During consideration of a corporate tax bill (S. 1637) on May 4, the Senate approved, 52-47, an amendment to block a Department of Labor rule on overtime pay. The department first published its proposed rule in March 2003. 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.
Under the final rule, full-time workers who earn up to $23,660 per year would be eligible for overtime pay. The Department of Labor estimates that an additional 1.3 million white-collar workers will be eligible for overtime pay.
The amendment proposed by Sen. Tom Harkin (D-IA) would maintain the $23,660 threshold, but also would guarantee that no worker who is currently eligible to receive overtime pay would lose that right under the new rule.
Prior to the final vote on the Harkin amendment, Sen. Judd Gregg (R-NH) offered an amendment that would protect overtime pay eligibility for employees in 55 occupations or job classifications that were not expressly protected in the final rule, including any worker paid on an hourly basis, registered nurses, licensed practical nurses, nurse midwives, nursery school teachers, and day care workers. The amendment was adopted, 99-0.
The Senate first considered this issue last year during consideration of the FY2004 Labor, Health and Human Services, and Education spending bill (H.R. 2660). On September 10, the Senate approved an amendment that would have blocked the Department of Labor from using federal funds to implement the proposed rule (see The Source, 9/12/03). Much to the dismay of Senate Democrats and some Republicans, the provision was removed from the final omnibus bill during conference. The Senate approved the omnibus bill on January 22.
Calling the Department of Labor rule “anti-worker” and “anti-family,” Sen. Harkin said that women would be disproportionately harmed by the rule. “The fact is, women tend to dominate in retail, services, and sales positions, which would be particularly affected by the new rule,” he stated, adding, “Married women increased their hours by nearly 40 percent from 1979 to 2000. As women have increased their time in the paid labor market, their contribution to the family income has also risen. These contributions are especially important to lower and middle-income families. Yet now the administration’s new rule will take away overtime protections from millions of American women. Women in the paid workforce will be forced to work longer hours for less pay. And, of course, this means more time away from families and more childcare expense, with no additional compensation.”
Arguing that the Fair Labor Standards Act has become outdated, Sen. Gregg said that the new overtime rule is necessary because “the law as it has presently evolved over the last 50 years with all this regulation, regulatory changes, and all the court decisions has really become a Byzantine morass. It is not clear. There is gray area everywhere and everything is getting litigated. It is the fastest area of lawsuit growth in the area of labor law. Class action suits are being brought left and right. The practical impact of that is employers and employees are suffering because of it. Resources which should be used to give employees better benefits and to expand businesses so more people could be hired are being used to defend lawsuits to try to figure out whether this person’s job is a job that involves overtime or is not a job that involves overtime, fending off lawsuits left and right, and, as a result, we end up with the misallocation of resources, fewer jobs being created and fewer benefits being paid because the dollars are going out to attorneys who are pursuing these lawsuits because the law is not clear.”
On May 4, the Senate Appropriations Subcommittee on Labor, Health and Human Services, and Education held a hearing to examine the Department of Labor’s final regulations on overtime pay. Many of the witnesses testified before the House Education and the Workforce Committee on April 28 (see The Source, 4/30/04).
Tammy McCutchen, Administrator of the Wage and Hour Division at the Department of Labor, appeared before the subcommittee to discuss the final rule. “Overtime pay is important to American workers and their families, and this updated rule represents a great benefit to them,” she stated. Ms. McCutchen 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.”
In responding to public comments regarding the rule, Ms. McCutchen 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.
Craig Becker of the AFL-CIO said that the new regulations would allow employers to classify many employees as exempt who had previously failed the salary basis test, including registered nurses (RNs). “While registered nurses meet the duties test for the professional exemption, they have until now consistently failed the salary test because their employers exercised close control over their time, not permitting them to come and go as they chose and docking them if they miss part of a day,” he stated, adding, “The new regulations will allow employers to pay employees such as these RNs for hours worked in excess of 40 in a workweek at straight, as opposed to overtime, rates or to ‘pay’ them in compensatory time off.”
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.
