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Overtime Pay in Jeopardy
For Millions of Americans

April 2004 IBEW Journal

Under a new Department of Labor plan likely to be imposed by April 1, up to eight million American workers will be required to work overtime without being paid time-and-a-half pay.

At that time, the 1938 Fair Labor Standards Actthe wage and hour law that forms the income scale foundation for Americas hourly work forcewill be weakened significantly. Although the changes have faced forceful opposition by both parties in Congress and by hundreds of thousands of working Americans, U.S. Labor Department Secretary Elaine Chao has the authority to change the rules by administrative order. Under such a fiat, jobs qualifying certain titles of workers for overtime will be altered.

"We are witnessing the unraveling of the Fair Labor Standards Act (FLSA), the guardian of the wage and hour law for generations," said IBEW International President Edwin D. Hill. "Now millions of workers will be held hostage to the whims of employers no longer bound by law to provide decent, fair compensation on the job."

The change in the FSLA would exempt many military veterans from eligibility if their training was gained in the armed services rather than in a civilian professional school. "This is not exactly the gratitude one would expect for the men and women who have made such an incredible sacrifice," said Sen. Tom Harkin (D-Iowa) during a last-ditch effort in March to forestall the overtime change.

The erosion of the countrys long-standing wage and hour laws concerns even those whom the changes are not expected to affect, at least initially.

"In the construction business, a lot of members look to work overtime during the season, so they have extra money stored for the cyclical downturns," said Local 58, Detroit member Derek Pennington, an inside wireman. "This is going to effect everyone whos not CEOs or management."

And weaker employment laws, coupled with an administration that has published outright guidelines for employers to avoid paying overtime, do not give IBEW members much hope for gains at the bargaining table.

"Anytime something like this happens, its a wedge that gets used against us at contract time," said Local 2304 Business Manager Dave Poklinkoski, Madison, Wisconsin.

The full effects of the law may not be apparent for months or years, said an economist for the Economic Police Institute.

"This is a problem that could snowball over time," said Jared Bernstein, a senior economist at the Economic Policy Institute. "Theres no way, if this rule is implemented on March 31, that 8 million people will immediately lose their overtime protection. It will be eroded over time as employers begin to take advantage of the new exemptions."

While the government has touted the new law for making approximately 1.3 million more workers eligible for overtime pay, the Labor Department has published a list of ways employers may avoid paying it. One option included making a "payroll adjustment" that results in "virtually no or only a minimal increase in labor costs," by cutting workers hourly wages to make regular and overtime pay equal to the original salary. Or employers can provide workers just enough of a raise to put them above the new cutoff that make them ineligible for overtime under the new rules. So, employers could lawfully require employees to work as many hours as they want, without paying them more.

"Youd think with 10 million Americans out of work, the Labor Department would want to find a way to help those who do have jobs work more, not less," President Hill said.

"Now millions of workers will be held hostage to the whims of employers no longer bound by a law that mandates decent, fair compensation for time on the job."