September 6, 2004
By Paul Kersey
This Labor Day finds many workers in a state of anxiety over the
overtime rules that became law on Aug. 23. The worry is
understandable, but unnecessary. Contrary to reports from many
self-described worker advocates, the new overtime regulations are
unlikely to cost many employees their overtime pay.
Yet misperceptions abound. The day the new rules took effect, for
example, Sen. Tom Harkin held a press conference outside of the
Department of Labor's offices in Washington, D.C. Harkin passed
along a story from the Aug. 11 Chicago Sun-Times reporting that, as
a result of the new rules, 2,000 employees of Sears Roebuck and Co.
had been reclassified and were no longer entitled to overtime
But the Sun-Times story was wrong. In fact, the paper already had
printed a correction (on the 13th) and announced that 2,000
employees of the department-store chain were about to begin
receiving overtime pay under the new regulations. Oops.
Sen. Harkin and the newspaper both can be forgiven. So much
confusion surrounds the new rules that it would be easy to assume
that whenever jobs are "reclassified" in terms of overtime
eligibility, it must mean workers are losing overtime pay, rather
than gaining it.
But as the rules are applied in workplace after workplace, a
pattern is developing: Employers initially intimidated by the 15
pages of carefully worded rules find that little has changed. And
employees find that they and their co-workers are still entitled to
time-and-a-half pay whenever they work more than 40 hours a
The misplaced concerns about the overtime rules can be traced to a
report by the pro-union Economic Policy Institute, which estimated
that six million workers would lose statutory overtime protection
under the new rules. This report drew much attention before the new
rules took effect, but since then nearly every employer who has
applied the new rules has found either no changes, or found workers
who gained overtime.
Among the many examples: A spokesman for Franks Nursery and Crafts,
a retail chain based in Troy, Mich., noted in Crain's Detroit
Business magazine that they were not affected. Blue Cross and Blue
Shield of Kansas announced that none of their 1,850 workers would
lose or gain overtime rights under the new rules.
Office Depot, headquartered in Delray Beach, Fla., announced that
they expect no changes. Reimbursement Technologies, a medical
billing company in Conshohocken, Pa., found that 40 of their
employees would gain overtime and none would lose it, according to
the Philadelphia Inquirer. And, of course, the 2,000 Sears Roebuck
and Co. employees will be gaining, not losing, overtime pay.
Expect this trend to continue. There will be a few workers who lose
a legal right to overtime pay (though new rules for those earning
more than $100,000 annually will mean that highly paid workers are
more likely to be considered exempt). Meanwhile the minimum salary
needed to qualify for an exemption increased from $8,060 to
$23,660, an increase that will result in 1.3 million workers
gaining a legal right to time-and-a-half pay for overtime.
The new rules also add details and updates for new industries and
occupations that have grown up over the last half-century. The last
thorough review of these rules was 50 years ago, and many of their
harshest critics admit that the overhaul was long overdue. But the
new details that were added were frequently based on prior court
cases or Department of Labor's own practices, meaning little was
really changed. Up-to-date rules will mean that both employers and
employees will find it easier to tell who gets overtime, reducing
the risk that either will be forced into costly and time-consuming
Many workers will be worried about overtime this Labor Day, but
over the next few months, as employers work through the new
overtime rules, those worries should dissipate. The far greater
concern for workers, one that should become more pressing as
worries over overtime recede, is whether or not their interests are
well served by organizations and politicians prone to overreact to
a fair and long overdue revision of an important labor law.
Paul Kersey is a policy analyst who specializes in labor issues
at The Heritage Foundation (heritage.org), a Washington-based
public policy research institute.
First appeared on FOXNews.com
This Labor Day finds many workers in a state of anxiety over the overtime rules that became law on Aug. 23.
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