Ask a Lawyer: Overtime Pay FAQ

On Aug. 23, 2004, millions of workers became eligible to lose their overtime pay because of new regulations from the Bush administration. Union members should check with their unions to determine how their contracts address overtime.

Here are answers to some frequently asked questions about the new overtime regulations from Woodley & McGillivary's wage-and-hour attorney Baldwin Robertson, a lawyer for Working America, the community affiliate of the AFL-CIO for nonunion workers.

Will all workers lose their overtime rights under the new rules?

A: Not all workers will lose eligibility, but many will. The Economic Policy Institute has estimated 6 million workers will lose their eligibility.

Who is most likely to lose overtime rights under the new rules?

A: Congress originally intended for the exceptions (called “exemptions”) to the 40-hour workweek to be limited to “executive” management, “administrative” management, “professionals” such as doctors and lawyers and outside salespeople. The new Bush rules expand those categories beyond all recognition, and far beyond what Congress originally intended, so that all kinds of workers who are not truly management or professionals or outside salespeople will now be ineligible for overtime pay. Workers who have only minimal supervisory responsibilities may now be considered “pay executive” management; workers who perform some administrative work but are not in any sense managers may now be considered “administrative” management; and workers such as embalmers, athletic trainers and chefs who have never gone to culinary arts school may now be considered “professionals,” just like doctors and lawyers. The new rules also expand the exempt category of outside salespeople to include many workers who perform even a relatively minor amount of sales work outside the employer’s place of business, such as delivery drivers. In addition, many workers who are currently entitled to overtime because they are not paid on a salary basis, such as registered nurses, may now be considered salaried under the new rules and therefore lose their overtime eligibility.

Will only “white-collar” workers lose their overtime rights, or will blue-collar workers also be vulnerable?

A: Most workers affected by the Bush overtime rules are “white-collar” workers, but some “blue-collar” workers also will be affected. Workers who perform manual work exclusively are entitled to overtime pay under current rules and will continue to be under the new Bush rules. But the blue-collar workers who will be more vulnerable under the new Bush rules are those who perform some combination of manual work and supervisory work, such as working foremen or working supervisors, as well as those who perform some combination of manual work and administrative work or “team leader” responsibilities. Blue-collar workers who work outside the employer’s place of business, such as repair persons who perform some sales work or could be assigned some sales work, will also be vulnerable. The Bush administration has added a new provision that pretends to protect “blue collars” but does not address any of the situations in which blue-collar workers are likely to be affected by the new regulations.

Will hourly workers be affected by the new overtime rules?

A: Yes. Technically, workers must be “salaried” rather than “hourly” to be ineligible for overtime pay. But the new Bush overtime rules make it easier for workers who are now considered “hourly” to  be considered “salaried.” Furthermore, the new rules loosen the other eligibility criteria, so that it will be a simple matter for employers to convert hourly employees into salaried employees in order to avoid paying them overtime. In fact, the Labor Department admitted last year that this is exactly what employers would do.

Does President Bush have the authority to take away people’s overtime pay all by himself?

A: Yes, but there are limits to his authority, and Congress can stop him. The rules that determine who is eligible and who is not eligible for overtime pay are contained in federal regulations. The president has the authority to revise those eligibility regulations without the involvement of Congress, and that is what President Bush has done. If Congress does not intervene, Bush’s new overtime cuts will start to take effect Aug. 23, 2004. But even after Aug. 23, Congress still has the power to pass legislation repealing the Bush overtime cuts. In other words, whatever Congress does trumps whatever President Bush does, but President Bush can get his way if Congress does not act. There have been repeated attempts in Congress to pass legislation protecting workers’ overtime rights, but so far President Bush and his allies in Congress have blocked legislation that would provide an overtime guarantee. When Congress returns in September, there will be attempts to get the House of Representatives to pass legislation already passed by the Senate that protects workers’ overtime rights.

Will anyone benefit from these new overtime rules?

A: About 384,000 low-income workers will gain overtime pay as a result of a non-controversial inflation adjustment. The new regulation makes an inflation adjustment to the salary level below which workers are guaranteed overtime. The adjustment made in the final regulation (from $8,060 to $23,660) was inadequate but long overdue and not opposed by anybody in Congress or elsewhere. The 384,000 who would gain overtime pay are workers currently earning below $23,660 who are considered “executive” management, “administrative” management, or “professionals” under current rules and therefore overtime-ineligible. Obviously, there are very few management or professional employees earning less than $23,660. The Bush administration claims that 1.3 million workers would benefit, but the Economic Policy Institute has used the Labor Department’s own data to show that this is a grossly inflated figure.

Do the new overtime rules guarantee overtime eligibility for police officers?

A: No. The new rules make it more likely that police officers will lose their overtime rights. The Labor Department has included a new provision that, it claims, provides an “iron-clad” guarantee of overtime rights for police officers, but this is largely a public relations exercise. Three of the highest-ranking Labor Department officials in the Reagan, Bush and Clinton administrations recently issued a report on the new rules and concluded that the one provision apparently relied upon by the Bush administration for its claims that overtime protection is strengthened for police officers does not have “any substantive impact.”

Will workers lose their overtime rights all at once?

A: No. The overtime cuts officially took effect on Aug. 23, 2004, but it could take much longer for them to be applied.

How can the Bush administration claim workers earning less than $100,000 would not lose their overtime rights, while others claim 6 million workers would be affected?

A: There is no good answer to this question. A recent report by three of the highest ranking Labor Department officials in the Reagan, Bush and Clinton administrations documented dozens of changes in the new overtime rules that will take away overtime rights from workers earning as little as $23,660. The Bush administration simply ignores these changes.

But isn’t the administration right to want to eliminate obsolete terms like “gang leader” and “straw boss”?

A: Yes, but nobody is trying to stop the administration from eliminating obsolete terms. Eliminating obsolete terms obviously does not take away anybody’s overtime rights. The overtime guarantee legislation in Congress that the Bush administration has so strenuously opposed would allow them to eliminate all these terms.

WORKING AMERICA reads every e-mail submitted and will try and respond on the website with answers to as many questions as possible. However, not all questions can be answered directly because of the large volume received. Although we can’t provide specific legal advice to anyone making a submission to this website, we can provide analysis and discussion for general informational purposes. It is our intent to inform you of the impact of the new overtime regulations on employees, not to provide legal advice on specific workplace issues. No attorney–client privilege exists between a questioner and the AFL-CIO or WORKING AMERICA.