Report Claims Eight Million May Lose OT Pay

June 27, 2003 ( - Opponents of a new overtime bill backed by the Bush Administration say that eight million workers could forfeit their right to overtime under the measure.

The Economic Policy Institute (EPI), a liberal Washington think tank, says that the proposal would cost 2.5 million salaried employees and 5.5 million hourly employees their right to overtime pay, according to the Washington Post. The proposed changes, which were first introduced by the Labor Department in March, will be implemented after a “public comment” period, which expires on Monday (see White House Proposes Overtime Rules Overhaul ).

Under current regulations established by the Fair Labor Standards Act (FLSA) of 1938, about 79% of all workers are guaranteed the right to overtime pay, or time-and-a-half for every hour worked above 40 hours in a week.

Test Criteria

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, and whether or not the employee performs certain job duties, according to the report. Under the current rules, 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 lift 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, according to the Labor Department . However, the EPI study said that the rest of the administration’s plan more than wipes out the gain. Salaried workers earning more than $65,000 a year will now be excluded from overtime, some 1.3 million workers, according to the EPI study. Additionally, job descriptions of millions of workers would be moved into certain “administrative,” “professional,” or “executive” categories that would exclude them from overtime.

Executive Sweep

For example, the EPI study says that “executives” ineligible for overtime, according to the old rules, were people who hired and fired workers, set wages, and assigned work. The new rules broaden the definition of “executives” to include any workers who can only recommend-but not carry out-the hiring or firing of the two employees they “supervise.”

According to the EPI study, which used Labor Department and General Accounting Office data about worker pay and qualifications, the total effect of the three changes is to exclude at least 8.025 million workers from overtime — and probably more, the study said, since the EPI only looked at 78 of the 257 “white collar” occupations identified by the Labor Department.

The Bush administration has said the new rules are clearer and will lower the chance of employee lawsuits.