Compliance November 21, 2003

Overtime Provisions Throw Spending Bill Into Flux

November 21, 2003 (PLANSPONSOR.com) - The US House of Representatives and the US Senate are in a dogfight with the White House over proposed amendments to the Fair Labor Standards Act (FLSA) that has stalled a $280 billion end-of-year spending bill.
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>The latest squabble comes after the House did an abrupt about face last month to withdraw its earlier support for the changes.   Even though October’s House vote was non-binding, it put the chamber on record as supporting the US Senate, which opposes the new regulations (See US Senate Blocks Bush’s FLSA Amendment ), according to an Associated Press report.

Leading the Senate’s charge is Pennsylvania Republican Arlen Specter, who claims amending the FLSA would cut the paychecks of millions of workers.   “The regulation which the Department of Labor (DoL) has is just going to eliminate a lot of overtime for a lot of people, and with the economy being in its current shape, that would be very, very unwise,” Specter said Thursday.

Specter wants a compromise requiring the DoL to set up a commission to study the issue and suggest new regulations within 90 days. The Labor Department would be barred from issuing its final rules during that time.

However, President Bush has threatened to veto the proposal under the current Senate version of the bill, thus denying funding for health, labor, and education programs attached to the overall measure.   So far, Specter’s compromise has not shown much promise of passing from the White House.

Bush’s Proposals

Bush’s proposed changes would have been the first comprehensive overhaul in more than 50 years of the white-collar exemption tests used to determine whether an employee must be paid overtime or is exempt from the minimum wage and overtime requirements of FLSA. Currently, there are three tests for whether or not an employee is ineligible for overtime:

  • the employee’s level of pay
  • whether or not the employee is a salaried or hourly worker
  • whether or not the employee performs certain job duties.

As the rules stand, any employee making more than $155 a week (about $8,000/year) could be excluded from overtime, if they had a salary and a job description that fell into certain categories.

The proposed regulations would have lifted the cutoff to $425 a week (about $22,100/year), a step that could add about 1.3 million lower-wage workers to the ranks of people eligible for overtime and could go into effect as early as 2004, according to DoL (SeeWhite House Proposes Overtime Rules Overhaul). 

The administration, along with the business community, argued the proposed changes are needed to update antiquated work rules.   However, nay-sayers, a group that includes labor unions, say the changes would unfairly strip workers of overtime protection and allow companies to make them work longer than a 40-hour week without additional compensation (SeeReport Claims Eight Million May Lose OT Pay).

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