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DOL Official Predicts Hill Democrats Will Not Succeed in Blocking Overtime Rules

by Department of Labor on 12/31/2003
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NEW YORK--"It's going to be a long, hot summer," Assistant Secretary of Labor Victoria A. Lipnic said May 20, referring to ongoing efforts by some lawmakers to block parts of revised Labor Department regulations determining which workers are entitled to overtime pay.

However, Lipnic predicted that those efforts will fail and that the rules, which she said are "a net benefit for workers," will go into effect as scheduled on Aug. 23. She made the remarks while speaking to employment attorneys attending New York University School of Law's annual labor conference.

Democrats and some Republicans opposing certain parts of the new rules contend that they unfairly deprive many workers of their entitlement to overtime pay. An amendment proposed by Sen. Tom Harkin (D-Iowa) and approved by the Senate would guarantee overtime pay for all workers who are eligible under the current rules. Harkin's amendment is attached to an unrelated export tax bill (S. 1637) (86 DLR AA-1, 5/5/04).

Lipnic asserted that the Harkin proposal would "create an enforcement nightmare" by requiring analysis under both sets of regulations to determine whether an employee is eligible for overtime pay.

The rulemaking process, which resulted in publication of the final regulations on April 23, "has been an extraordinarily controversial undertaking," Lipnic said, adding that there probably was no way to do it without a lot of controversy. She observed that DOL's March 2003 notice of proposed rulemaking resulted in the public filing 78,000 comments, 600 of which she characterized as substantive. "That's a lot to work through," she said.

The overtime regulations were in serious need of updating, Lipnic said. She pointed out that the workforce has changed dramatically since World War II in terms of the types of work performed, who is working, workers' education levels, and the number of hours worked.

The current rules include provisions that guarantee overtime pay for workers who earn less than a certain amount per year, but because that minimum salary level--$8,060 annually under the old regulations--had not been increased for 30 years, the benefit of that provision has eroded with the passage of time, Lipnic said. The new rules raise that minimum salary threshold to $23,660 per year. Any worker making less than that is guaranteed time-and-a-half overtime pay after 40 hours of work in a week, regardless of his or her job duties.

Lawmakers who support Harkin's amendment do not object to DOL's provision raising the minimum salary threshold.

The initially proposed regulations would have added a new rule that blue-collar workers who earn more than $65,000 a year and have at least one exempt job duty would not be entitled to overtime pay. In response to comments, the final regulations include "a major increase" in the cap to $100,000, Lipnic said. She said that the final rules also make clear that "first responders" such as police and firefighters are entitled to overtime pay.

The duties tests for determining whether certain workers are exempt from overtime pay as executive, administrative, or professional employees needed clarification, Lipnic said. She observed that it "has never been an easy task" to define those categories. Because courts have issued numerous decisions and DOL has issued numerous opinion letters interpreting these so-called white-collar exemptions, employers and employees could not determine exempt status simply by looking at the regulations, Lipnic said. As a result, she said, good-faith employers were stymied, bad-faith employers played games, and employees did not understand their rights. The new rules draw from the case law, incorporate in the regulatory text some language that previously was in a separate "interpretations" section of the old rule, and include examples of jobs that are generally exempt, Lipnic said. However, she emphasized that it is actual job duties, not titles or job descriptions, that determine whether an employee is exempt or not. The new definitions are "not perfect" but are better than the current ones, Lipnic said.

Updating the overtime regulations "is an action-forcing event creating an opportunity for compliance," Lipnic observed. Greater enforcement and compliance with the rule will benefit workers, especially those who work for smaller employers that do not always understand the requirements, she said. That makes all the work and all the controversy worthwhile, Lipnic declared. She asserted that 1.3 million workers who make less than $23,660 annually and are not entitled to overtime pay under the current rules will gain that right under the new rules and that the right to overtime pay will be strengthened for 6.7 million low-wage workers.

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Categories: 2004

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