Saturday, August 7, 2004
Workers and employers are expected to clash on new overtime rules.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
Pay close attention to your paycheck starting Aug. 23.
New federal rules take effect that day, and some are predicting the loss of overtime pay for thousands -- or perhaps millions -- of workers.
Labor leaders say the rules, approved by Congress and President Bush earlier this year, threaten overtime pay for as many as 6 million people, including finance, accounting, marketing, human resources and public relations workers. Others who stand to lose overtime include insurance claims adjusters, funeral directors and nurses, the AFL-CIO says.
"It's a terrible thing," said Bill Burga, president of the Ohio AFL-CIO.
Positive outlook
Such claims are exaggerated, said the U.S. Department of Labor, which wrote the rules, and business groups.
They advise not to expect much change -- supervisors and professionals won't receive overtime, but production workers will. A revision was needed because the Fair Labor Standards Act hadn't been revised in 50 years and contained outdated language, government officials said.
Bob Sincich, president of the Western Reserve Chapter of the Society for Human Resource Management, said he thinks more people will gain overtime pay than lose it with the changes.
He said not only does the new law make it easier for low-income workers to receive overtime, but he thinks more people will seek overtime as they become aware of their rights.
He acknowledged, however, that there will be disagreements between workers and employers, and he expects more workers to file lawsuits; he also expects an increase in the number of worker complaints filed with the U.S. Department of Labor. Rulings on those cases will help define how to apply the regulations, he said.
"This issue is going to be the hot button," he said.
Applying rules
Concern about overtime pay already has been growing, especially in the retail industry. Class-action lawsuits over pay issues have doubled since 1997, said the National Federation for Independent Business.
As legal precedents evolve, figuring out how to apply the new rules comes down to human resource executives such as Cindy Cerimele.
The vice president of human resources at Home Savings and Loan Co. in Youngstown said it's a difficult task because much of the wording in the rules appears open to legal interpretation.
"There are still a lot of pockets of gray," she said.
She and her staff have attended seminars but are still conducting their own review on how to apply the rules to specific jobs.
Income guidelines
Perhaps the most obvious change is that nearly all workers who earn less than $23,660 a year must be paid overtime for working more than 40 hours a week. The current rules set a threshold of $8,060.
On the flip side, the new rules say most workers cannot receive overtime if they make more than $100,000 a year.
The contention comes from the rules on who should get overtime among the people who earn amounts in between. Different rules apply to five categories of jobs, including a new one for computer employees.
The rules affect both private and government workers, although public employers have some exceptions, such as being able to give compensatory time instead of time-and-a-half pay.
Gray areas
Critics say some of the changes will strip away overtime pay for workers.
The Economic Policy Institute, a research group that has been critical of the changes, said some changes that could eliminate overtime pay are:
UTeam leaders could be classified as supervisors.
UWorkers could be considered "learned professionals" based on their job experience, not just course work.
UNew job categories, such as chefs, could be called creative professionals.
UA separation among financial services workers, with those who collect and analyze information or advise customers losing overtime pay.
Executive employees
Timothy Jacobs, a Youngstown lawyer who advises employers on labor law, said the changes aren't significant enough to cause many workers to lose overtime.
For example, an administrative worker still must "exercise discretion and independent judgment" in order to be ineligible for overtime, noted Jacobs, a lawyer at Manchester Bennett Powers & amp; Ullman.
He said the biggest change is with executive employees. The new rules say employees are not eligible for overtime if they manage the business or recognized department, direct the work of two or more people and have the authority to hire and fire or at least make recommendations.
This section has received much attention because it will affect managers and assistant managers of retail stores and fast-food restaurants, both of which have been hit with lawsuits in recent years.
The Economic Policy Institute said such workers will lose overtime because the change eliminates a provision that required an employee to spend more than half his time on supervisory duties to be ineligible for overtime.
Counterbalancing
Jacobs said, however, that employees who lose overtime might receive a raise in exchange. They would have to be paid at least $23,660 a year if overtime were withheld.
Also, there are practical limits to what an employer can expect from an employee, he said. If too many hours without overtime are required, the employee will leave, Jacobs said.
These same market forces will prevent employers from eliminating overtime in many other categories, he said.
For example, a shortage of nurses should prevent medical providers from taking overtime away from nurses, as some fear, he said.
Nurses' efforts
"Nurses are receiving overtime and premium pay not because of the law but because of supply and demand," he said.
Linda Warino, executive director of District 3 of the Ohio Nurses Association, said she is concerned about nurses' losing overtime and noted that the union is trying to exempt nurses from the law, as police and firefighters have been.
"I'd feel safer if the law is on our side," she said.
Workers with labor contracts that provide for overtime have that pay protected, but union leaders say they expect companies to seek to eliminate those provisions because of the new law.
"There will be pressure at every negotiation," said Burga from the AFL-CIO.
shilling@vindy.com