| U.S.
businesses, labor organizations, regulators, and employees
are trying to determine is new rules governing overtime
pay put into place on Monday under the Fair Labor Standards
Act will increase or decrease the size of their pay checks.
Some labor experts said the new laws will affect millions
of employees, particularly white-collar workers.
It
is unclear how many workers will be eligible to receive
extra compensation for work done outside of the normal 40-hour
work week. Estimates of how many workers will lose their
overtime eligibility range from 107,000 to 6 million. Workers
who could become newly eligible range from very few to 1.3
million.
“To
be candid, no one knows,” the Associated Press quoted Jerry
Hunter. Hunter is a labor lawyer at Bryan Cave LLP in St.
Louis, Missouri, and was general counsel of the National
Labor Relations Board. “Not only is the Labor Department
unsure, but a lot of people in a lot of industries are unsure.
This is all very fluid right now.”
Employers
have lobbied for decades to change the overtime-pay rules.
They claim the regulations covering overtime pay are ambiguous
and antiquated. They also don't believe highly paid professionals
should receive overtime pay. Labor unions argue that the
new rules reduce an employer's costs by reducing the number
of workers who are eligible for overtime pay.
The
new rules -- the first in more than half a century – are
aimed at mostly white-collar workers. The Labor Department
says manual laborers and other blue-collar workers will
not be affected. The new rules are intended to limit workers'
multimillion-dollar lawsuits, many of them successful, claiming
they were cheated out of overtime pay for working more than
40 hours per week.
Retailers,
restaurants, insurance firms, and banks have been targeted,
and jobs in those industries are generally exempt from overtime
in the new rules. They include chefs, pharmacists, funeral
directors, embalmers, journalists, insurance claims adjusters,
low- and midlevel bank managers, and dental hygienists.
The
new overtime rule has three criteria. One is the "salary-basis"
test. To be exempt from overtime, workers must be paid a
set salary, not an hourly wage. This has long been the rule
under federal overtime law. The new rules don't change this
requirement. The second criteria is the “salary-level” test.
In order to be exempt from overtime, the new rules require
that employees earn a minimum salary of $455 a week, or
$23,660 a year. That's triple the prior minimum salary of
$155 a week, or $8,060 a year. White-collar employees who
earn more than $100,000 a year are automatically exempt
from overtime pay under the new law. This wasn't the case
before, although many high-income workers have been exempt
for other reasons besides their income level. The third
criteria is where the rules get considerably more complicated
-- and controversial. The “duties” test tries to establish
eligibility based on the type of work an employee performs
every day. Under federal law, a worker whose job is deemed
"administrative," "professional" or "executive" in nature
does not qualify for overtime. The categories themselves
won't change. Instead, the new rules aim to clarify the
type of work that qualifies as administrative, professional
and executive. For example, under the administrative exemption,
a fast-food manager who sets schedules for a team of workers
but can't hire or fire workers will no longer earn overtime.
In
Saturday's Democratic Party radio address, vice presidential
candidate Sen. John Edwards blasted the rules. “Why would
anyone want to take overtime pay away from as many as 6
million Americans at a time when they need that money the
most?,” Edwards asked. Under the law, there are three primary
tests for determining who is eligible (non-exempt) and who
is not (exempt) from overtime pay.
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