Understanding the New Overtime Rules

Changes to the Fair Labor Standards Act (FLSA) proposed by the Department of Labor and the Bush Administration went into effect August 23. In early September a bipartisan union-backed effort in the House of Representatives narrowly overturned the changes, but President Bush is expected to veto this attempt.

The Labor Department is highlighting the fact that any worker who earns less than $23,660 per year will now be eligible for overtime pay at time-and-a-half (the previous figure was $13,000). But changes in the definition of “executive position,” “learned professional,” and “creative professional” may strip overtime benefits from many other workers.

To understand these changes Labor Notes talked with Chris Townsend, political action director of the United Electrical Workers, who has been following the fight over overtime, comp/flex time, and other changes to the FLSA for over ten years.


Who do the new overtime regulations affect? Are they positive for workers?

Most of the implementation will depend on what employers decide, but we probably have between six and eight million workers who are potentially going to be ripped off. It’s likely some number of that six to eight million have been entitled to overtime all along, and due to non-enforcement and poor enforcement have never received and never pursued overtime benefits.

The Wall Street Journal states that the new rules were designed in part to stem a flood of overtime-related federal lawsuits that rose by 42 percent between 2000 and 2003. Some say this is the reason that the new rules go into a great deal of detail about which jobs are affected.

I’m reluctant to get too specific with the job titles because that tends to allay people’s concerns, when in fact they are part of the target and will potentially be affected.

But anyone who is a low-level team leader or a mid-level working foreman, working crew leader, crew chief—those who direct work but who are not workers—these folks are in great danger under the basis that they are “supervisors” now.

If you look into various kinds of teachers, health care providers, informational technology computer programmers, scientific-type workers, the new rules will claim that they’re “learned professionals,” they’re “creative professionals” that have all this discretion, so therefore they should be exempt from overtime pay.

‘I have zero tolerance for employer whining about this.’

I have zero tolerance for employer whining about this—the bogus claim from the corporations and their think tanks that the rules are too cumbersome, too confusing, too vague, the enforcement is too erratic, it’s a litigation nightmare.

The vagueness would work in their favor, wouldn’t it?

Exactly. And there is no enforcement problem other than the fact that it’s greatly under-enforced. There is hardly a problem with wage-and-hour cops breaking down the door of bosses, in big business or small business. If anything, a compelling case could be made that millions of workers are being ripped off and there is no pro-active enforcement or monitoring of any kind. It’s all based on people who have the courage and the initiative to go down and file a complaint.

How will employers maximize the benefits of these new overtime rules?



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It’s not a question of how, it’s the fact that they already have been. All you have to do is too look at who has been lobbying for these new stipulations for overtime. Tremendous thinking, planning, homework has been done for the better part of ten years now by the employers.

All the various sectoral industry lobby groups, personnel and manager associations, anti-labor law firms have been furiously meeting. They have been having seminars and workshops. They’re putting together modules of how you might refashion the guidelines. Just visit any of these employer associations, such as the Manufacturers Association, the Restaurant Association, or the Society for Human Resource Management.

There already are consulting companies out there offering packages that say, “You need to retain us so we can come in and show you how to rearrange compensation packages that can now take advantage of these new rules.”

How will overtime benefits work now when it comes to collective bargaining?

It creates a more crucial reason why people should get into a union. Whatever your union contract states about overtime pay, that will continue to supercede whatever the law states, for the duration of that union contract. That could come unhinged only if the company came to the union and asked for mid-term concessions and the union granted them.

But here is a scenario that is quite possible, within manufacturing, for example. You have many thousands of low-level crew leaders and team leaders. Take a maintenance crew leader—a woman or man that has a gang of four, five, or 10 people but is not a boss.

That guy or that woman is probably at the highest rate of pay in the union in that classification. You can just about bet that at the next bargaining session an employer might say, “We want these positions to be removed from the bargaining unit. And if we can’t get them removed then we want those people to be jiggled over to strict salary and not time-and-a-half after 40 hours.”


“Team concept” seems to come into play here. Won’t employers be more likely to create teams because of these rule changes?

You are connecting to what is a much bigger and much more dangerous assault on workers’ rights than many are cognizant of. All these things come together.

What about an employer that gathers up 15 people who work in a certain work area and they have a whole rejuvenated team concept? What if suddenly hiring and firing decisions become group decisions? Does this now taint all of these individuals—now they meet some of the duties tests of being supervisory? Potentially, absolutely.

It’s unlikely that a lot of employers will put a letter in your pay envelope saying, “Just because the law got changed, we are no longer going to pay you overtime pay.” That would actually be the best scenario, because it would have the power of waking people up to the fact that it is all up to the company heads that consistently look at bottom-line profits and cutting costs.

What is the current counter-strategy to the rule changes, and can it be considered effective?

The obvious counter-strategy that most unions have focused on is the election of John Kerry. Now, this is definitely better than if George W. Bush were reelected, in which case we would certainly see no slowing down of this type of legislation, or even more serious setbacks.

Is this an effective strategy? No. What I would suggest is that rank-and-file workers, organized or not, approach their employers. Let them know that you know what this legislation could mean. Ask them if these changes will be entering into your workplace and if so, how.

People who are not yet represented should organize, start their own union or join an existing one if there is one at their workplace. This legislation can be used to the workers’ advantage if we can band together. Ninety percent of the workforce is non-union. Those numbers need to change, and this may be just the catalyst that we need.