Overtime reform roadblock apparently overcome

Yahoo! News (Reuters) reports:” White House Said to Prevail on Overtime Work Rules.”

“The Bush administration won a Capitol Hill battle on Friday over proposed changes to U.S. overtime work rules that are supported by business and opposed by labor, congressional aides said.”

“They said Sen. Arlen Specter, a Pennsylvania Republican, had lifted his objections, clearing the way for passage of a huge year-end spending bill without a provision that would have blocked the new regulations.”

“Specter, who could have kept the bill bottled up in committee by one vote, made the about-face a day after he floated a possible compromise that was shot down, and hours after he told a news conference he was still seeking a deal. He conceded he had been “boxed in” with no certain way out. ”

“Specter and other lawmakers have vowed to challenge the proposed work rules next year under an act that allows congressional review of new regulations, and labor groups promise to test them in court.”

I just looked at a side-by-side comparison chart from the Dept. of Labor, and am unimpressed by the “sky is falling” bleating of the critics.

The salary threshold for exemption has been raised from $250 per week ($13,000 per year) to $425 per week ($ 22,100 per year). This should not have a significant impact, except to prevent exemption of very low-paid salaried workers (who probably shouldn’t be treated as exempt under either the old or new criteria, quite aside from the pay requirement).

The executive exemption is actually tightened by adding: “Has authority to hire or fire other employees (or recommendations as to hiring, firing, promotion or other change of status of other employees are given particular weight).” ( I know, the old “long test” contained additional requirements, but who was supervising 2 or more people for less than $13,000 a year? I.e., the long test didn’t apply much anymore anyway).

The administrative exemption replaces the cryptic and problematic “Customarily and regularly exercises discretion and independent judgment” with “Holds a ‘position of responsibility’ with the employer, defined as either (1) performing work of substantial importance or (2)performing work requiring a high level of skill or training.” Whether this proves any easier to apply remains to be seen. I have my doubts.

The professional exemption also eliminates “Consistently exercises discretion and judgment.” I would expect employees meeting the other requirement would exercise discretion and judgement also, so this just eliminates a point of possible disputation and uncertainty, without adding that many people to the exemption. The new regulation adds the possibility of a “combination of intellectual instruction and work experience” equivalent to “a prolonged course of specialized intellectual instruction.” This will add some employees to the exempt category who may be lacking advanced degrees. I have a hard time seeing the unfairness in this: if they have “the equivalent” they should get equivalent treatment.

The bottom line from where I sit is that the biggest problems with the white-collar exemptions are: 1) substantial lack of compliance, partially due to employer ignorance (many, many wrongly assume salaried = exempt and therefore make no effort to examine the duties); and 2) uncertainty resulting from slippery terms like “discretion and independent judgment.” The new regulations and the attendant publicity may enhance compliance just by raising consciousness (of the fact there are duties tests). The uncertainty may be replaced by new uncertainty, as I’ve noted, but perhaps the new standards will be a bit more “bright-line.”

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