Why would the poor deserve money for working overtime anyway?
WASHINGTON-- A proposed Labor Department rule suggests ways employers can avoid paying overtime to some of the 1.3 million low-income workers who would become eligible this year.
The department’s advice comes even as it touts the $895 million in increased wages that it says those workers would be guaranteed from the reforms.
Among the options for employers: cut workers’ hourly wages and add the overtime to equal the original salary, or raise salaries to the new $22,100 annual threshold, making them ineligible.
The department says it is merely listing well-known choices available to employers, even under current law.
“We’re not saying anybody should do any of this,” said Labor Department spokesman Ed Frank.
New overtime regulations were proposed in March after employers complained they were being saddled with costly lawsuits filed by workers who claimed they were unfairly being denied overtime. But the regulations themselves have stirred controversy over how many workers would be stripped of their right to overtime pay.
The issue is being seized by Democrats in their attempt to win back Congress and the White House.
A final rule, revising the 1938 Fair Labor Standards Act, is expected to be issued in March. The act defines the types of jobs that qualify workers for time-and-a-half if they work more than 40 hours a week.
Overtime pay for the 1.3 million low-income workers has been a selling tool for the Bush administration in trying to ease concerns in Congress about millions of higher-paid workers becoming ineligible.
But the Labor Department, in a summary of its plan published last March, suggests how employers can avoid paying overtime to those newly eligible low-income workers.
Employers’ options include:
Adhering to a 40-hour work week.
Raising workers’ salaries to a new $22,100 annual threshold, making them ineligible for overtime pay.
If employers raise a worker’s salary “it means they’re getting a raise – that’s not a way around overtime,” Frank said. The current threshold is $8,060 per year.
Making a “payroll adjustment” that results “in virtually no, or only a minimal increase in labor costs,” the department said. Workers’ annual pay would be converted to an hourly rate and cut, with overtime added in to equal the former salary.
Essentially, employees would be working more hours for the same pay.
The department does not view the “payroll adjustment” option as a pay cut. Rather, it allows the employer to “maintain the pay at the current level” with the new overtime requirements, said the Labor Department’s Wage and Hour Division administrator, Tammy McCutchen, an architect of the plan.
The final plan does not require approval from Congress. That hasn’t stopped Democrats and some Republicans from trying to block the rule, thus far unsuccessfully, out of fear that millions of workers would become ineligible for overtime.