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y=74627&ran=211483
To OT or not to OT? That's the question under new rules
ILLUSTRATION: DAVID M. PUTNEY
By MICHAEL DAVIS, The Virginian-Pilot
© August 23, 2004
Manager or employee? Salary or hourly wages? White-collar or blue-collar?
The new federal rules on overtime pay being rolled out today are supposed to sharpen those distinctions.
The revisions mark the most dramatic change to the Fair Labor Standards Act in more than half a century. Critics condemn the overhaul as a way for business to get more labor for less money.
Other observers, however, insist the regulations should make pay scales more fair in the long term.
The goal is that it will be a lot less ambiguous, said Elizabeth Fealy, a senior consultant for Chicago-based human resources firm Hewitt Associates, which earlier this summer conducted a study on the changes.
The Labor Department predicts the new rules will make overtime pay typically one-and-one-half times the normal hourly wage for work beyond 40 hours a week newly available to as many as 1.3 million American workers.
Anyone making less than $23,660 a year, or $455 a week, will automatically qualify for overtime regardless of the job duties they perform. The previous limit was $155.
The Labor Department also predicts that employers will save a quarter-billion dollars annually in litigation and other expenses thanks to clearer overtime guidelines.
Fast-food and retail companies, for example, have been frequent targets of lawsuits over pay. Assistant managers may claim they are owed overtime because they serve customers in addition to their supervisory duties, while the employer argues they are supervisors and therefore do not qualify for overtime.
By outlining what tasks allow exemption from overtime, the new rules should be easier to implement and lead to less litigation expense, said Michael Eastman, director of labor policy for the U.S. Chamber of Commerce in Washington.
We view the new regulations as something more in tune with the modern work force.
Others, however, have blasted the revisions. The Economic Policy Institute think tank claims that as many as 6 million workers from funeral embalmers to financial services employees could lose overtime.
Executives may be barred from premium pay if they regularly direct the work of at least two other full-time employees. Administrative employees who do non manual work directly related to the management of a business might not get overtime pay.
At the high end of the pay scale, office or non manual workers earning $100,000 a year or more who routinely perform at least one of the duties of the other exempt workers also may be barred from overtime, as could many computer employees and outside sales people.
Critics also have charged that companies may boost hourly workers pay above the new minimum, or technically promote them to executive status, to avoid paying overtime.
Defining what workers do and how they are classified, legal experts say, is crucial if employers want to stay out of court.
The FLSA can be a confusing statute. Theres a lot of wrinkles, said Timothy M. McConville, an attorney in the employment section at Willcox & Savage in Norfolk.
Everyone can understand the time-and-a-half overtime requirement. The difficult piece is the exemptions from that requirement.
Bill Miller, owner of The Duck-In Restaurant in Virginia Beach, said practically all of the 300 or so workers he hires in the course of a year are standard, paid-by-the-hour employees who receive overtime beyond 40 hours.
Everybody who does things here that are even remotely non managerial are hourly, he said. The salaried workers have legitimate management positions.
So the new rules should not affect his operations, Miller said. And he expects more of the same from fellow eatery proprietors. As an active member of the Virginia Beach Restaurant Association, I havent heard any discussion of it at all, he said.
Large blocks of workers are not covered by the provisions. Blue-collar or manual laborers, those who work under union labor agreements that regulate pay rates and overtime, and emergency responders such as police officers and firefighters do not fall under the statute rules.
And some companies may not be covered, including enterprises that generate revenue of less than $500,000 a year and that dont participate in interstate commerce. Also free from the rules would be a company with a work force that is limited to members of the business owners immediate family.
Although organized labor is not directly affected, union officials warn that the new rules will make negotiations tougher at contract time. They fear companies with unionized work forces may try to cut their employees overtime to compete with non union shops.
Theyll say, 'The law doesnt require us to pay overtime any more. We dont want to, said Jill Cashen of the United Food and Commercial Workers, which represents 1,500 Hampton Roads employees of the Kroger Co. grocery chain.
Its not something that will happen on Aug. 24, but employers will be looking to eliminate overtime.
Government workers share those concerns. The International Federation of Professional & Technical Engineers, which represents federal white-collar employees, is urging members to take part in a rally against the rules outside the Labor Departments headquarters this afternoon.
Union member Paul Long, a Virginia Beach resident and two-decade veteran test engineer and supervisor at Norfolk Naval Shipyard, figures he earns as much as $25,000 in overtime in a busy year.
While government employees are not automatically subject to the statute , Long worries that the new rules may eventually begin to seep into the public sector and influence pay grades.
That, in turn, could threaten overtime for him and others who are almost literally in the same boat, especially as the government looks to cut costs.
It could potentially be not very employee-friendly, Long said.
Fealy, however, said she does not think overtime for most workers is in any great peril.
Her clients have overwhelmingly concerned themselves with adding new employees to overtime eligibility through the new, higher threshold, she said, not cutting other workers from it. And labor markets will prevent many employers from reducing overtime.
The health-care industry is struggling with a dire labor shortage, and operators could not competitively recruit and retain help by what amounts to cutting their workers pay.
It doesnt send a very positive message. I think that they would want to approach that pretty carefully, said Jan Johnson, executive director of the Virginia Nurses Association in Richmond.
If you treat the nursing staff as dispensable, theyll say, 'Ill work elsewhere, Ill retire early, Im out of here.
==============================================
WHO'S AFFECTED
Highlights of the new rules governing overtime pay:
Workers making less than $455 a week are now automatically eligible for overtime - a limit raised from $155 per week. Above that level, several types of workers can be exempted from overtime. Among them:
- Executives, who manage a business or department, direct the work of at least two other full-timers, and have the authority or recommendation to hire or fire;
- Administrators, who do office or nonmanual work directly related to management or operations of the employer, and exercise discretion and independent judgment;
- Learned or creative professionals, who do work requiring advanced knowledge in a field of science or learning acquired by a prolonged course of specialized intellectual instruction; or work requiring invention, imagination, originality or talent;
- Computer employees, including systems analysts, programmers or software engineers;
- Highly compensated employees - Anyone in office or non-manual work who makes $100,000 a year or more and routinely performs at least one of the duties of the other exempt workers;
- Outside salespeople, who usually do their work away from the employers place of business.
The exemptions do not apply to:
- Employees whose pay is covered by collective bargaining agreements;
- Blue-collar workers, or those who do work involving repetitive operations with their hands, physical skill and energy;
- Emergency first responders like police, firefighters and paramedics.
--------------------------------------------------------------------------------
The Associated Press contributed to this story. Reach Michael Davis at 446-2599 or michael.davis@pilotonline.com
y=74627&ran=211483
To OT or not to OT? That's the question under new rules
ILLUSTRATION: DAVID M. PUTNEY
By MICHAEL DAVIS, The Virginian-Pilot
© August 23, 2004
Manager or employee? Salary or hourly wages? White-collar or blue-collar?
The new federal rules on overtime pay being rolled out today are supposed to sharpen those distinctions.
The revisions mark the most dramatic change to the Fair Labor Standards Act in more than half a century. Critics condemn the overhaul as a way for business to get more labor for less money.
Other observers, however, insist the regulations should make pay scales more fair in the long term.
The goal is that it will be a lot less ambiguous, said Elizabeth Fealy, a senior consultant for Chicago-based human resources firm Hewitt Associates, which earlier this summer conducted a study on the changes.
The Labor Department predicts the new rules will make overtime pay typically one-and-one-half times the normal hourly wage for work beyond 40 hours a week newly available to as many as 1.3 million American workers.
Anyone making less than $23,660 a year, or $455 a week, will automatically qualify for overtime regardless of the job duties they perform. The previous limit was $155.
The Labor Department also predicts that employers will save a quarter-billion dollars annually in litigation and other expenses thanks to clearer overtime guidelines.
Fast-food and retail companies, for example, have been frequent targets of lawsuits over pay. Assistant managers may claim they are owed overtime because they serve customers in addition to their supervisory duties, while the employer argues they are supervisors and therefore do not qualify for overtime.
By outlining what tasks allow exemption from overtime, the new rules should be easier to implement and lead to less litigation expense, said Michael Eastman, director of labor policy for the U.S. Chamber of Commerce in Washington.
We view the new regulations as something more in tune with the modern work force.
Others, however, have blasted the revisions. The Economic Policy Institute think tank claims that as many as 6 million workers from funeral embalmers to financial services employees could lose overtime.
Executives may be barred from premium pay if they regularly direct the work of at least two other full-time employees. Administrative employees who do non manual work directly related to the management of a business might not get overtime pay.
At the high end of the pay scale, office or non manual workers earning $100,000 a year or more who routinely perform at least one of the duties of the other exempt workers also may be barred from overtime, as could many computer employees and outside sales people.
Critics also have charged that companies may boost hourly workers pay above the new minimum, or technically promote them to executive status, to avoid paying overtime.
Defining what workers do and how they are classified, legal experts say, is crucial if employers want to stay out of court.
The FLSA can be a confusing statute. Theres a lot of wrinkles, said Timothy M. McConville, an attorney in the employment section at Willcox & Savage in Norfolk.
Everyone can understand the time-and-a-half overtime requirement. The difficult piece is the exemptions from that requirement.
Bill Miller, owner of The Duck-In Restaurant in Virginia Beach, said practically all of the 300 or so workers he hires in the course of a year are standard, paid-by-the-hour employees who receive overtime beyond 40 hours.
Everybody who does things here that are even remotely non managerial are hourly, he said. The salaried workers have legitimate management positions.
So the new rules should not affect his operations, Miller said. And he expects more of the same from fellow eatery proprietors. As an active member of the Virginia Beach Restaurant Association, I havent heard any discussion of it at all, he said.
Large blocks of workers are not covered by the provisions. Blue-collar or manual laborers, those who work under union labor agreements that regulate pay rates and overtime, and emergency responders such as police officers and firefighters do not fall under the statute rules.
And some companies may not be covered, including enterprises that generate revenue of less than $500,000 a year and that dont participate in interstate commerce. Also free from the rules would be a company with a work force that is limited to members of the business owners immediate family.
Although organized labor is not directly affected, union officials warn that the new rules will make negotiations tougher at contract time. They fear companies with unionized work forces may try to cut their employees overtime to compete with non union shops.
Theyll say, 'The law doesnt require us to pay overtime any more. We dont want to, said Jill Cashen of the United Food and Commercial Workers, which represents 1,500 Hampton Roads employees of the Kroger Co. grocery chain.
Its not something that will happen on Aug. 24, but employers will be looking to eliminate overtime.
Government workers share those concerns. The International Federation of Professional & Technical Engineers, which represents federal white-collar employees, is urging members to take part in a rally against the rules outside the Labor Departments headquarters this afternoon.
Union member Paul Long, a Virginia Beach resident and two-decade veteran test engineer and supervisor at Norfolk Naval Shipyard, figures he earns as much as $25,000 in overtime in a busy year.
While government employees are not automatically subject to the statute , Long worries that the new rules may eventually begin to seep into the public sector and influence pay grades.
That, in turn, could threaten overtime for him and others who are almost literally in the same boat, especially as the government looks to cut costs.
It could potentially be not very employee-friendly, Long said.
Fealy, however, said she does not think overtime for most workers is in any great peril.
Her clients have overwhelmingly concerned themselves with adding new employees to overtime eligibility through the new, higher threshold, she said, not cutting other workers from it. And labor markets will prevent many employers from reducing overtime.
The health-care industry is struggling with a dire labor shortage, and operators could not competitively recruit and retain help by what amounts to cutting their workers pay.
It doesnt send a very positive message. I think that they would want to approach that pretty carefully, said Jan Johnson, executive director of the Virginia Nurses Association in Richmond.
If you treat the nursing staff as dispensable, theyll say, 'Ill work elsewhere, Ill retire early, Im out of here.
==============================================
WHO'S AFFECTED
Highlights of the new rules governing overtime pay:
Workers making less than $455 a week are now automatically eligible for overtime - a limit raised from $155 per week. Above that level, several types of workers can be exempted from overtime. Among them:
- Executives, who manage a business or department, direct the work of at least two other full-timers, and have the authority or recommendation to hire or fire;
- Administrators, who do office or nonmanual work directly related to management or operations of the employer, and exercise discretion and independent judgment;
- Learned or creative professionals, who do work requiring advanced knowledge in a field of science or learning acquired by a prolonged course of specialized intellectual instruction; or work requiring invention, imagination, originality or talent;
- Computer employees, including systems analysts, programmers or software engineers;
- Highly compensated employees - Anyone in office or non-manual work who makes $100,000 a year or more and routinely performs at least one of the duties of the other exempt workers;
- Outside salespeople, who usually do their work away from the employers place of business.
The exemptions do not apply to:
- Employees whose pay is covered by collective bargaining agreements;
- Blue-collar workers, or those who do work involving repetitive operations with their hands, physical skill and energy;
- Emergency first responders like police, firefighters and paramedics.
--------------------------------------------------------------------------------
The Associated Press contributed to this story. Reach Michael Davis at 446-2599 or michael.davis@pilotonline.com
