New rules for overtime take effect

WASHINGTON – After months of heated debate, a major revision, protests and an unsuccessful legislative assault, the most sweeping changes in the nation’s overtime rules in more than 50 years take effect today.

Workers who earn less than $23,660 annually will become automatically eligible for overtime pay, a boost from the current threshold of $8,060 set in the 1970s.

That change is “the most objective bright line standard” in the dense, complex regulations, said Tom Farmer, a senior consultant with Hewitt Associates, a human resources consulting firm. He predicts thousands of workers will begin earning overtime immediately because of the higher threshold.

But beyond that, interpreting the complicated 154-page document still boggles many employers who must first understand the regulations and then translate the changes into new job classifications for employees.

“There is just going to be continued confusion,” said Anita Raman, vice president of operations for PrO Unlimited Inc., which helps companies sort out employment regulations. “Employers really thought with the new law, ‘I’ll definitely be able to figure out who’s exempt and who isn’t.’ They are still wandering around trying to figure out how to classify (employees) correctly.”

Other than the higher threshold for automatic eligibility, every change in the new regulations means less overtime protection for workers, said a report released last month by John Fraser, Monica Gallagher and Gail Coleman – three of the highest-ranking Labor officials under Presidents Reagan, George H.W. Bush and Clinton. “More classes of workers, and a greater proportion of the work force overall, will be exempt than we believe the Congress could have originally intended,” they wrote.

But the Department of Labor argues otherwise. “Millions of workers in America will benefit from the Department of Labor’s new, stronger overtime protections,” Steven J. Law, deputy secretary, said Wednesday.

The rules have been the source of political contention for months. The Senate voted to block the rules in May, in an effort pushed by Sen. Tom Harkin, D-Iowa. Sen. John F. Kerry, the Democratic presidential nominee, has said he will repeal them if elected.

Saturday, Sen. John Edwards, the Democratic vice presidential candidate, denounced the new regulations in the Democrats’ weekly radio address. “If you work hard, then you should be rewarded for that effort,” Edwards said. “Why would anyone support this new rule, which could mean a pay cut for millions of Americans who have already seen their real wages drop again this year?”

The battle will continue today when the AFL-CIO, along with workers and Harkin, will protest the rules at a rally at the Labor Department.

Salaried workers who fall between $23,660 and $100,000 a year might lose overtime based on a duties test, which describes the tasks that determine whether a worker can, for example, be classified as a professional ineligible for overtime. Those making more than $100,000 will lose their overtime rights unless they do not regularly perform professional, administrative or executive duties.

“It’s really in that duties test that the really negative impact is being made,” said Baldwin Robertson, a lawyer who works with the AFL-CIO. Robertson helped launch an overtime question-and-answer site called “Ask a Lawyer” at www.workingamerica.com.

For example, Robertson said, workers in the food industry who spend most of their time doing manual work, but sometimes instruct subordinates, could be overtime losers under the new duties test. Those workers can be reclassified as team leaders or as executives because they supervise two or more people, Robertson said.

Business groups have been proponents of the new regulations.

“These reforms provide clearer guidance to both employers and workers on their rights and responsibilities under wage and labor laws,” said Randel K. Johnson, U.S. Chamber of Commerce vice president for labor, immigration and employee benefits.

Several groups have produced reports pointing out what they say are rule loopholes through which many white-collar workers – 6 million, according to Ross Eisenbrey, vice president of the labor-backed Economic Policy Institute – could lose overtime.

But the Department of Labor disputes that analysis and says it changed the rules because they needed updating. The old rules did not mesh with the new economy, causing increased litigation, officials argued. Overtime class actions have doubled since 1997 and outnumber discrimination suits for the first time. Labor recovered $212 million in back wages in fiscal 2003.