WASHINGTON - The 1.3 million low-wage workers the Labor Department says will be guaranteed overtime pay as part of proposed rule changes may not necessarily see any extra cash.
While touting the $895 million in increased wages it says those workers would be guaranteed from the changes, the Labor Department is suggesting ways employers can keep their payroll costs down.
Among the options: 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.
White House spokesman Scott McClellan said Tuesday that the employer options were part of an economic analysis that's required under the rule-making process.
He defended the proposal, saying it would restore overtime protections that have eroded over five decades to millions of white-collar workers who deserve overtime protection today and are not protected by the current rules.
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 upon by Democrats in their attempt to win back Congress and the White House.
Instead of doing whatever it takes to create jobs it seems like George W. Bush is working overtime to make life harder for working families said presidential hopeful Sen. Joe Lieberman of Connecticut. The Bush assault on working people won't stop until we give the president a pink slip.
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.
The Labor Department, in a summary of its plan public shed last March, suggests how employers can avoid paying more money to those newly eligible low-income workers.
Most employers affected by the proposed rule would be expected to choose the most cost-effective compensation adjustment method
the department said. For some companies, the financial impact could be near zero
it said.
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.
Labor unions criticized the employer options.
Mark Wilson, a lawyer for the Communications Workers of America who specializes in overtime issues, said the Bush administration was protecting the interests of employers at the expense of workers.
This plan speaks volumes about the real motives of this so-called family friendly administration
Wilson said.
He says cutting workers' pay to avoid overtime is illegal, based on a 1945 Supreme Court ruling and a 1986 memo by the Labor Department under President Reagan.
McCutchen disagreed. If changes were made week to week to avoid overtime, they would be illegal. A one-time change is not, she said.
We had a lot of lawyers look at this rule. We would not have put that in there if we thought it was illegal
she said.
Unless you have a contract
there is no legal rule ... prohibiting an employer from either raising your salary or cutting your salary
