Workplace beware

August 19, 2004

THE LABOR Department's trumpeting of its new regulations governing overtime, which go into effect next week, sounds a little tinny.

"We're past politics now," U.S. Deputy Secretary of Labor Steven J. Law said Wednesday, as his assistants e-mailed a 12-page letter to reporters rebutting the AFL-CIO's strong contentions of harm.

But Mr. Law is right about the new day dawning Monday, when the revisions to the Fair Labor Standards Act become the law of the land. Labor predicts the rules will require employers to pay 1.3 million more workers at the bottom of the pay scales overtime if they earn it.

Revisions in the duties tests and classifications, though, could cause between 100,000 and 6 million to lose their overtime eligibility.

That number has been hotly debated, not only by big unions but by nonpartisan think tanks and former Labor officials from the past two administrations. Now the nation will act as a giant laboratory.

The regulations set a new test of job duties to determine which employees who earn between $23,660 and $100,000 per year can earn overtime pay. The changes are expected to cost employers about $700 million to implement, but then save them more than $1 billion each year in litigation costs, according to Labor. It's not so clear the savings will appear, though. The push for businesses to cut costs and increase productivity has led more to wrongly classify workers as exempt from overtime, and that seems unlikely to change.

Employers do benefit in other ways. The new regulations allow them greater freedom to dock employees' pay without losing the worker's exempt status and give more leeway for employers to correct wrong deductions from exempt workers' paychecks before they face federal fines.

For workers, establishing automatic overtime eligibility for anyone making up to $23,660 a year, instead of the previous $8,060, is a real benefit, unless employers tweak their jobs into an exempt form. Still, for them and for workers classed as administrative, professional and executive, questions remain. And they may not be able to ask their bosses yet.

Some 20 percent of large firms say they will miss Monday's deadline for changing how they pay their employees, a survey by consultants Hewitt Associates found. And at least some small employers don't even know they need to change, Hewitt said.

Sixty-five percent of U.S. workers said they did not receive any praise or recognition in the workplace in 2003, according to a recent Gallup poll.

They now must wait and see how their monetary reward falls out. One can only hope that the payback for such uncertainty is worth it, for them and for their employers.

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