OT rules still causing rift

For the first time in 50 years, overtime regulations governing “white-collar” workers have been updated, raising income thresholds and clarifying which jobs qualify for overtime. The Labor Department said the new rules strengthen overtime protection for more than 6 million workers.

Labor unions disagree, and commissioned studies that they say show the new rules instead strip more than 6 million workers of overtime pay eligibility.

“It was difficult before the law; it’s probably going to be difficult after the law,” said Seward Dinsmore, the Department of Labor’s wage and hour investigator in Eastern Washington and North Idaho. “There was a great effort to try to untie the knot, to update the regulation. My hope is that it will make things easier. Ask me in two or three years and I can tell you whether this has been beneficial.”

The new rule takes effect Aug. 23. It sets up a three-pronged test to determine whether an employee is eligible to receive overtime. First, all employees earning less than $455 a week or $23,660 per year, receive overtime for work above 40 hours a week. That’s an increase of about $300 a week from the old rule, which said only workers earning less than $8,060 were guaranteed overtime.

Second, employees who are paid hourly automatically qualify for overtime, according to the new FairPay rule.

The last test examines an employee’s job duties. The rule says job titles alone do not determine whether an employee is exempt from receiving overtime. Performing certain functions at work may qualify an employee to fall into certain exempt categories, thereby removing their eligibility for overtime. The categories include exemptions for “executive,” “administrative” and “professional” work. The exemptions spell out job requirements that include managing other employees, “exercise of discretion or judgment,” and “advanced knowledge in a field of learning,” which would remove an employee’s eligibility for overtime.

In addition, most employees who earn more than $100,000 a year will not be eligible for overtime if their work regularly fits into one of the exempt categories. The Labor Department estimates that this clause could result in 107,000 workers losing overtime pay eligibility, but insists those are the only workers at risk.

The new rules apply only to white-collar workers. All blue collar workers, defined as employees who work with their hands, using physical skill, are eligible for overtime, regardless of how much they earn. A special section also was written into the rule guaranteeing overtime pay to police, firefighters, paramedics and other first responders.

The final version of the regulation was released in April and will take effect Aug. 23. In May, the Republican-controlled Senate voted 52-47 to require that the new regulations guarantee the right to overtime pay for all workers who currently qualify for it. That bill was never taken up by the House.The Labor Department said the so-called Harkin amendment, led by Sen. Tom Harkin, D-Iowa, would have created an entitlement to overtime “attached in perpetuity to a person, rather than to a set of duties or even a particular job.”

AFL-CIO President John Sweeney saw it differently.

“The Administration’s final regulation is rife with special-interest fixes for industries that have been unable to secure them from Congress,” Sweeney said in a statement following the Harkin amendment vote. “It is puzzling that the Administration is pressing forward in defiance of a strong bipartisan majority of Congress.”

Dinsmore said he understands the labor unions’ concerns. “I wouldn’t want a regulation to be used adversarily against workers. I don’t doubt some employers will do exactly what their fear is” and try to use the rule to remove overtime eligibility from some workers who already receive it. But he said he thinks such companies are in the minority and that the labor unions underestimate the power of competition, which forces most companies to treat employees the same way their competitors do.

One group that feels particularly targeted by the new rule is registered nurses, who can be classified as exempt from receiving overtime under the “learned professional” exemption. The Washington Nurses Association signed onto a letter that opposed the rule and was sent to the Senate.

“We are extremely concerned about the new regulations,” said Anne Tan Piazza, assistant director of governmental affairs for the association. Considering the predicted shortage of registered nurses nationwide, “what most concerns me is that registered nurses are routinely being asked to work overtime,” she said.

Piazza said the association will monitor the implementation of the rule carefully, on a case-by-case basis. Though most nurses in Spokane are unionized, the letter says that’s no protection, considering many union contracts defer to Labor Department regulations, in which case they’d be governed by the new rule, not the contract. In addition, when contract negotiations reopen, the new rule could be applied. The Labor Department responds that the FairPay rule does not change current law regarding registered nurses. It says RNs paid on an hourly basis should receive overtime pay. RNs who receive overtime through a contract will be protected, the department said.

At Kootenai Medical Center in Coeur d’Alene, where nurses are not unionized, hospital Vice President Carmen Brochu said the new rule wouldn’t affect the hospital’s policy. “If they generate overtime, we pay them overtime,” she said. “This would not create new exempt positions.”

Keller Allen, a Spokane attorney who has been practicing labor law for 16 years, said the threat of lawsuits — especially class actions — should help keep employers in check regarding overtime.

“The one thing I would tell employers is the wave of class actions has not hit here” — such as recent judgments against Farmers Insurance and Pepsi — “but it’s really only a question of when,” Allen said. “I think the majority of employers want to do it right, but they never took the time to really evaluate whether people fit into those exemption classifications.”

But Beth Thew, spokeswoman for the Spokane Regional Labor Council, which represents 100 unions in Eastern Washington, worries that in a tough economy, protections for working people are slowly disappearing.

“This is just another attack on the conditions we inherited. The next time they work on your contract, that’s something that could be under attack,” Thew said. “There are certain standards we take for granted, like a 40-hour workweek, weekends, vacations, holidays. Little by little, they’re all being eroded.”

The AFL-CIO commissioned a study by three former Department of Labor officials. Even while applauding the Labor Department for taking on the contentious and difficult issue, they found the rule exempted more workers from receiving overtime, failed to establish clear criteria for who is exempt and failed to protect working people. An analysis by the Economic Policy Institute, a nonprofit think tank, found that the rule strips six million workers of overtime eligibility.

The Labor Department disputes both reports point by point. In a prepared statement, department spokesman Ed Frank decried such reports as part of a “misinformation campaign that has failed to cover up the fact that millions of workers will benefit.”