Chao defends overtime changes

Former federal official says eligibility weakened

April 29, 2004|By BLOOMBERG NEWS

WASHINGTON - U.S. Labor Secretary Elaine L. Chao told lawmakers yesterday that labor unions and Democrats are waging a "campaign of misinformation" against new overtime-pay regulations.

A former federal official, however, said workers have reason to be worried because the rules "artfully" weaken eligibility.

Chao testified before a House work force committee about the regulations, which were issued last week and are to become effective in August. She said the new rules will mean $375 million more a year in overtime pay for 1.3 million workers and will bring clarity to outdated rules that have drawn workers and employers into costly litigation.

"It will mean real money for workers," she said.

Karen Dulaney Smith, a former wage investigator for the Labor Department in the administrations of Presidents Ronald Reagan and Bill Clinton, told the panel that some wording in 535 pages of regulations "artfully weakens current regulation in very subtle but significant ways that will surprise employers and employees when businesses begin the implementation process."

Smith said workers earning between $23,660 and $100,000 a year are in danger of losing overtime. They include nursery school teachers, nurses, chefs, team leaders, outside salespeople and financial-services employees.

The overtime regulations have been the subject of partisan fights in Congress for months. Democrats are vowing to stop any of the rules that deny overtime from taking effect and are pursuing legislation to do so in the Senate next week.

Republicans praise the new rules and say Democrats are trying to agitate workers in an election year.

The regulations guarantee overtime pay to salaried workers making less than $23,660 a year. Workers making more than that, up to $100,000 annually, must be paid overtime unless they perform the duties of an executive, administrator or professional, Chao said. Most workers making more than $100,000 a year won't qualify.

The Labor Department has the backing of the U.S. Chamber of Commerce and several business groups. Democrats and the AFL-CIO say the Bush administration is trying to take away the extra wages to appease corporations.

The overtime regulations under the 1938 Fair Labor Standards Act were last changed in 1949 and 1975.

The Chamber of Commerce said the $100,000 ceiling is too high but called the new regulations a "marked improvement" over current regulations.

The National Retail Federation, which represents companies such as Office Depot Inc. and Ethan Allen Inc., and the National Association of Manufacturers, which represents ConocoPhillips and Dow Chemical Co., support the rules.

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