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In March, the Bush Administration issued a proposal to change the Fair Labor Standard Act (FLSA) regulations governing overtime provisions. The FLSA is the foundational labor law enacted in 1938 to protect the rights of workers. The Bush changes would make it much easier for employers to reclassify workers from 'non-exempt' to 'exempt', making them ineligible for overtime. The Bush proposal would also create a new exception for "highly compensated employees", effectively denying overtime protection to workers earning more than $65,000 (not indexed to inflation).

The Bush proposal would strip overtime rights from millions of workers. The Bush Administration estimates that its proposal would exclude between 2.1 and 3.3 million workers from overtime protection. However, there appears to be no basis for the Administration's estimates. Outside analysts estimate that the Bush proposal would strip overtime rights from at least 8 million of workers, and a representative for the Society of Human Resource Management (SHRM), an employer organization, says, "This is going to affect every workplace, every employee, and every professional."

The Bush proposal would strip overtime rights from many kinds of workers in many industries. The Bush proposal would exclude from overtime protection large numbers of workers in the aerospace, defense, health care, and high tech industries. Workers likely to lose their eligibility for overtime pay include mid-level office workers, lower-level supervisors, licensed practical nurses, newspaper reporters, policemen, firefighters, EMTs, paramedics, cooks, secretaries, dental hygienists, air traffic controllers, social workers, occupational therapists, dieticians, physical therapists, administrative support, computer support, drafters, designers, graphic artists, engineering technicians, planners, assistant and associate architects, health technicians, and paralegals.

The Bush proposal would fail to guarantee overtime eligibility for low-income workers. Under current law, workers are automatically eligible for overtime pay if their income is lower than a minimum salary threshold. This threshold, last adjusted in 1975, would be $26,520 today if adjusted for inflation. The Bush proposal would raise the minimum threshold to only $22,100, leaving workers worse off than they were in 1975. The Administration claims that raising the salary threshold to $22,100 would make 1.3 million more lower-income workers automatically eligible for overtime pay, but the Bush proposal itself coaches employers how to avoid any pay increase for these workers.

The Bush proposal would undermine the 40-hour workweek. The many millions of workers denied overtime protection under the Bush proposal would no longer be paid anything for their overtime work. If employers no longer have to pay extra for overtime, they will have an incentive to demand longer hours, and workers will have less time to spend with their families.

The Bush proposal would be a pay cut. Millions of workers depend on overtime pay to make ends meet, and in 2000 overtime pay accounted for about 25% of the income of workers who worked overtime. Workers stripped of their overtime protection would end up working longer hours for less pay. The Bush proposal would even cut the pay of workers not excluded from overtime protection because employers would naturally shift overtime assignments to the millions of workers no longer entitled to overtime pay.

There is no justification for taking away workers' overtime rights. There is broad consensus that an adjustment of the minimum salary threshold for inflation is long overdue. But updating the white collar regulations does not require stripping any workers of their overtime protection. The Bush proposal does not even accomplish its purported objective of clarifying the criteria for the white collar exclusions and avoiding litigation: it would make the rules more confusing by replacing well-established standards with vague and ambiguous language, and would spawn litigation over the meaning of these new rules. According to the Chicago Tribune, "The Labor Department's [Tammy] McCutchen predicts a deluge of lawsuits as employees and employers press for clarifications once the new rules go into effect."

The Bush Administration has no authority to exclude millions of workers from overtime protection. The Administration has no statutory authority to implement such a drastic cutback in overtime eligibility absent congressional action. The Bush proposal even creates a new exception ("highly compensated employees") not found in the FLSA and precisely the type of limitation Congress rejected in 1938.

Legislation has been introduced to stop the Bush proposal. This legislation would not stop the Administration from raising the minimum salary threshold, however, or from clarifying the criteria for the white collar exceptions in ways that do not take away workers' overtime rights.

FLSA History and Rights
The FLSA is a civil rights statute created by Congress in 1938 to improve working conditions and eliminate oppressive and detrimental labor conditions and establish minimum work standards. Many employees were being forced to work long hours (60-70 hours per week) at low pay. The Act's overtime provisions limit the number of hours a person can work for two reasons: 1) to spread employment among more people and 2) to create and maintain a 40-hour workweek. The FLSA achieved these aims through a single mandatory device: forced overtime pay. It penalizes employers when employees work longer than 40 hours, and it provides bonus compensation to all employees for longer work hours.

Congress explicitly wanted to create a financial burden on employers. Thus, restrictions on business practices (through higher labor costs) are the exclusive method for achieving fair working conditions. Rather than balancing the interests of employers and employees, the obligations and burdens imposed by the Act are completely one-sided. They favor employees alone.

Given the Act's mandate, to force employers to pay more for overtime hours, any exceptions had to be as narrow as possible to achieve the law's main goals. Since exclusions from overtime defeat the purposes of the Act, they must be drawn narrowly.

Congress stated that top managers of a business could be excluded from overtime pay. This included the administrator of the business as well as executives. An administrator was defined as a principal manager who doesn't necessarily supervise other workers, and an executive is a principal manager who does supervise workers. Low-level supervisors and others who perform paperwork or other office work functions were never considered for exemption. The regulations were written so that the vast majority of workers would have overtime pay rights. The FLSA also allowed professionals to be excluded from overtime pay. The professions included only doctors, lawyers, and ministers.

The dividing line between exempt managers/professionals and non-exempt regular workers was intended to be quite clear. The general presumption is that all workers should get overtime pay and have their 40-hour week protected. The salary test for exemption was supposed to ensure that only the most highly paid executives would be denied overtime protections. In 1940, 1949, and 1958, the salary tests were set so high that only the top 10 percent of salaried employees would meet the test. The lower 90 percent of workers would be guaranteed to receive overtime pay. Now, the DOL claims only the lowest 10 percent of workers should be protected.