On July 31, the Senate Appropriations Subcommittee on Labor, Health and Human Services, and Education held a hearing to examine a proposed rewrite of federal rules that determine who is eligible for overtime pay.
Under the proposed new guidelines, all workers earning less than $22,100 per year would be eligible for overtime pay, while workers earning over $65,000 would be exempt almost automatically if they are doing non-manual, administrative work. The existing regulations require three tests for exemption: a minimum salary level, a salary basis test, and a duties test, which specifies the particular types of job duties that qualify for each exemption.
Tammy McCutchen, the Labor Department official who drafted the proposed revisions, told the panel that the existing criteria determining exemption have not been changed for decades. The job duties tests were last revised in 1949, the salary basis test was set in 1954, and the minimum salary levels were last updated in 1975. Ms. McCutchen pointed out that under those salary rates, an employee earning only $8,060 per year may qualify as an exempt “executive.” By comparison, an employee paid the current minimum wage of $5.15 an hour and working 40 hours a week earns about $10,700 a year. She went on to insist that under her proposed changes, fewer than 650,000 workers would lose overtime pay.
“Because the new exemptions are limited to certain defined classes of white collar workers, only those employees who perform office or non-manual work meeting the specified duties tests can be classified as exempt from receiving overtime pay,” Ms. McCutchen explained. “The proposal will not impact construction workers, carpenters, electricians, mechanics, plumbers, teamsters, cooks, secretaries and similar workers because none of these workers would qualify as white collar workers meeting the duties tests contained in the regulations.”
Ross Eisenbrey of the Economic Policy Institute took issue with the Department of Labor’s numbers. “Our conclusions are very different from those of the Department,” Mr. Eisenbrey told the panel. “We estimate … that over 8 million workers will lose the right to overtime pay. … The Department does not estimate how many employees will lose overtime protection; rather it only estimates how many employees who are currently receiving overtime pay will lose it. While approximately 80 or 90 million workers have overtime protection, only about 12 million at any one time are actually working overtime and being paid for it.”
Mr. Eisenbrey also disputed the Department of Labor’s assertion that the proposed rule makes no changes in the professional exemption that affects nurses and other health technicians, police officers, cooks or secretaries. “Each of these claims is wrong,” he said. “To be exempt, nurses, like all professionals, have had to meet strict educational requirements under current law. Under the proposed rule … work experience may be substituted for all or part of the educational requirements for any learned profession, even nursing. Once an employer determines that an R.N. with only a two-year degree has substantially the same knowledge as an R.N. with a four-year degree, it will be free under the proposed rule to exempt him or her and refuse to pay overtime.”
Christine Owens of the AFL-CIO voiced union opposition to the proposed changes, which she testified were tantamount to a repeal of the 40-hour work week. “DOL has failed to explain, nor can it explain, why the 40-hour workweek is obsolete for the 8 million workers who would lose overtime protection under the proposed regulations. What is it about the 21st century economy that makes the 40-hour workweek obsolete for police, firefighters, licensed practical nurses, paramedics, secretaries, paralegals, bookkeepers, and low-level supervisors? These workers need more control over their time, and they need protection against excessive work hours. Many of them need overtime pay to send their children to college and pay their bills,” she said.
