While members of Congress and countless Americans enjoy their summer vacations between now and Labor Day, there lies a huge piece of unfinished business on the Congressional agenda–one that could make the summer for those average Americans much less enjoyable after August 23.  Congress has adjourned for its traditional summer recess without doing anything to prevent new overtime regulations from going into effect in late August.  A couple of recent studies now confirm what was already anticipated:  that more workers will be harmed than helped by the changes.  And while a number of U.S. businesses may not yet be geared up to transform the way they pay their workers, especially with the political outcome still in doubt, some workers will undoubtedly see changes before Labor Day.  It’s not too late for Congress to fix the problem when it resumes in September, but it certainly makes a already messy situation even messier.

It’s always a challenge to pass legislation in an election year, especially when one or both parties has a particular ax to grind.  Neither side wants the other to score any points that could be used to leverage that party or candidate’s position in November.   This issue has been particularly polarized.  Most Republicans (but not all) support the business interests who want to see changes to the overtime regulations, and support the Administration’s proposal.  Most Democrats (but not all) support the position of workers who mostly stand to lose ground when these changes go into effect, and have thus opposed the proposal.  Right now in Congress, if one takes a head count, there are more who oppose the changes than support them.  Unfortunately, those who oppose the changes are not part of the leadership in either the House or Senate, so it has been relatively easy thus far to stall efforts to block the new regulations from going into effect.

Because the rules are so complex, and there were changes in the final text when it was released, it has taken a while for worker-friendly advocates to analyze their full impact.  (See April 20, 2004 blog entry, with kudos to NELA for the role of its commentary in bringing about some changes.)  In mid-July, the Economic Policy Institute, a leading foe of the proposed changes, issued its long-awaited analysis.  The Department of Labor claims that 6.7 million workers will have their overtime protection strengthened by the law, including 1.3 million low-wage workers who were denied overtime under the old rules.  (See DOL’s FairPay page.)  However, EPI’s research strongly challenges that assertion, instead claiming that 6 million workers will lose the ability to collect overtime, while only 400,000 who don’t currently collect overtime will be newly eligible.  (See Longer Hours, Less Pay.)   

Those who are nominally considered “supervisors” are at most risk for losing overtime.  According to Eisenbrey,

Changes in the primary duty test and the redefinition of “executive” will allow employers to deny overtime pay to workers who do very little supervision and a great deal of manual or routine work, including employees in factories and industrial plants. Employees who can only recommend—but not carry out—the “change of status” of the two employees that they “supervise” will be exempted as “executives” even if they manage nothing more substantial than a team or grouping of employees.

Also at risk are those without advanced degrees, or even those without college degrees, who nonetheless run the risk of being considered “professionals,” based solely on their on-the-job training.  Workers in this category include computer programmers, chefs and sous chefs, and funeral directors and embalmers, all of whom enjoy more protection under current law.   Eisenbrey sums up the proposed changes by calling them an “abomination” and saying “It’s the worst rollback in employee rights in 57 years,” referring to the passage of the Taft-Hartley Act in 1947, a bill that put some limitations on trade union activities.

The AFL-CIO, also very active in this fight, has produced a report which indicates by region where overtime will be lost, so that workers can see which areas of the country are likely to be hardest hit.  (See AFL-CIO Chart.)  The AFL-CIO has also commissioned a study by several  former Labor Department officials, who worked under both Republican and Democratic regimes, to evaluate the new rules. The study’s author’s claim that the proposed regualations 

“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.

(See Christian Science Monitor article.) 

When confronted with the EPI and AFL-CIO reports, the Department of Labor’s response has been to deny its accuracy.  Ed Frank, DOL spokesman, responds that “This is a last-ditch effort to restart the misinformation campaign that has failed to cover up the fact that millions of workers will benefit from the Labor Department’s strong new overtime guarantees.”  (See CBS MarketWatch article.)  The disputes about who will benefit and who will be harmed are certain to continue over the next several months and years, if the new overtime regulations remain in effect for any significant period of time.  It is indisputable some workers will benefit from the new “salary” test–the question is merely how many.  The old test of $155 a week has been in place since 1975, and so an increase was clearly warranted.  However, it is also unclear whether there are really that many employees making less than the new standard or $455 a week who are currently considered exempt by their employers, so it’s not enough to simply count the number of employees who make between $155 and $455 a week and consider them newly protected. 

Time is currently on the side of workers, but that time is running out.  One lawyer, Lawrence Lorber, claims “the notion that anyone is going to be fully compliant is impossible.” Lorber says there are many companies that still won’t be meeting the new rules in 2006. (See Washington Post article.)  A recent survey by Hewitt Associates indicates that 20 percent of 150 companies interviewed said they did not expect to be able to meet the Aug. 23 deadline for compliance. An additonal twenty-three percent said they would be ready, but only as a result of focusing additional resources on the effort to be in compliance.  Some firms are not planning to make significant changes, either because they plan for competitive reasons to stick with current law where it favors workers, or because they already pay overtime for those in the lowest paid jobs who might stand to benefit.   One Georgia hospital, which would be allowed to change overtime pay for some nurses, is not planning to do so.  “First of all, it’s the right thing to do when our nurses work more than 40 hours a week on our behalf,” says administrator Scott Cantley. “Second, it’s the competitive thing to do. The other hospitals in our region also do the exact same thing.”  (See Marietta Times article.)

While this “wait and see” approach may favor workers in the short term, it will not last forever, especially if Congress fails to act soon.  In the Senate version of the JOBS bill (which also contains a provision concerning taxation of damage awards) there is an amendment which would prevent the new provisions from going into effect.  It’s unclear what will happen to this provision in a House/Senate conference, especially in an election year.  (See Christian Science Monitor article.)  What’s clear, however, is that even though members of Congress are on vacation (or most likely campaigning or attending the respective political conventions), workers can’t take a break right now.  Congress needs to continue to hear from you, so that staffers have piles and piles of letters opposed to overtime reform ready for their bosses after Labor Day.  Otherwise, the changes will go into effect, businesses will figure out how to pay their workers the least amounts that are legally permissible , and workers throughout the country will be spending less time with their families, and will have less money to spend on their families.

Take Action Now:  Protect Your Right to Overtime Pay