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Overtime rule changes revised

With an apparent eye on election-year politics, the Bush administration has retrenched on its plan for a sweeping overhaul of the nation's rules on overtime.
/ Source: staff and news service reports

With an apparent eye on election-year politics, the Bush administration has retrenched on its plan for a sweeping overhaul of the nation's rules on overtime.

The new rules -- unveiled Tuesday after months of contentious debate -- protect the rights of many workers to keep earning overtime while dumping some provisions that prompted an outcry from organized labor and the White House's critics, who argued that the administration wanted to help business while gutting overtime rights for up to 8 million workers.

For example, the final plan, previewed Tuesday by Labor Secretary Elaine Chao, will allow some white-collar workers earning up to $100,000 a year to remain eligible for extra pay if they work more than 40 hours a week. Previously, the proposal would have capped overtime for those earning $65,000 a year or more.

Chao described the final rules as she had the proposed rules: a way to reduce confusion between workers and employers, and a chance to win overtime for many low-wage workers.

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

The final rule includes guarantees of overtime rights for some professions that had been in the center of a policy firestorm, notably police, firefighters and emergency medical technicians. Democrats on Capitol Hill had criticized the administration for trying to take away those protections.

They also took the White House to task for allowing provisions that would have taken away protections from military veterans, under rules that counted military training as experience that could make someone ineligible.  The final plan carves out some exceptions for veterans.

And while the initial rule would have guaranteed overtime to any white-collar worker earnings less than $22,100, the final rule raised that to $23,660. The department had said last year that requirement would make 1.3 million workers newly eligible for overtime pay. But it also quietly 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.

Hundreds of pages
Many labor experts on Tuesday were trying to absorb the details of the new rules, which stretched over 500 pages.  But unions, who fought to push back the revisions, were skeptical the new version had many improvements.

"There are some partial fixes in areas where the Labor Department was under attack," said Bill Samuel, legislative director for the AFL-CIO. But Samuel pointed to some explicit protections written into the final rules -- like those for public safety workers -- as evidence that the administration's earlier promises were faulty.

The new overtime rules have been mired in a dueling battle of numbers between the administration and its critics over the past nine months.

Under Chao's initial proposal last year, the Labor Department estimated that 644,000 white-collar workers could have lost protection, while 1.3 million low-wage workers would have gained it. But in June, the Economic Policy Institute, a think tank tied to labor unions, provided its own estimate that 8 million workers would lose their right to protection.  Business groups and the Labor Department questioned that analysis.

Chao said the new rules "guarantee and strengthen overtime rights for more American workers than ever before." The Labor Department now says up to 107,000 workers could lose their overtime protection, but 6.7 million workers would be guaranteed eligibility.

Of the 6.7 million, it estimated that 1.3 million salaried workers not currently eligible for overtime would gain that right.

Labor officials questioned those estimates.

"Their credibility is somewhat in question here because they’ve touted numbers, in fact, that ended up not to be true," Samuel said.

The new overtime rule will take effect in 120 days. But they come at a time when the economy and jobs are on the minds of most voters.  The administration's pro-business image has rankled many lower-wage workers, and President Bush's public approval on economic issues continues to lag, in part because of rosy outlooks on job creation issued by White House officials that have yet to come true. 

Some 308,000 jobs were created last month, but White House economic adviser Gregory Mankiw hedged on a prediction that 2.6 million jobs would be created this year.  Unless job growth picks up significantly, Bush would be the first president since Herbert Hoover with a net job loss in his administration.

Widely criticized
The overtime fight began last March when Chao proposed a huge overhaul of the Fair Labor Standards Act at the urging of businesses and employer groups.  Employers wanted the changes to bring clarity to the 50-year-old regulations and to get relief from a growing number of lawsuits brought by workers.

All sides agreed the rules -- which were last revised in the 1970s -- needed a major overhaul. But Chao's plan immediately drew ferocious criticism from organized labor, Democrats and some Republicans. And the agency received more than 75,000 comments after it released its initial rule.

Senate Democrats, led by Sen. Tom Harkin of Iowa, managed last year to pass an amendment that barred the Labor Department from enacting the final regulation, but their effort was later stricken down amid pressure from the White House. Congress cannot approve the labor rules, but can vote to bar funding for the department if it approves them.

Chao is likely to be asked to Capitol Hill for more details on the rules, according to a spokesman for Rep. John Boehner, R-Ohio, chairman of the House Education and Workforce Committee.

'It's about having clear answers'
And the actual impact of the final rules is likely to come clear in the next few weeks as companies and labor attorneys parse the details.

Payroll experts hope that the language gives firms a defining line to determine how their workers should be paid.

“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.”

The U.S. Chamber of Commerce, which sought an overhaul to provide that sort of clarity, was still evaluating the plan Tuesday. “It all comes back to our initial goal, to cut down on lawsuits,” said Michael Eastman, its labor law policy director. “It’s hard to answer that question until I see the fine print.”

Though the regulations will not impact any labor agreements workers already have, the unions fear the new standards would find their way into future labor negotiations, which helps explain why they have fought so vigorously on the issue, which largely impacts white-collar workers who are not unionized.

And the AFL-CIO noted some exemptions written into the rule that barred some professions, such as funeral directors and inside salespeople, from overtime -- provisions it said business groups had been unable to win from Congress over the past several years.

Harkin on Tuesday was wary about the final rules.  "As we say in Iowa, you can put lipstick on pig, but guess what? It’s still a pig," he said in a statement. "Given this Administration’s track record, I remain skeptical and will need to read the fine print."

MSNBC's Jon Bonné and The Associated Press contributed to this report.