Overtime Workers For Truth

As a nod to TGU reader CK, who's looking for the actual substance of the new overtime rules, here's the Economic Policy Institute's congressional testimony from May: All in all, the rule means longer hours and less pay for millions of workers – and more litigation for our entire economy. A number of things about the rule are immediately clear: First, the Department has created new exemptions that jeopardize the overtime rights of millions of employees who earn between $23,660 and $100,000 a year. The overtime rights of the nation’s 367,000 nursery school and pre-school teachers are weakened. Low-level working supervisors all throughout American industry will be reclassified as “executives” and will lose overtime rights; just as fast food assistant managers already have in some jurisdictions, even though they spend 90% or more of their time doing routine, production-line work such as flipping burgers and taking customer orders. Despite its claims to the contrary, the new rule’s treatment of cooks, chefs, and sous chefs, for example, of whom 2.4 million are employed in the United States, will cause hundreds of thousands to lose their right to overtime pay. Funeral directors and embalmers will be treated as exempt learned professional employees by the Labor Department for the first time, and large numbers of employees in the financial services industry will be adversely affected by a new blanket exemption. Second, the rule will lead to an explosion of litigation because the Department chose to adopt new definitions that are unclear and new tests for exemption that require a case-by-case analysis that will be almost impossible for Wage and Hour’s enforcement staff. Most notably, the new rule encourages employers to treat non-degreed employees as professionals, as long as they have “substantially similar” knowledge and do substantially similar work. The best possible objective criterion is missing: there is no requirement that they receive substantially similar pay. How will the Department know whether a non-degreed sous chef has substantially the same knowledge as a college grad? By making him prepare a soufflé, or taste-testing his Caesar salad? The rule also reduces the requirement that an exempt executive manage “the enterprise in which he is employed or of a customarily recognized department or subdivision thereof,” to a new and embarrassing level of absurdity. Rather than the enterprise or a department or subdivision, it will be enough to be in charge of a “grouping or team.” Unhelpfully, the Department suggests that a “case-by-case analysis is required” – a guaranteed recipe for litigation. Department stores will argue that an employee “in charge of” the perfume counter is an exempt executive because she has the “authority” to suggest shift assignments for two other employees. Third, contrary to the Bush Administration’s claims, it is not the case that 1.3 million low-wage workers who are not getting overtime pay now will. The Administration is engaged in consumer fraud, selling this new regulation on the promise of benefits it knows full well will not materialize. Part of the problem is that the Department’s estimate assumes that every employee among these 1.3 million low-wage workers actually worked overtime during the year, even though the evidence is that they did not, and even though only about one employee in seven generally works overtime. If the Department had made this same assumption with respect to the proposed rule, it would have found that almost 5 million employees would have lost overtime pay, rather than the 644,000 it claimed. Moreover, the number of employees who will be guaranteed coverage by the $23,660 threshold will diminish over time because it is not indexed for inflation. An administration that cared about low-wage workers would have raised the threshold to at least keep pace with inflation since 1975, in other words, to at least $28,075. Fourth, by the Department’s own estimates, more than 100,000 employees who earn $100,000 a year or more will lose their right to overtime pay. As inflation and rising productivity increase the pay of American workers, the number of employees adversely affected by this new test will grow each year. Fifth, a bizarre and poorly explained new exemption for “team leaders” creates the potential for hundreds of thousands of currently exempt non-supervisory workers to lose their overtime rights. The use of self-managed teams of non-managerial, non-supervisory, front-line employees is widespread in American industry, and millions of employees are routinely involved in them. The regulations provide no definition of “team leader,” it has never been defined in FLSA case law, and the Department’s assertion that it is clarifying current law is patently false. Sixth, the Department’s claims that it has clarified and expanded the overtime rights of police officers and other first responders are untrue. The ambiguities in the rule make their rights more uncertain than ever. Seventh, despite the Department’s claims in power point presentations to public officials that blue-collar workers are entitled to overtime, the rule limits overtime rights to “non-management blue-collar employees,” begging the question of who gets classified as a management blue-collar worker, a seemingly new class of exempt workers that will grow significantly under these new rules. Eighth, by reducing the penalties for employers who illegally dock the pay of salaried workers, the Department removes an important deterrent and makes it more likely that hourly employees will lose overtime pay.