Labor Department Rewrites Rules for Overtime Pay The Labor Department has rewritten rules governing overtime pay for the first time in nearly half a century, proposing that any full-time employee earning less than $22,100 a year would automatically be entitled to overtime pay regardless of job description. The proposed rule also would allow employers to eliminate overtime pay for more than 600,000 people who meet new qualifications to be classified as executives, administrators or professionals, including engineers, accounting, purchasing and marketing employees. The proposals were published in the March 31 Federal Register. The comment period ends June 30 and the rule is expected to take effect early next year. For the first time since 1975, the department’s proposed rule would raise the salary threshold — below which workers would automatically qualify for overtime — from $155 a week to $425 a week, or $22,100 a year. The department said that change would extend overtime pay to an additional 1.3 million workers. The proposed rule rewrites the complex and often-outdated definitions governing which jobs can be exempted from overtime pay. The current regulations, written in 1949, mention job classifications that no longer exist, such as key punch operators, straw bosses, leg men and gang leaders. The proposal would make little substantive change in the classification of what are called “computer employees,” because the rules for their overtime pay are set by law. The statute generally exempts non-management computer professionals from overtime if they make more than $57,470 a year. “Updating these regulations is long overdue. The types of jobs people do and the skills they need have changed, but the regulations have not,” said Wage and Hour Administrator Tammy McCutchen. “By recognizing the professional status of skilled employees, the proposed regulation will provide them a guaranteed salary and flexible hours.” But the AFL-CIO said in a statement that the proposals “would erode the 40-hour workweek.” Proposed rules for classifying executive, administrative and professional employees would eliminate the current need to determine what percentage of the employee’s time is spent on various duties and substitute a “primary duty” test. Under the proposed rule, employees would be exempt from overtime pay if they met the following tests: •Executive duties: An executive’s primary duty must be managing the enterprise; he or she must direct the work of two or more employees; and must have authority to hire or fire, or at least the executive’s recommendations on hiring and firing are given particular weight. •Administrative duties: An exempt administrator must hold “a position of responsibility.” The proposed rule lists examples of the types of work that meet this requirement: “tax, finance, accounting, auditing, quality control, purchasing, procurement, advertising, marketing, research, safety and health, personnel management, human resources, employee benefits, labor relations, public relations, government relations and similar activities.” •Professional duties: A “learned professional” who is exempt from overtime would no longer have to have a college degree. The department said, “The clarified test reflects changes in the 21st century workplace in how some ‘knowledge workers’ acquire specialized learning and skills: in the modern workplace, some employees acquire advanced knowledge through a combination of formal college-level education, training and work experience, even where other employees in that field customarily acquire advanced knowledge by obtaining a baccalaureate or advanced degree.” The department said training in the military or in a technical school or community college, along with work experience, could be taken into account in deciding who is a professional. In addition, the proposed rule establishes a category of “highly compensated employees,” those making more than $65,000 a year, who are exempt from overtime pay “if they have an identifiable executive, administrative or professional function.” Overtime rules have been the subject of widespread litigation; the department said federal class-action lawsuits seeking overtime pay outnumbered discrimination lawsuits in 2001. The Federal Register notice said, “We invite comments on occupations the exempt status of which has been the subject of confusion and litigation including but not limited to pilots, athletic trainers, funeral directors, insurance salespersons, loan officers, stock brokers, hotel sales and catering managers, and dietary managers in retirement homes…and whether such occupations should be treated as exempt or nonexempt.” The department also solicited comments on the computer-employee classifications: “Because of the tremendously rapid pace of significant changes occurring in the information technology industry, we have avoided citing specific job titles as examples of exempt workers, as they tend to quickly become outdated…The Department recognizes that the computer employee exemption has been particularly confusing, and invites comments on any further clarifications possible under the statute.” The right to be paid time-and-a-half for work above 40 hours a week was established by the 1938 Fair Labor Standards Act. Except for increasing the pay threshold, regulations implementing the act have not been substantially changed since 1954. The notice is FR Doc 03-7449 in the March 31 Federal Register. Written comments of 20 pages or less may be submitted by fax to 202-693-1432 or by e-mail to whd-reg@fenix2.dol-esa.gov. The deadline for comments is June 30.