A think tank has issued a report that contends the Bush administration's proposed revisions of the overtime rules in the Fair Labor Standards Act will render more than 8 million white-collar worker ineligible for OT, including some who earn as little as $22,100 per year.

The report was issued by the Economic Policy Institute, which describes itself as "a nonprofit, nonpartisan think tank that seeks to broaden the public debate about strategies to achieve a prosperous and fair economy." It lists both corporations and unions as donors, though various news stories describe it as a "liberal" organization.

The changes, proposed by the Labor Department on March 31, would "dramatically increase" the number of workers whose jobs are classified as professional, administrative, or executive and therefore ineligible for overtime pay, according to EPI.

"This blurring of the lines between managerial and hourly staff, coupled with a downgrading of the educational standards required to exempt employees from overtime pay, will give employers a powerful incentive to switch millions of workers from hourly to salaried status in order to reap the benefit of a newly created pool of unpaid overtime hours," EPI said.

Ross Eisenbrey, EPI’s vice president and policy director, said the changes "would create, in effect, a massive subsidy to employers paid for by their employees.

"As more employers take advantage of the new rules," he continued, "it will create a rush-to-the-bottom pressure that will eventually force even reluctant employers to participate in order to keep their labor costs competitive.”

Among those who stand to be affected by the changes, according to EPI, are workers with little more than a high school diploma, workers with little or no on-the-job discretionary authority or responsibility, and frontline supervisors who spend most of their workday doing the same tasks as those they supervise.

Under the new rules, they could be reclassified as executive or administrative employees who would no longer be able to claim extra pay for hours worked above 40 per week, EPI said.

In addition, the Labor Department proposal would greatly lessen the amount of education required for a worker to be
categorized as a “learned professional” and therefore ineligible for overtime pay, EPI claimed. It said the new definition would no longer require a degree beyond a high school diploma for this classification. Work experience or military training may substitute for academic training, it added, but the proposed rules do not establish a minimum amount of such experience or training.

Similar loosening of how executive and administrative functions are defined and how much of a job must be devoted to such duties gives employers wide latitude for redefining many jobs as ineligible for overtime, EPI said.

The public comment period on the proposed regulations officially ended on Monday; the new rules could be in place by the fall.

Links

• Economic Policy Institute
• Wage and Hour Division, Department of Labor