New overtime rules: favoring management?

At least 6 million American workers will lose their right to overtime pay starting Aug. 23.

At least that's what Ross Eisenbrey, an economist with the liberal Economic Policy Institute in Washington, charges.

"It's the worst rollback in employee rights in 57 years," he says, harking back to the passage of the Taft-Hartley Act in 1947, a bill that put some limitations on trade union activities.

A Department of Labor (DOL) spokeswoman, Pamela Groover, calls Mr. Eisenbrey's study and attacks by the AFL-CIO, the nation's trade union federation, "misinformation stuff" that "hurts workers."

The DOL states that its new "FairPay" rules "will strengthen overtime rights for 6.7 million American workers, including 1.3 million low-wage workers ... denied overtime under the old rules."

Who's closer to right - Eisenbrey or the DOL - may be suggested by the fact that almost every business association in the country is loudly cheering the new regulations published in April and taking effect in four weeks. The list includes the 600,000-member National Federation of Independent Business, the 14,000-member National Association of Manufacturers, and the 3 million-member United States Chamber of Commerce.

Business clearly expects to benefit from the new rules.

"This rule is an abomination," says Eisenbrey. Bosses, he adds, will be able to work more employees 50, even 80, hours in a week without paying time-and-a-half or anything extra for hours worked beyond 40.

Americans already work far longer hours than employees in most rich nations. The French workweek is by law 35 hours.

The rules may only be in effect for a short time. It depends on whether Congress tackles the overtime issue again when it reconvenes after Labor Day. Sen. Tom Harkin (D) of Iowa has an amendment already attached to a bill involving a tax break for exporters that the World Trade Organization says is illegal. The amendment would prevent the Bush administration from imposing any new regulation that strips workers of overtime rights. The measure also allows for expansion of overtime coverage or any other improvements, such as better job titles, that do not restrict overtime eligibility.

The amendment already passed the Senate 52 to 47 on May 4, attached to another bill that has so far gone nowhere. A few Republicans joined the Democrats. With an election coming up, some Republicans are concerned about appearing to clip overtime pay, which Senator Harkin notes accounts for 25 percent of the income of workers who work overtime.

The legislative dance is a bit complicated, involving a House-Senate legislative conference. But the Republic leadership is "doing somersaults," says Kelly Ross, an AFL-CIO official, to avoid having to vote on the overtime issue. The labor federation, Mr. Ross promises, will continue to fight the new DOL overtime rules in Congress.

To Ross, the new rules are another sign that the DOL "goes out of the way to do bad things for working people."

Traditionally the Labor Department under any administration, either Republican or Democratic, has been regarded as a supporter of workers in the perpetual conflict between management and labor over government regulation. The Commerce Department is seen as the protector of business.

But organized labor has taken aim at the Bush administration's Labor Secretary Elaine Chao for not taking their side. "We have two secretaries of Commerce," AFL-CIO President John Sweeney has grumbled.

A Labor Department fact sheet accuses the AFL-CIO of "a greater interest in playing politics than in protecting workers."

Both sides agree on a need to revise overtime regulations under the Fair Labor Standards Act. The rules have been unaltered for 30 years despite many changes in the economy and the labor force. During that time the salary threshold below which employees are guaranteed overtime compensation, regardless of their duties, has remained at $155 a week, or $8,060 a year, ignoring decades of inflation.

For the layman, the 154 pages of new rules in the Federal Register are almost incomprehensible. It is difficult to determine, without expertise, whether the new overtime rules help or hinder workers.

They do create a new salary threshold of $455 a week or $23,660 a year. DOL claims that 1.3 million salaried workers now earning less than $455 a week will gain overtime pay. But Eisenbrey maintains that this DOL analysis is "flawed and demonstrably wrong" and that only 384,000 of these low-paid workers would be guaranteed overtime should they work more than 40 hours per week. (To get a total net figure - overtime losers minus overtime winners - that 384,000 should be subtracted from Eisenbrey's 6 million estimated losers.)

Recognizing the complexity problem, the AFL-CIO asked three former Labor Department officials, who worked under both Republican and Democratic regimes, to evaluate the new rules. After proclaiming total independence, the three experts, in 40 pages, offered damning conclusions.

The rules exempt from overtime, they write, a greater proportion of the workforce than "Congress could have originally intended." They remove existing overtime protection for "large numbers of employees." They "failed to restore" an appropriate salary level requirement, and failed to establish "reasonable and clear criteria" for determining those not able to claim overtime, including executives, administrators, professionals, and outside sales employees. The rules could result in a "profusion" of court litigation.

Worst of all, the three held that the department in its rules "failed to protect and promote the interests of working people," a "core" mission of the DOL.