Bush and U.S. Labor Secretary Elaine Chao claim that new overtime rules will solidify rights for some 5.4 million American workers whose time-and-a-half privileges may have been in doubt but time and again, the language in the document belies the surface claims.
Selling Workers Snake Oil
August 22, 2004
Language In New Overtime Rules Distorts The Truth, Americans Deserve The Facts Rather Than Snake Oil
Labor Day is still a couple of weeks away, but the folks in charge of the nation's workplace rules insist tomorrow marks a happy milestone for the toiling masses. After years of debate, sweeping new overtime regulations take effect.
"Millions of American workers will benefit," said Deputy Labor Secretary Steven J. Law, who also claims the rules simplify a system that has led to a feeding frenzy for lawyers.
Opponents say, correctly, that the rules gut protections for all except low-paid workers, and create even more room for litigation.
Law declared in a conference call last week that he's tired of the back-and-forth. It's a new day, he declared. From Monday on, the rules will speak for themselves.
"The misinformation created about the rules has, in fact, undermined workers' rights," he said.
Whoa. It's the rules themselves that will do the damage, not the arguments over the rules. Years will pass before we can tally the results, before courts can weigh in on employers' actions based on the new rules. In the meantime, there's no good reason to stifle an open debate on the broadest revision in overtime rules since the Fair Labor Standards Act created the 40-hour workweek in 1938.
Overtime - once a musty, arcane policy arena - should keep its hot seat at the political table. After all, the new rules kick in just in time for the presidential elections. Bush's overtime rules, and the debate surrounding them, perfectly echo the larger economic picture in this country, a picture in which the administration makes one blatantly false claim after another.
Bush and U.S. Labor Secretary Elaine Chao claim, laughingly, that the rules will solidify overtime rights for some 5.4 million American workers whose time-and-a-half privileges may have been in doubt. They point to language on the surface of the rules, which does, in fact, appear to make the world a softer place for anyone expecting a day-and-a-half's pay for an extra day's work.
But time and again, the language in the document belies the surface claims. This is documented in a report by three retired officials from the U.S. Department of Labor, all of whom held influential or top-level posts in employment standards.
Chao's department "can perhaps persuade a casual reader" that workers have equal or greater overtime protections, said the July report, anchored by John Fraser, a former deputy assistant secretary for employment standards.
In fact, the report goes on, the rules deploy a bait-and-switch method of applying old standards meant for well-paid workers to anyone making more than $23,660 a year.
"And - presto! - the worker finds a walnut shell with no overtime under it," the report states.
"They are basically cheating," said Ross Eisenbray, vice president and policy director at the Economic Policy Institute in Washington, who wrote a detailed analysis of the new rules.
The new rules bring three basic changes. The first is a long-overdue increase in the pay threshold below which workers are automatically entitled to overtime. That threshold, unchanged from 1975, moves from $155 a week to $455 a week, or $23,660 a year. The higher threshold will protect 1.3 million people, including poorly paid assistant store managers. No one disputes that it's helpful to workers, although the salary level is still a bit low.
The second change creates a very strict standard for anyone who earns more than $100,000 a year, but still receives overtime. It now becomes extremely easy for employers to declare that those highly paid workers are exempt from time-and-a-half. The labor department says 107,000 people could lose overtime rights under this reform; Eisenbray pegs the number at 400,000.
The deeper changes spell out job duties that employers use to declare workers exempt from overtime - among those earning between $23,660 and $100,000 a year. The exemptions fall into three main categories, executive, administrative and professional, with special definitions for computer employees and outside salespeople.
It is this set of reforms that is most controversial. Chao says it extends protections to 5.4 million workers. The Fraser report says it has "removed existing overtime protection for large numbers of employees." Eisenbray estimates the number of threatened workers at nearly 6 million, based only on 10 key changes in the rules.
Connecticut is buffered, but not entirely insulated from all this. This state has its own set of rules, which generally offer more overtime protection than even the old federal rules. For example, in 2001 the threshold was raised to $475 a week.
All Connecticut workers earning less than that are automatically entitled to overtime for hours beyond 40.
But every few years Connecticut revamps its rules, based on the federal model. So, over time, erosion of overtime rights at the federal level is bound to affect the balance here.
So, the debate nationally brings us apart by upwards of 12 million workers. Each side basically says the other is lying. The Fraser report was done for the AFL-CIO, Chao says, and therefore is tainted.
Lawyers for employers don't necessarily take Chao's side. Stephen Aronson, a lawyer at Robinson & Cole in Hartford who has closely followed the rules changes, said it's probably true that companies will now be able to declare more workers exempt. He disagrees with the notion that that's bad for workers.
"If somebody thinks that they're going to make a lot of money simply working overtime and they compare what they would be making if the jobs were exempt, the exempt positions might be worth more," Aronson said.
He also said companies tightly monitor their overtime workers and give more freedom to non-overtime staff.
It may be true that companies pay more to non-overtime workers. And it is true that good companies, or companies facing a squeeze, can always pay higher salaries. For now, though, it's worth looking at a few telling details in the rules - which offer less protection for workers.
One main exemption denies overtime rights to any worker "whose primary duty includes the exercise of discretion and judgment with respect to matters of significance." The old rule didn't include "with respect to matters of significance," so it seems on the surface that more workers gain protection. That's exactly what Chao claims.
But look at the definition of "primary duty." Until today, it meant, essentially, the work a person does most of the time. Starting tomorrow, it means "the principal, main, major or most important duty." If someone stocks store shelves most of the time, but also oversees two other stockers, what's his "most important duty?" In fact, the new rules specifically spell out that an exempt "manager" is not entitled to overtime just because he or she stocks shelves along with other workers.
In another example, the department issued a document saying Eisenbray was "attempting to stir up emotion" by wrongly asserting that at least 30,000 nursery school teachers would lose overtime rights. The department said the rules are unchanged. In fact, the old rule said the non-overtime group "may include" nursery school teachers, while the new rule includes them outright as exempt. Worse, it specifically exempts them from the salary rule that would otherwise guarantee overtime to many of them.
Bush's minions have put into political play a labor policy that Congress didn't change or intend to change. Rather than tell the truth - that they think the new policy is better for the nation because it's better for employers, or that they think workers are better off without overtime, or perhaps that they shamelessly caved in to the business lobby - they are selling snake oil.
Dan Haar can be reached at dhaar@courant.com.
