On July 10, House Republicans beat back Democratic efforts to block implementation of the new overtime rules by just three votes. Opponents believe that there are reasonably good prospects for the Senate to block implementation in September if the already significant objections raised begin to look like a political hazard for politicians supporting the rule change.
American workers already work more hours each year than workers in any other advanced industrial country. They need a reduction in the work week, higher wage premiums to discourage mandatory overtime, and more mandatory vacation time, none of which the Bush administration supports. Many workers will face financial hardship if the rules go into effect, since they could not only lose their current time-and-a-half overtime pay but also receive no additional compensation from employers who require them to work more than 40 hours a week.
According to a study by the Washington-based Economic Policy Institute (EPI), 8 million workers are likely to lose their right to time-and-a-half premium pay for work over 40 hours, more than 10 times the Labor Department estimate. Others will indirectly feel the effects. Those without jobs will not be hired as employers get more work out of current employees. The rules would also change workplace culture, subjecting workers to intensified managerial expectations that they put in long days away from family or leisure.
Originally overtime rules were motivated by a desire both to spread the work during the Depression and by a decades-long campaign by workers to reduce work hours. While 80 percent of wage and salary workers are now theoretically entitled to overtime pay, the law provided exemptions for workers who met three tests: sufficiently high pay, compensation as a salary rather than hourly pay, and jobs that involved managerial, administrative, or professional skills.
The new Labor Department rules will guarantee that workers making less than $425 a week are eligible for time-and-a-half pay, which will benefit another 1.3 million workers, according to an analysis by the EPI. But the rules will take away the right to overtime pay for a roughly equal number of high-paid workers, since nobody will be entitled to overtime who makes more than $65,000 a year. Since these figures are not indexed, the law will progressively protect fewer workers and exempt larger numbers. According to Washington labor attorney Mark Wilson, the Labor Department regulations instruct employers on how to convert low-salaried workers to a reduced hourly wage so that the workers will have to work more than 40 hours but receive no increase in pay, even though the Supreme Court has explicitly prohibited such evasive tactics.
The new rules permit businesses to reclassify as “professional” workers who lack any advanced education or the right to exercise any independent discretion and judgment in their work. According to the EPI study, 2.5 million salaried workers will lose their right to overtime pay and another 5.5 million hourly workers will be at risk of such a loss. Occupations that would be most immediately affected include such jobs as paralegals, emergency medical technicians, licensed practical nurses, reporters, technical writers, lab technicians, cooks, and factory set-up workers.
The Labor Department claims it is simply modernizing the rules to accommodate a changing workforce. But EPI public policy director Ross Eisenbrey says that the department is actually providing a “a massive subsidy to employers paid for by their employees” both in lost income and lost time for their lives beyond work.
David Moberg, a senior editor of In These Times, has been on the staff of the magazine since it began publishing in 1976. Before joining In These Times, he completed his work for a Ph.D. in anthropology at the University of Chicago and worked for Newsweek. He has received fellowships from the John D. and Catherine T. MacArthur Foundation and the Nation Institute for research on the new global economy.