The Integrity News
Vol. XII No. 13
April 2, 2003
via FindLaw News and Commentary
March 27, 2003
April 2, 2003
"The 1938 Fair Labor Standards Act
has not been updated in 28 years. These
proposed changes would effect 110
million workers. About 640,000 white-
collar workers would lose overtime pay,
and over a million low-income employees
would begin to earn overtime pay."
The regulations will be simplified from
31,000 words to 13,000 words, so that
they are easier for employers to follow,
and so that the Department of Labor "will
be able to more vigorously enforce the
law." A Labor Department spokesperson
said that they want both employees and
employers to easily understand when
an employee is entitled to overtime.
It is expected that these changes will be
ready to implement at the end of 2003.
You need to monitor this development,
as it could effect your recruiting, payroll,
tax, management, and other systems.
Business groups have long complained that the
current Labor Department rules, which are very
complicated, require overtime pay for already
well-compensated and highly skilled professionals.
"Workers now are exempt from overtime pay if
they earn more than $155 a week, or $8,060 a
year, and meet other convoluted, confusing job
criteria, such as devoting at least 80 percent of
their time to 'exercising discretion' and other
Under the proposed changes, any worker earning
less than $425 a week, or $22,100 a year, would
automatically be required to receive overtime pay.
"The proposal also clarifies and simplifies definitions
of administrative, executive and professional
employees that should be exempt from overtime pay.
Generally, workers would be exempt under the
proposal if they manage more than two employees
and have the authority to hire and fire, or they have
an advanced degree and work in a specialized field,
or they work in the operations, finance, or auditing
areas of a company."
"With the proposed changes, employers could face
$334 million to $895 million in new direct payroll costs
for the 1.3 million low-wage workers estimated to
become eligible for overtime pay. Overall, businesses
could face costs of $870 million to $1.57 billion to
implement the new requirements." It is anticipated
that the increased productivity from the overtime pay,
and fewer lawsuits, "could mean savings of $1.1 billion
to $1.9 billion."
The Administration is also pursuing other revisions
to workplace regulations and programs, including
the Family Medical Leave Act (FMLA), job training
programs, and unemployment insurance.
Employees who work under collective bargaining
agreements negotiated by unions would not be
effected by the new regulations. Also, companies
can choose to pay overtime to exempt workers.