The Fair Labor Standards Act of 1938 (FLSA), as amended, provides for minimum standards for both wages and overtime entitlement, and spells out administrative procedures by which covered worktime must be compensated. The act exempts specified employees or groups of employees, the "exempt employees," from the application of certain of its provisions. For generations, the FLSA has required employers to pay "nonexempt" workers time-and-a-half for more than 40 hours of work a week.
With the passage of time, however, the overtime system had become so antiquated that companies no longer knew how to classify workers. As noted recently in The Wall Street Journal, lawyers had exploited this confusion by filing suits of behalf of "miscategorized" laborers, turning overtime cases into one of the more lucrative areas of labor law.
In an attempt to overhaul the rules, to the ultimate benefit of American workers, the U.S. Department of Labor recently proposed new rules governing overtime eligibility for white-collar workers under FLSA. In announcing the proposed new FairPay Inititative, U.S. Secretary of Labor Elaine L. Chao said, "Today, workers win. The department's new rules guarantee and strengthen overtime rights for more American workers than ever before." You can find more at www.departmentoflabor.gov.
Perhaps predictably, the AFL-CIO began posting opposition to the new rules on its Web site as soon as the Labor Department released them. "Under the guise of helping working moms and dads have extra hours with their children, the Bush administration and Republicans in Congress are trying to strip away workers' guaranteed rights to overtime pay," says Linda Chavez-Thompson, AFL-CIO executive vice president. You can find more at www.aflcio.org.
As we go to press, the Senate has passed an amendment that would largely prevent the new regulations from taking effect as scheduled on Aug. 23, 2004. "By approving the amendment, the Senate succumbed to the scare tactics of labor unions and others who are more interested in scoring political points than in reforming a regulatory dinosaur that forces employers to guess where modern-day webmasters and network engineers fit into regulations built around foreman fixers, gang leaders and Linotype operators," says Sandy Boyd, National Association of Manufacturers vice president of human resources policy. "The result is that employers today are more likely to be sued for alleged violations of the Fair Labor Standards Act than any other labor statute. Such a system is no picnic for workers either, and ultimately benefits only the trial lawyers."
The issue is not yet settled, and is sure to have changed by the time you read this. At this point, however, "The politics of fear won out over a policy of reason," Boyd says.
The amendment increases confusion by establishing two types of tests to determine overtime status, and a litigation windfall for trial lawyers; truly a tort accompli for the plaintiffs bar.
