April 21, 2004

Labor Dept. Revises Plans to Cut Overtime Eligibility

Source: Capitalists for Labor, Inc. Elaine L. Chao is the nation's 24th Secretary of Labor, representing a new generation of American leadership. Since her confirmation by the United States Senate on January 29, 2001, she has been dedicated to carrying out the Department of Labor's mission of inspiring and protecting the hardworking people of America. She is respected as an effective and articulate champion of the nation's contemporary workforce, acting quickly to focus the Labor Department on the modern realities of workers' lives.

acing a deluge of criticism in an election year, the Bush administration yesterday scaled back its plans to deny overtime coverage to hundreds of thousands of American workers.

With many police officers, firefighters and higher-paid blue-collar workers fearing that the administration's draft regulations would make them exempt from overtime pay, Secretary of Labor Elaine L. Chao announced revised regulations that she said would ensure those workers still qualified.

The administration also said workers earning more than $100,000 a year would almost automatically be disqualified for overtime pay, increasing that threshold from the $65,000 it proposed a year ago. There currently is no ceiling.

Ms. Chao said the new rules, the first broad revision of overtime regulations in 50 years, would protect workers and would merely modernize and simplify regulations governing more than 100 million working people.

"Our intent is always to strengthen overtime protections," Ms. Chao said at a news conference in Washington. "We do not expect that many people will lose their overtime."

But many Democratic officials and labor leaders said the new rules favored corporate America and denied overtime pay to many middle-class workers just when they were feeling an economic squeeze.

When the Bush administration proposed new overtime rules a year ago, Labor Department officials estimated that an additional 644,000 workers would be ineligible for overtime pay. But the liberal Economic Policy Institute said the administration had deliberately underestimated the number, predicting that eight million workers would lose eligibility.

Ms. Chao said yesterday that the new rules, which take effect in 120 days, would deny eligibility to only 107,000 workers. But the administration's critics asserted that she was again underestimating the number.

"This is an administration that had no reservations about repealing overtime for eight million workers," said Senator Tom Daschle of South Dakota, the Democratic leader. "So it's hard for us to believe that they now have some transformation in that position and have been converted to an advocacy of overtime for these people."

In a statement, Senator John Kerry, the likely Democratic presidential nominee, said, "The Bush administration's changes to overtime pay strike a severe blow to what little economic security working families have left as a result of Bush's failed policies."

Under the Fair Labor Standards Act, workers are generally to receive time-and-a-half pay when they work more than 40 hours a week, except when they are salaried workers in certain executive, administrative or professional positions.

The new rules modify the tests determining who qualifies for overtime pay, with the criteria including the amount of managerial responsibility and professional training.

The pay level below which workers are automatically eligible for overtime pay will rise to $23,660, from $8,060. The administration said this threshold would guarantee overtime eligibility to 1.3 million workers who do not now receive it.

Under the current regulations, many assistant store and restaurant managers with salaries of about $20,000 do not qualify for overtime pay, even when they work 60-hour weeks.

Corporate and union officials acknowledged that it was unclear which workers earning between $23,660 and $100,000 would still qualify for overtime pay.

American corporations have pressed President Bush to revise the overtime rules, saying those regulations were so unclear that they encouraged hundreds of lawsuits in which low-level managers asserted that they deserved overtime pay.

"We're pleased that after having to live with 50-year-old regulations that no longer fit today's workplace, we finally face an update," said Katherine Lugar, vice president for legislative and political affairs with the National Retail Federation. "I expect at the end of the day we'll have more clarity."

Critics and supporters of the new rules, which are 500 pages long, said it would take days to assess exactly how many workers would be disqualified from overtime pay.. There was widespread agreement that fewer would lose eligibility than under the original proposals.

Saying the administration was heeding political concerns, Bill Samuel, the A.F.L.-C.I.O.'s legislative director, said, "We think there are some partial fixes in areas where the Labor Department was under attack."

The Labor Department received more than 75,000 e-mail messages and letters commenting on its draft proposal.

Ms. Chao said the new rules would continue to provide overtime eligibility to police officers, firefighters, emergency medical technicians, blue-collar workers and licensed practical nurses, groups that said language in the draft regulations might have exempted them.

The new rules indicate that some workers earning between $23,660 and $100,000 will almost automatically be exempted, including claims adjusters, funeral directors and many computer administrators.

The original proposals angered veterans' groups because they said that training received in the military could be counted as professional education that might disqualify workers from overtime pay. The new regulations omitted that language.

Under the new rules, white-collar employees who earn at least $100,000 will be exempt from overtime pay if they regularly perform some duties of an executive, administrative or professional employee. But white-collar workers earning more than $100,000 will still receive overtime pay if covered by a union contract that provides for it.