New overtime rules infuriate labour groups

Unions, government disagree on how many workers will be impacted by overhaul of overtime regulations

New overtime rules in the United States went into effect Monday, the first major overhaul of the federal overtime law in more than 50 years.

The new regulations have labour groups fuming, with the AFL-CIO stating the new law will bar six million workers from earning overtime pay. But the Labour Department claims the new law will strengthen overtime rights for 6.7 million workers, including 1.3 million workers who were denied overtime under the old rules.

“Ignoring the protests of millions of American families and defying the wishes of Congress, the Bush Administration has pressed forward with new overtime regulations that will eliminate the right to overtime pay for many hardworking Americans,” said AFL-CIO president John Sweeney.

He said the Bush Administration opposed legislation that would have preserved overtime pay for all workers, and pushed ahead with eliminating overtime pay for a “huge swath” of middle-class workers, some of whom earn as little as $23,600 US a year.

“This has to be one of the biggest pay cuts in American history — special delivery to American workers straight from the White House,” said Sweeney. “It is a huge windfall for large corporations.”

Sen. John Edwards, the Democrat’s vice-presidential candidate, blasted the changes in a radio address.

“Why would anyone want to take overtime pay away from as many as six million Americans at a time when they need that money most,” said Edwards.

According to a CNN/Money article, there are three primary tests for determining who is — and is not — eligible for overtime pay:

Salary-basis test. To be exempt from overtime, workers must be paid a set salary, not an hourly wage. This has long been the rule under federal overtime law. The new rules don’t change this requirement.

Salary-level test. In order to be exempt from overtime, the new rules require that employees earn a minimum salary of $455 a week or $23,600 a year. That’s triple the prior minimum salary of $155 a week or $8,060 a year.

White-collar employees earning more than $100,000 per year are automatically exempt from overtime pay under the new law.

Duties test. This is the most controversial — and murkiest — part of the new law. It attempts to establish eligibility based on the type of work an employee performs. Under federal law a worker who job is deemed administrative, professional or executive in nature does not qualify for overtime.

The categories themselves won’t change, but the new rules aim to clarify the type of work that qualifies as administrative, professional and executive. For example, under the administrative exemption, a fast-food manager who sets work schedules for a team of workers but can’t hire or fire workers will no longer earn overtime.

Sweeney said the move will do nothing to help job growth in the U.S.

“Allowing businesses to stop paying for overtime will only encourage them to overwork their existing employees and refrain from hiring new workers,” he said. “Americans should demand immediate repeal of any part of the President’s plan that cuts overtime pay.”

But the legislation won’t impact every worker it intends to. Amy Bess, an employment law partner at Sonnenschein Nath and Rosenthal in Washington, D.C., told CNN/Money that some 18 states — including California and Illinois — have separate overtime rules that trump federal law.

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