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MARCH 2004
Bush's overtime pay cuts are pure chutzpah
by Rick S. Bender, President of the Washington State Labor Council, AFL-CIO

Approaching what promises to be a close presidential election, it’s hard to imagine the chutzpah it takes to do what President Bush is about to do.

He will defy the will of both Republican-controlled houses of Congress and enact a new policy opposed by 74 percent of Americans and supported by just 14 percent. This new policy will make it easier for employers to pay workers less and, get this, at a time the nation is at war, it specifically targets veterans for the pay cuts.

The issue is overtime pay: who gets it and who doesn’t. The Bush administration has vowed to impose new rules by the end of March regarding who can be exempted from time-and-a-half pay for extra work beyond the 40-hour week. They say they are doing it to “modernize” and “simplify” the confusing rules.

Overtime laws were established in the Fair Labor Standards Act of 1938 to create a disincentive for employers to require longer work hours and an incentive to hire more people. The resulting 40-hour workweek is considered by organized labor as one of our proudest accomplishments. In fact, next time you celebrate a weekend off, thank a union member.

But overtime rules can’t apply to everybody, so narrowly limited exemptions were created. Originally they were restricted to management executives and professionals like doctors and lawyers, who presumably exercise some control over their own work schedules.

But ever since, oh, about 1939, employers have been trying to skirt the rules with new and creative ways to overtime labor costs. You know, like running fast-food restaurants full of nothing but “assistant managers.” But along comes some evildoing trial lawyer, and next thing you know, you lose a class-action suit and owe all your assistant managers back pay.

That’s why we’ve got decades of legal opinions interpreting who can be exempted from overtime pay, rules that are complicated and involve a series of tests to establish how much control someone has over their schedules or other employees.

These complicated rules are suddenly a priority for two reasons. One is because corporations are losing more and more of those class-action overtime suits. Ironically through their very complexity, the rules offer little wiggle room for today’s creative human resources managers.

The other reason is corporate interests have a friend in George W. Bush.

Bush has invited them to write their own rules. Tammy McCutchen, the administrator of Bush’s Department of Labor Wage and Hour Division, is the principal architect of the overtime changes.  Before that, she was an attorney -- not a trial lawyer (shudder) -- for a Chicago law firm specializing in representing corporations on employee overtime and other wage claim disputes.

McCutchen & Co. have come up with some modern new language that touts the “availability” of exemptions like they’re a door prize: “Exemption is also available to employees in such professions who have substantially the same knowledge level as the degreed employees, but who attained such knowledge through a combination of work experience, training in the armed forces, attending a technical school, attending a community college or other intellectual instruction."

That "armed forces" part probably comes as a surprise to America’s 26 million veterans, but not to the Boeing Co.  They wrote Bush's Labor Department last June saying Boeing "strongly supports" revising the rules to classify employees with military training as "learned experts" who can be denied to overtime pay.

Estimates of how many people will lose overtime pay vary widely. A labor-financed study estimates 8 million people in jobs ranging from police officers to nurses to secretaries could lose overtime pay. Bush officials, in a talking point testing straight faces even worse than the 2.6-million-new-jobs doozie, say the new rules will actually increase the number of people who get overtime pay.

The truth is we don’t know exactly how many people will have their pay cut; it will depend on how businesses respond to the new rules.

What we do know is that overtime pay isn’t gravy; working people depend on it to meet basic needs supporting their families. For the workers who get it, overtime pay makes up about one-fourth of their weekly earnings, an average of $161 per week.

We also know the new rules are being written by the employers for the employers.  Working people didn’t ask for this. In fact, several hundred thousand have written Bush, urging him not to do it.

And finally, we know that employers are always -- ALWAYS -- looking for ways to increase profits by cutting costs, and labor’s their biggest cost. It’s fair to assume employers will use Bush’s new overtime rules, and use them aggressively, to do just that.

Just hope you aren’t among the “costs” getting cut.

Rick Bender is President of the Washington State Labor Council, AFL-CIO,
the largest labor organization in the state.

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Copyright © 2004  Washington State Labor Council, AFL-CIO