Bush puts overtime pay and the 40-hour week on the chopping block

Bush puts overtime pay and the 40-hour week on the chopping block
Katherine Stapp
Inter press Service
January/February 2004

January 15, New York - An electronic technician with the U.S. Navy, John Garrity has two young children and another on the way. He often works extra hours to help make ends meet, but worries that under new overtime pay rules proposed by the Labor Department, he will lose about six thousand dollars a year.

"It's a pay cut and an attack on workers' rights," he said in an interview. "They're trying to roll the clock back. People fought and went to jail to have a 40-hour work week so they could spend more time with their families. The president just wants to pay back his corporate friends."

On Wednesday, an international trade union criticized the United States for having ratified only two of eight global conventions on core workers' rights, calling that one of the "worst rates of ratification in the world."

The International Confederation of Free Trade Unions (ICFTU) said the country has "a serious record of continuing labor rights violations involving some of the world's best-known companies, such as Wal-Mart."

The Bush administration has touted the new overtime rules as a long overdue update of the Fair Labor Standards Act of 1938, pointing out that they would extend overtime pay eligibility to an estimated 1.3 million low-income workers.

Under federal law, hourly employees are entitled to time-and-a-half pay (150 percent of the normal rate) if their work week extends beyond 40 hours.

But a study last year by the Economic Policy Institute (EPI), a non-partisan Washington think tank, found the new rules would also remove overtime pay protection from some eight million workers by reclassifying them as executives, professionals-in the case of Garrity, for example-and administrators.

Workers earning more than $65,000 a year would also be exempt from overtime pay.

"Our experience is that the Department of Labor has been pretty unresponsive to our criticisms," said Jared Bernstein, a senior economist at EPI. "We've written extensively about the serious, fundamental flaws in their analysis of the impact of this change, yet they've done little to address the issues we've raised."

Labor Department officials contest the study, saying the changes would affect fewer than one million higher-paid workers.

But many Democrat and Republican politicians oppose the new regulations.

Last year, both the Senate and House of Representatives passed an amendment to the proposed rules that preserved overtime pay protection for most workers. The amendment, named after its sponsor, Senator Tom Harkin of Iowa, was later dropped from a spending bill under intense pressure from the White House.

The Labor Department is now pushing the regulations as an administrative rule change-for which it does not need congressional consent-that would likely take effect in March.

In a move that provoked outcry among unions, the department has also published information for employers on how to legally avoid paying overtime to low-income workers who could be eligible for it, though it insists it does not recommend such tactics.

"This is a draconian proposal," said Lou Gerber, chief lobbyist of the Communications Workers of America.

"The administration has been deaf to the votes of Congress. The real issue is why isn't the administration proposing to raise the minimum wage, rather than cutting overtime pay?"

Legislators are currently on winter recess, but a hearing on the overtime rules is planned for Jan. 20.

"The idea behind our lobbying efforts right now is to get them to put the Harkin amendment back in the bill," said Kelly Ross, a legislative representative with the AFL-CIO, which represents more than 13 million workers. "It will be a lot harder to fix it once it's passed."

The National Organization of Women (NOW) has also opposed the changes, noting that many of those affected would be women working in middle-income jobs, like nurses, secretaries, cooks and paralegals.

"Think about a working mom whose boss requires her to work an extra four hours one night," said NOW President Kim Gandy in a statement. "Without the guarantee of overtime, she has to pay the babysitter while she's doing work for which she isn't getting paid extra."

The ICFTU reported that, "women hold nearly half the executive and managerial jobs in the United States, but they fall short of men at the top ranks of the salary ladder."

"Discrimination in respect of employment and occupation is prohibited by law. However, there is still a wage gap between men and women and between different ethnic groups," it added.

Industry groups that support the Labor Department's position argue that the EPI study was faulty, and assert the new rules would actually result in a net increase of people entitled to overtime pay protection.

"These regulations have not been comprehensively modified since 1949 and are out of step with today's workplace," said Sandra Boyd, a vice president at the National Association of Manufacturers.

"Employers want these regulations reformed for two reasons: to reduce compliance costs-you shouldn't need to hire a team of lawyers and consultants to figure out how to classify employees-and to reduce litigation exposure," Boyd said.

Last year, the Labor Department investigated more than 31,000 worker complaints and recovered $212 million in unpaid overtime wages, a 21 percent increase over 2002.

A particularly notorious case was retail giant Wal-Mart, which is fighting dozens of lawsuits around the country brought by employees who say they were forced to work unpaid overtime.

Tammy McCutchen, who heads the Labor Department's wage and hour division, says increased productivity and fewer lawsuits under the new rules could mean savings of up to 1.9 billion dollars for employers.

"Overtime pay is very hard to get even if you are entitled to it," says Jonathan Rees, a history professor at Colorado State University who has written extensively on labor issues.

"The fact that the Bush administration would rather take away this right than enforce this law is an obvious sign of their domination by corporate interests."