the rules’ “learned professionals” clause.
Nurses: Another political hot potato. It’s important to differentiate between registered nurses, who are certified by state boards, and licensed practical nurses. Registered nurses currently are considered professionals and thus aren’t guaranteed overtime. But according to Chris Donnellan of the American Nurses Association, a severe shortage of RNs “just dictates that people get overtime.”
LPNs, who often are not licensed to do tasks performed by RNs, may be more vulnerable to lose overtime if they gain enough on-the-job experience. Many RNs also worry employers will use the overtime changes to end their voluntary overtime, especially for nurses who work under union contracts. Donnellan says some employers have already indicated they see the changes as a way to halt overtime. “It would just create more of a shortage,” he says.
Medical technicians: A vulnerable area, according to the EPI figures, with nearly 500,000 people standing to lose overtime rights, but the potential for confusion is enormous. While the rules specify that some certified lab technicians and physician assistants don’t get overtime, there is less clarity about other medical workers. It may ultimately depend on their level of education. McGillivary, who heads the American Bar Association’s committee on federal labor issues, says the learned professional clause “opens the door for people who have only two-year degrees.” What might help, lawyers say, would be a more detailed list of medical jobs considered professional.
Dental hygienists, meanwhile, don’t get overtime under the new rules — but that would have little impact. Most already work 40 hours or less, according to the American Dental Hygienists’ Association. “I don’t think there would really be anybody affected,” says Tammi Byrd, the association’s president.
Social workers: Another area with great potential for confusion. Despite an estimate that over 300,000 could lose overtime rights, most certified social workers already work extra hours for a straight salary. More at risk are those with no formal training: homeless-shelter workers on an hourly wage, for example.
Computer programmers and technicians: Most salaried programmers are already exempt from overtime, in part because of a 1992 law that removed overtime requirements for higher-level computer jobs. But worries linger for programmers who are paid hourly — especially contract workers. Some in the industry worry other jobs could also be reclassified under other exemptions, such as test engineers and technical editors. Mike Blain, co-founder of WashTech, which represents tech workers in Washington state, argues that industry attempts to force extra hours without extra pay are well documented. “If this is enacted,” he says, “it would increase that kind of abuse.”
The new rules could also place some technical employees under an “administrative” exemption, argument being that they contribute to crucial business functions — anything from accounting to advertising. A large coalition of businesses wants to expand that definition and include such positions as database or network administrators. By their argument, these are such critical tasks that the employees who perform them have built-in job security. “That person has the protection ... when times are slow,” says Houlihan, who represents the coalition, “of knowing they’re going to get their salary no matter what.”
Nontraditional reporting structures in many computer firms may broaden the definition of “executive” positions to include workers with a handful of subordinates or those deemed “team leaders.” Some businesses argue it should also include workers who manage “processes, projects and contracts rather than employees.”
Paralegals: Many work long hours, but most who earn overtime get it because of their law firms’ pay policies. Little would change under the new rules — though the National Federation of Paralegal Associations wants the salary limit for guaranteed overtime raised to $33,800. They also wanted the Labor Department to include paralegals under the professional (versus administrative) exemption, though that may jeopardize their overtime eligibility. Being considered a profession under federal law would help separate paralegals from legal secretaries and other law firm employees, says federation president Dianna Smiley.
Retail workers: The most contentious issue in retail involves managers and assistant managers who perform the same duties as their employees — running a cash register, folding shirts, preparing fries — while also supervising. The new rules explicitly note that retail supervisors can be exempt from overtime even if they spend less than half their time managing. Retail business groups suggest that those rules simply reflect retail’s team-oriented nature. But they acknowledge that many assistant managers may lose overtime, even if they spend most of their day working side-by-side with subordinates. “They’re still supervising the restaurant,” says NCCR’s Coleman. “The buck still stops with them.”
Even so, retailers claim the rules will cost them. Their net cost, the Labor Department estimates, will at best be nearly $40 million and could possibly approach $100 million. The major change, they say, will come from the new $22,100 salary test for guaranteed overtime — because many retail workers currently fall below that. “You will actually see more people in the retail industry be eligible for overtime because of the salary increase,” says Katherine Lugar, vice president of legislative and political affairs for the National Retail Federation.