Overdue on Overtime
Virtually everything about the American workplace has changed since
the 1930s. We use computers instead of typewriters, send e-mail
rather than use the post office, and rely on just-in-time delivery
instead of stacking tons of extra parts in warehouses.
One important thing still dates back to the Depression, though: Our
overtime laws. Now, however, the Department of Labor is poised to
finally update those laws, so they will reflect the realities of
today's workplace and simultaneously return to the intent of the
nation's labor laws.
The Fair Labor Standards Act, originally passed in 1938,
established 40 hours as the standard workweek and provided
employees with "time-and-a-half" pay for hours worked over that.
The idea was to encourage employers to hire more workers and
improve conditions for those already on the job by limiting work
But a significant problem remains. The law makes executive,
administrative and professional employees, along with outside
salesmen and saleswomen, exempt from the overtime rules. Needless
to say, just who qualifies as a "white-collar" exempt employee is a
critical question for both employers and workers. Millions of
dollars in overtime pay are at stake. That's why the law
desperately needs updating.
For starters, salary levels that employees must receive in order
to be considered executives, administrators or professionals
haven't been changed since 1975. Depending on his or her job
duties, an employee may be considered exempt while earning as
little as $250 per week.
At the same time, the regulations are needlessly complicated.
Employers use different tests at different income levels, and many
of the existing rules prove difficult to apply. The Labor
Department's own investigators admit their determination of whether
a job is exempt often hinges on the employee's own attitude towards
his or her job. These arbitrary decisions are a gold mine for trial
lawyers, who have won judgments as high as $90 million against
employers who were found to have misinterpreted the
Finally, the rules don't account for the rise of highly skilled
production workers. These well-compensated employees receive as
much as $70,000 annually and have job duties and training similar
to that of engineers. But because they lack formal college degrees,
they're not considered "professionals" and frequently must be given
The Labor Department's new rules, however, will go a long way
toward fixing these problems. They'll boost - to $425, from $250, a
week - the minimum salary an employer would need to pay before
a worker could be considered "exempt." At the same time, the rules
would be streamlined, making it easier for workers, employers and
investigators to determine whether an employee is eligible for
By raising the minimum salary level needed for "white collar"
status, the Labor Department is returning to the original intent of
the Fair Labor Standards Act - to protect unskilled manual
laborers from the dangers of overwork. By limiting work hours,
Congress meant to reduce the dangers of fatigue and workplace
accidents and allow workers more time for recreation, family and
Executives, administrators and professionals were excluded because
they were seen as having both higher compensation and greater job
security, giving them better control over their own work
The drafters of the original Fair Labor Standards Act probably
would be shocked to learn that, under today's rules, a cook earning
$13,000 a year can be considered an executive because he supervises
two kitchen workers, while a technician with a $70,000 salary can
receive mandatory overtime pay.
More straightforward regulations will make enforcement of the
wage-and-hour laws easier. Thus unskilled workers, the employees
who have the least control over their working hours and conditions,
will receive the maximum level of protection. Under the new rule,
any worker receiving a salary of less than $20,000 will be eligible
for overtime, regardless of his or her job duties.
Employers will also benefit, because it will be easier to
determine who is eligible for overtime. And the Labor Department
also will remove well intentioned but unworkable provisions that
have complicated the lives of both employers and DOL
American workers are the most efficient and valuable in the world,
and deserve fair compensation for their extraordinary efforts. With
new overtime rules in place, our labor laws can finally join our
labor force in the 21st century.
First appeared on FoxNews.com