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AFL-CIO
FOR IMMEDIATE RELEASE
APRIL 21, 2004
6:38 PM
CONTACT: AFL-CIO 
Suzanne Ffolkes 202-637-5018
 
Statement by AFL-CIO President John Sweeney on the Bush Administration’s New Overtime Pay Restrictions
 

WASHINGTON - April 21 - A close reading of the Bush Administration’s new overtime regulation finds that under the new restrictions to go into effect in August, many middle-income working families are at risk of losing overtime pay at a time when wages are already flat or falling for millions of workers. While the Administration has apparently abandoned its efforts to strip overtime rights from workers in a few high-profile occupations, as a result of intense pushback from working families and a public relations fiasco, it has now decided to target overtime rights for many middle-class workers who have received less attention. Cutting overtime pay and weakening overtime protections discourages job creation and encourages businesses to overwork their existing staff rather than hire new workers.

It is unconscionable to take away overtime pay from workers who spend more hours on the job and less time with their families. According to the final regulation, many workers remain at risk of losing overtime protection, including those in the following fields: network and database administration, tax, finance, accounting, budgeting, auditing, insurance, quality control, advertising, marketing, safety and health, personnel management and journalism.

If the president wants to protect all workers, he should support the Harkin Amendment. It would ensure no workers lose overtime pay, but allow the Administration to update the regulations. The final regulation is merely an attempt by the Administration to appease voters on an issue that resonates with millions of Americans while still providing a windfall to corporations.

(Attached is a fact sheet with a further breakdown of overtime pay restrictions under the new Bush administration rule.)

BUSH ADMINISTRATION’S NEW OVERTIME PAY RESTRICTIONS HURT WORKING FAMILIES AND THE ECONOMY

· The Bush Administration’s new restrictions on who can receive overtime pay will hurt many workers, taking much-needed extra cash out of their pockets during an economic crunch and discouraging companies to create new jobs. Overtime pay makes up about one-fourth of the weekly earnings of workers who earn overtime, an average of $161 per week.

· The Administration could have supported legislation that would ensure no workers lost overtime pay, while still allowing them to update the rules. Instead, they came out with a 500-page rule that weakens the overtime eligibility rules and strips overtime rights from workers earning as little as $23,660 per year.

· It appears that the Bush Administration has dealt with a public relations problem by addressing the overtime concerns of the most highly-visible workers—like firefighters and police—while simultaneously including new provisions that will strip overtime rights from less visible workers.

· The Bush Administration has consistently underestimated the number of workers who would lose overtime rights under their proposal. It is likely that they are doing so again.

Who will lose overtime pay rights?

Many workers who earn between $23,660 and $100,000 will no longer be eligible for overtime pay, including those who fall in the categories below:

  • In general, the final overtime regulation will have an especially large impact on workers with minimal supervisory or “leadership” responsibilities, workers who perform minimal amounts of administrative work, workers with special skills, and certain kinds of employees in the computer field;
  • An employee who leads a team of other employees assigned to complete major projects for the employer will lose overtime rights, even if the employee does not have direct supervisory responsibility. This is an enormous new loophole that will allow management to disqualify workers from overtime simply by appointing them “team leaders.” (New Section 541.203);
  • The rule will strip overtime rights from many working supervisors, including assistant retail managers, who spend most of their time performing non-management work. (New Sections 541.106 and 541.700);
  • Workers in network and database administration, tax, finance, accounting, budgeting, auditing, insurance, quality control, purchasing, procurement, advertising, marketing, research, safety and health, personnel management, human resources, employee benefits, labor relations, public relations, government relations, and legal and regulatory compliance will be especially vulnerable to losing overtime rights. (New Section 541.201(b));
  • Most workers in the financial services industry other than sellers of financial products will be exempt. (New Section 541.203(b));
  • The new rule eliminates the presumption that journalists are non-exempt professionals, with journalists working in print media, radio, television, and electronic media being especially vulnerable to loss of overtime rights. ( New Section 541.302);
  • The rule specifically exempts insurance claims adjuster, thus nullifying the effects of a recent court case rejecting DOL’s position that insurance claims adjusters are exempt under the FLSA. (New Section 541.203(a));
  • Funeral directors and embalmers will be exempt. The Bush Administration has used the rulemaking process to do what could not be done in Congress, as legislation to exempt funeral directors and embalmers has been unsuccessful in the last several congresses. (New Section 541.301(e)(9));
  • Athletic trainers will be exempt. (New Section 541.301(e)(8));
  • The rule eliminates almost all duty and salary requirements for exemption of employees who have a 20% interest in their employer. (New Section 541.101);
  • Contrary to claims of the Bush Administration, the final overtime regulation will negatively affect the overtime rights of some “blue collar” workers, most notably those who fall within the final regulation’s expanded exemptions for “administrative” employees.

In addition, the following provisions will strip overtime rights for many other middle-income earners who make as little as $23,660 a year:

Elimination of 50% rule of thumb. A new section eliminates the “50 % rule of thumb” eliminating overtime for many employees who spend less than 50% of their time on administrative management work. (New Section 541.700)

Independent judgment and discretion. The new rule has a weaker requirement that the primary duty of administrative employees must “include” the exercise of discretion and independent judgment. The primary duty no longer needs to occupy 50 percent of the employee’s time for the employee to be exempt. (New Section 541.200(a)(3))

Work experience. New Section 541.301(d) will strip overtime rights from many workers who lack the standard requirement of a professional degree if they “have substantially the same knowledge level and perform substantially the same work as the degreed employees, but attained advanced knowledge through a combination of intellectual instruction and work experience.” This is the exact same argument DOL used to justify exemption of veterans who have received training in the armed forces.

Elimination of 20% tolerance test. New Section 541.500 eliminates the requirement that outside sales employees spend no more than 20% of their time on work unrelated to outside sales and contract solicitation. This and other changes in the provision will strip overtime rights from many drivers who sell and from inside sales employees.

Income cap. The final overtime regulation effectively places, for the first time, an income ceiling on overtime eligibility. This income ceiling is not indexed for inflation, so each year it will strip overtime rights from more workers.

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