Tuesday, July 15, 2003

Overtime: Rules' effects are unclear to experts

Proposed changes would get more for some, less for others

By Adam Geller
The Associated Press

NEW YORK - Say you're a cook, or a nurse, or the assistant manager of a store. You've worked more than 40 hours this week, so you're entitled to overtime pay, right?

It's hardly that simple, and the Bush administration's proposed new rules on overtime pay raise all kinds of uncertainty about just who should be entitled to extra wages for extra work.

The administration says its rules could cost 644,000 workers the right to extra wages. Labor unions and Democrats say the real number is at least 8 million and maybe even higher.

The truth is nobody's sure precisely how many workers will be affected, largely because it's unclear what employers would do with the increased flexibility provided by rules that are both arcane and broadly worded.

Some cooks, for example, may be disqualified from overtime pay if they're deemed "learned professionals." But where to draw the line between academy-trained chefs and cooks with years of experience at the stove? Therein lies the uncertainty.

"We don't know exactly how many people are going to be losing their overtime because of this," said Alexander Colvin, an assistant professor of labor studies and industrial relations at Pennsylvania State University. "It's very tricky."

The administration plan won narrow backing last Thursday from the Republican-led House of Representatives.

The changes would require overtime for workers making up to $22,100 a year, up from $8,060, a shift that all sides agree would benefit up to 1.3 million more low-income workers when they work more than 40 hours a week.

That's where the agreement ends.

The Labor Department says the changes would disallow overtime pay for 644,000 mostly white-collar workers on the upper end of the pay scale.

But several experts in labor relations and economics said Friday the actual number of people affected could be well into the millions - particularly among workers like nurses, dental hygienists, retail managers and policemen.

The Economic Policy Institute, a think tank that relies on labor groups for much of its funding, determined that the changes could eliminate overtime eligibility for 1.3 million workers at the upper end of the scale, to be set at $65,000 a year.

In lower pay ranks, another 2.5 million salaried workers and 5.5 million hourly workers could also lose their right to overtime, the EPI estimated.

That adds up to 9.3 million people, but the group settled on its 8 million figure by subtracting the workers at the low end of the pay scale who would be newly eligible for overtime.

"We really think that the number is probably a heck of a lot higher than 8 million," said Sarah Harding, an EPI policy analyst.

Others say such an estimate amounts to scare tactics. If the new rules are approved, most employers would probably be reluctant to change the pay status of current workers even if they could, some analysts say. Businesses might, instead, make changes gradually, perhaps as open positions are filled.

"There's no way to get around that subjectivity," said Ed Potter, president of the Employment Policy Foundation, which supports the changes. "So, if you want to be misleading, you've got room to exaggerate or dismiss as your ideological preference allows."

But Potter's group, as well as experts generally opposed to the changes, are unwilling to put a number on how many workers will lose out.

Analysts agree the fuzziness of the rules and employers' leeway in using them make it difficult to know which workers will be affected. But many say the administration's estimate of those who will lose out on overtime pay appears to be low.

"I think people don't realize the extent to which this is going to touch families all over the country in all kinds of jobs," said Lance Compa, a lecturer in labor law at Cornell University's New York State School of Industrial and Labor Relations. "I think the effect is really being underestimated."

A labor economist, Lonnie Golden of Pennsylvania State at Abington, Pa., said workers already find it difficult to know whether they're entitled to overtime, an increasing problem as employers try to squeeze more hours out of those on the payroll.

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