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April 21, 2004
DOL Says OT Regs Are Fair to Everybody--Critics Disagree

U.S. Secretary of Labor Elaine L. Chao says new overtime rules, which the Labor Department has dubbed the "FairPay" rules, will strengthen overtime protection for America's workers.

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"When workers know their rights and employers know how to pay workers, everybody wins," says Chao. "With the 'FairPay' rule, we are restoring overtime to what it was intended to be: fair pay for workers, instead of a lawsuit lottery."

Democrats and labor groups remain skeptical about changes. While they support rules that would guarantee more workers have overtime eligibility, these critics say too many white-collar workers will lose overtime under the new rules.

"While President Bush cuts taxes for the wealthy, he wants to eliminate the right to overtime pay for millions of workers--money these workers need to put food on the table, to make ends meet, to buy a home, and to send their children to college," says House Democratic Leader Nancy Pelosi. "The President just does not understand that middle-class families need their overtime pay more than ever in this stagnant economy."

In general, business groups, including the Chamber of Commerce and the Society for Human Resource Management, applauded the final rules.

The final rules differ from the department's initial proposal, which was announced in March 2003.

The new rules nearly triple the salary threshold, which was $8,060. Under the new rules, workers earning less than $23,660 per year--or $455 per week--are guaranteed overtime. The March 2003 proposal would have lifted the threshold to $22,100. The department says 1.3 million low-wage workers will gain eligibility under this rule.

The revised regulations also increase the salary threshold for a new exemption for "highly compensated" workers to $100,000, instead of the $65,000 threshold in the initial proposal.

The new rules add sections that clearly state that "blue collar" workers, police officers, fire fighters, paramedics, emergency medical technicians, and licensed practical nurses are entitled to overtime protection. Those sections were not included in the initial proposal, prompting fears among "first responders" that their overtime eligibility was in jeopardy.

The department's new rules will take effect in 120 days. It will be published in the Federal Register and a text version is available online at www.dol.gov/fairpay.

Read about what the new rules mean for employers in this BLR article.

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