Controversial Overtime Rules Take Effect
By STEVEN GREENHOUSE
Published: August 23, 2004
The Bush administration's new overtime rules go into effect today, but
the Kerry campaign has already begun attacking the overhauled
regulations, saying they will hurt millions of American workers.
Urging President Bush to scrap the rules, the Kerry campaign and
organized labor say the regulations will exempt up to six million
additional workers from receiving overtime pay by redefining which
workers qualify for time-and-a-half pay when they work more than 40
hours. But the administration asserts that no more than 107,000 workers
will lose their eligibility, while 1.3 million workers will gain the
right to overtime.
In essence, the hundreds of pages of new rules redefine the criteria for
which administrative, professional and managerial workers qualify for
overtime, among them nurses, chefs, pharmacists, funeral directors,
claims adjusters and restaurant managers.
Senator John Edwards, the Democratic vice-presidential candidate,
devoted his political party's weekly radio address on Saturday to
assailing the new rules, making clear that the Democrats view them as an
issue to exploit when many Americans are worried about the economy and
"Why would anyone want to take overtime pay away from as many as six
million Americans at a time when they need that money the most?" Mr.
Edwards said. "And why would anyone support this new rule which could
mean a pay cut for millions of Americans who have already seen their
real wages drop again this year?"
That follows attacks by Senator John Kerry, the Democratic presidential
nominee, who said last month, "The new overtime regulations represent a
shameful assault on the paychecks of hard-working Americans at a time
when they are already putting in more hours, paying more for everyday
costs and saving less than ever before."
To turn up the volume on the issue, the A.F.L.-C.I.O. says it will hold
a news conference today and will distribute several million fliers
saying Mr. Bush has given its corporate friends a gift that will cut the
paychecks of millions of Americans.
The administration asserts that the new regulations are needed to
replace vague, outmoded rules that have spurred many lawsuits as
employers and employees tussle over which workers are exempt and which
are not. The administration argues that the overtime rules are clearer,
will be easier to enforce and will reduce expensive litigation that
hurts business and the economy.
"We view this as a step in the right direction for bringing clarity and
certainty to this area of the law so there can be greater compliance,"
said Alfred Robinson, director of the Labor Department's wage and hour
division. "And that's good for employers and employees. I'd rather focus
on that than the spin and the politics."
Critics of the new rules say they are another example of the Bush
administration's taking regulatory steps that please businesses, which
have lobbied for years to revamp the overtime regulations.
The Economic Policy Institute, a liberal research group, has issued a
report, which many Democrats have relied on, concluding that the rules
will exempt about six million workers from overtime coverage. Among
those, the institute said, are 1.4 million low-level salaried
supervisors, 130,000 chefs and sous-chefs and 900,000 workers with
graduate or college degrees who will now be considered professional
The administration has accused the institute and the A.F.L.-C.I.O. of
engaging in a partisan campaign of misinformation on the issue.
Senator Tom Harkin, an Iowa Democrat who has failed in repeated attempts
to win passage of a bill to roll back the rules, said he would introduce
new legislation to try again.
"This strikes right at the heart of a fundamental labor right," Mr.
Harkin said. "These vague regulations will hurt rather than help
Americans with their overtime pay, while the administration's public
posture is all smiles and happy talk."
Michael Eastman, director of labor law policy at the United States
Chamber of Commerce, said companies were not seizing on the new rules to
try to deny overtime pay to many workers. He praised the
administration's efforts, saying the regulations sorely needed to be
"It's a very easy issue to demagogue and to frighten people with claims
that the worst will happen," Mr. Eastman said. "It's taken a lot of
courage for this administration to take this kind of unwarranted
criticism from labor unions and other opponents.''
Overtime, which is governed by the Fair Labor Standards Act of 1938, is
a complicated area of law. Senior managers do not qualify for overtime
pay when they work more than 40 hours, but the more difficult questions
involve whether low-level, salaried supervisors are to be viewed as
managers who do not qualify for overtime or as workers who do.
The new rules set forth criteria, like what responsibilities supervisors
have and whether they have the power to hire and fire, to determine who
The rules largely exempt workers earning more than $100,000 from
overtime pay, although those with union contracts calling for overtime
will continue to be eligible.
Three former Labor Department officials under President Bill Clinton and
the first President Bush concluded in a report that the regulations
would hurt American workers. The A.F.L.-C.I.O. financed their study, but
the three authors, led by John Fraser, former director of the wage and
hour division, insisted that they were independent.
Mr. Fraser called the rules "a very big deal." Their report said that
but for a provision involving very low-paid supervisors, every change
the Labor Department made had expanded the reach and scope of rules that
exempted workers from overtime coverage.
In a rebuttal, the Labor Department has said the studies concluding that
six million more workers would be exempt were based on faulty
assumptions and partisan thinking.