On April 28, the House Education and the Workforce Committee held a hearing to examine the Department of Labor’s final regulations on overtime pay. In March 2003, the department first issued its proposed rule. After receiving more than 75,000 comments, the department published the final rule on April 23, 2004. The rule will go into effect 120 days from the date of publication.
The proposed rule was the subject of great controversy last year when the Senate voted to block the department from using federal funds to implement the rule. That language was removed during conference; the move held up Senate consideration of the final FY2004 omnibus spending bill until January of this year (see The Source, 1/23/04).
Chair John Boehner (R-OH) praised the department for “its willingness to make adjustments to the final regulation,” stating, “It appears the Labor Department has worked very hard to address legitimate concerns raised both by workers and employers.” He added that there had been a “campaign of misinformation based on fear, distortions, and untruths” regarding the draft proposal. “Some attempted to paint this draft proposal as an attack on workers, falsely claiming it would eliminate overtime pay for millions, which is simply untrue.”
Ranking Member George Miller (D-CA) criticized the rule, saying that a significant number of employees could be adversely affected. “When you start to read the fine print, you see that overtime pay for potentially millions of employees making between $23,660 and $100,000 is at risk, including employees working in financial services, chefs, computer programmers, route drivers, assistant retail managers, preschool teachers, team leaders, and many other categories of employees,” he said, adding, “It doesn’t matter how the administration spins it, the purpose of this new regulation is to reduce eligibility for overtime pay.”
Secretary of Labor Elaine Chao appeared before the committee to discuss the final rule. “Workers win under this rule,” she said, adding that “misinformation” has “unfairly characterized [it] as taking away overtime pay from millions of Americans when the exact opposite is true.” She explained that workers earning less than $23,660 per year will be guaranteed overtime pay: “This will strengthen overtime rights for 6.7 million American workers, including 1.3 million low-wage, salaried ‘white collar’ workers who were not entitled to overtime pay under the old regulations, and who will gain up to $375 million in additional earnings every year.” Secretary Chao added, “The final rule identifies the occupations these 1.3 million workers are in and the estimated number of currently exempt workers who will likely gain compensation under the final rule. They are predominately married women with less than a college degree and live in the South.”
In responding to public comments regarding the rule, Secretary Chao said that the new rule strengthens overtime protections for “licensed practical nurses, police officers, fire fighters, paramedics, and similar public safety employees.” Additionally, “The Department has updated the rule to clarify that ‘blue-collar’ workers—such as construction workers, cashiers, manual laborers, employees on a factory line or workers compensated under a collective bargaining agreement, will not be affected by the new regulation,” she said.
During the question and answer period, Rep. Major Owens (D-NY) raised the issue of compensatory time versus overtime pay, noting that the issue “has been on the agenda for some time.” He questioned, “You did not deal with that in these regulations. Can we assume that it is off the table?”
Secretary Chao responded that the regulation has nothing to do with comp time. “These are two separate issues,” she said. “We never anticipated dealing with these together.”
When pressed further on the issue by Rep. Owens, Chair Boehner agreed that the issue of comp time needs to be addressed. “We will have a discussion on this because if it’s good enough for federal and state workers, then it ought to be good enough for our constituents.”
The subcommittee also heard from Karen Dulaney Smith, a wage and hour consultant and former Department of Labor Wage and Hour Division investigator, who said that there are “flaws in this regulation” that will “negatively affect workers earning between $23,660 and $100,000 per year.” Specifically, she pointed to nursery school teachers: “Nursery school teachers have been non-exempt and entitled to overtime because their job does not require the use of independent discretion and judgment. The final rule removes this requirement, so nursery school teachers will lose their right to overtime pay.” She also stated that registered nurses’ overtime pay may be “undermined” by the rule.
David Fortney of Fortney and Scott disagreed. “Registered Nurses currently are exempt, even though the overwhelming majority receives shift premiums or similar additional payment as a result of market factors, and that classification remains unchanged. Generally, Licensed Practical Nurses currently are not exempt, and their status also has not changed,” he said.
