Winners and losers at work
The new federal overtime rules aren't as clear-cut as promised
American workers are uncertain about their job security, fearful of losing their health insurance, and uneasy about their pensions. Now they have something else to worry about: Will they get time-and-a-half pay when they work more than 40 hours a week?
That once simple question has become increasingly contentious as Starbucks managers, Geico insurance adjusters, Computer Sciences Corp. techies, and a host of others have sued their employers in recent years, charging that their bosses illegally labeled them "executives" or "professionals" to avoid paying them overtime. And this week, the issue will only get murkier as President Bush's controversial reforms of the overtime law--which for 66 years has guaranteed that everyone except executives, professionals, administrators, and some salespeople earn time-and-a-half pay for working more than 40 hours a week--take effect.
This isn't what was supposed to happen, of course. The Bush administration had hoped that the first major reform in the law would reduce the growing confusion about who is eligible for overtime pay and rein in an explosion of litigation that has wrung tens of millions of dollars in legal fees, settlements, and back pay from employers who allegedly tried to squeeze free work out of their employees. But the new rules appear to have fallen short of that goal, thanks to the increasingly partisan political atmosphere as well as growing state activism. Eighteen states have adopted laws that offer more protections to workers than the new federal rules. Employers are governed by whichever law--state or federal--is most advantageous to workers.
If that patchwork isn't confusing enough, there are real questions about how long the new rules will last. Congressional Democrats, seeing a chance to score points against Republicans already vulnerable on job issues, are vowing to pass legislation this fall to scuttle changes that would deny any workers overtime protection. And Democratic presidential nominee John Kerry has said he will reverse the rules if he is elected in November.
Clear as mud. As a result, the new rules probably won't deliver the clarity, savings, or worker protections that the administration promised when it proposed an overhaul. On the other hand, while the new rules will most likely mean fewer workers will receive overtime pay over the long run, the loss probably won't be as widespread or dramatic as opponents have predicted.
Everyone agrees, however, that the reform will give new and better guarantees of overtime to at least two large groups of workers. For the first time, anyone who earns less than $23,660 per year (up from $8,060) will be guaranteed time-and-a-half pay for work over 40 hours a week. The Department of Labor estimates that employers will have to spend $375 million more in overtime a year. Among the new recipients are 1.3 million low-wage retail managers, administrative assistants, and others, as well as "first responders," such as firefighters, police officers, and emergency medical technicians.
The upshot for just about all others, however, may be more befuddlement. The new rules change the definitions of the executives, managers, professionals, administrators, and team leaders who will be exempt from the federal guarantee of overtime pay. (Of course, an employer can choose to pay overtime to any worker.) For example, to be deemed a manager now, the employee must have a "primary duty" of management, oversee at least two workers, and have the power to at least make suggestions about hiring and firing. The old law didn't insist that managers have input in personnel decisions but did require that managers be in charge of a recognized unit. Robert Thompson, an attorney for RadioShack managers currently suing their employer for overtime pay, says the new language could end any hope of retail managers' receiving overtime. "At every mall you go to, all the managers will be affected by this law," says Thompson.
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