Lower pay, longer hours and unpredictable work schedules are some of the changes working families could face under the Bush administration’s new overtime pay regulations set to go into effect Aug. 23, 2004, unless Congress acts to change them.

The new overtime regulation, issued by the Bush administration April 23, loosens the rules that determine which employees are entitled to overtime pay and could cut paychecks for many workers. Many would face reduced pay and even more unpredictable work schedules because of an increased demand for extra hours for which employers would not have to compensate workers fairly, according to an Economic Policy Institute analysis.

Under the Bush administration's overtime regulations:

* Many salaried workers making between $23,660 and $100,000 per year who now are eligible to receive overtime pay could be reclassified as executives or administrative or professional employees—and would no longer qualify for overtime pay.
* According to EPI, the regulations protecting the overtime pay of the nation’s 367,000 nursery school and preschool teachers have been weakened and they could lose overtime pay.
* Other low-wage earners who have supervisory or management-related responsibilities could be penalized. Some of the workers affected include fast food assistant managers who could be reclassified as “executives” and lose all rights to overtime pay, even though most of their time is spent doing such routine work as flipping burgers or taking orders.
* Employees who lead a team of other workers assigned to complete a major project will not be eligible for overtime pay, even if they do not directly supervise the employees on the team. The title of “team leader” is widely used in American industry and has been applied to warehouse workers, furniture makers, food service workers, mechanics at car dealerships and many others.
* Many professional employees or those with advanced education or specialized training are in jeopardy of losing eligibility for overtime pay. The new rules for chefs and sous chefs, as well as funeral directors, embalmers and athletic trainers, could result in their losing overtime. Others affected by the new rules include financial service workers.
* The U.S. Labor Department claims that the new rules provide an “iron-clad guarantee” of overtime rights for police officers and other law enforcement personnel, but the new rules are so ambiguous they may provide law enforcement personnel with no protection at all from overtime cuts contained elsewhere in the regulations. At the very least, the new provision on law enforcement is bound to generate extensive litigation.
* Employees not covered by the new rules also could be hurt: After reclassifying many of their workers as exempt from overtime pay, employers most likely would assign overtime only to them and eliminate overtime for other workers.
* Virtually anyone making $100,000 or more a year likely would lose overtime pay. This new overtime cap is not indexed for inflation, and the last inflation adjustment to the overtime eligibility rules was 29 years ago.

The Bush administration claims its plan would give overtime pay protection to 1.3 million more workers by allowing anyone who earns $23,600 a year or less to automatically qualify for overtime pay. But many of those workers, such as fast-food employees, already are covered. EPI has found that the administration has inflated this number, which is likely to be lower than 250,000. And the number who will qualify under this section of the rules will decline over time, because the $23,600 threshold is not indexed for inflation.

Many working families depend on overtime to pay bills—especially during the current economic recession that has resulted in stagnant and declining wages coupled with increasing costs of health care, prescription drugs, child care and other essentials. The Bush overtime pay take-away would cut into many of these families’ paychecks.

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Some of the workers affected include fast food assistant managers who could be reclassified as “executives” and lose all rights to overtime pay, even though most of their time is spent doing such routine work as flipping burgers or taking orders.

Executive Exemption

To qualify for the executive employee exemption, all of the following tests must be met:

* The employee must be compensated on a salary basis (as defined in the regulations) at a rate not less than $455 per week;
* The employee’s primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise;
* The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and
* The employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.

Administrative Exemption

To qualify for the administrative employee exemption, all of the following tests must be met:

* The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week;
* The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and
* The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

Professional Exemption

To qualify for the learned professional employee exemption, all of the following tests must be met:

* The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week;
* The employee’s primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment;
* The advanced knowledge must be in a field of science or learning; and
* The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.

To qualify for the creative professional employee exemption, all of the following tests must be met:

* The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week;
* The employee’s primary duty must be the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.

Computer Employee Exemption

To qualify for the computer employee exemption, the following tests must be met:

* The employee must be compensated either on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week or, if compensated on an hourly basis, at a rate not less than $27.63 an hour;
* The employee must be employed as a computer systems analyst, computer programmer, software engineer or other similarly skilled worker in the computer field performing the duties described below;
* The employee’s primary duty must consist of:

1) The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications;

2) The design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications;

3) The design, documentation, testing, creation or modification of computer programs related to machine operating systems; or

4) A combination of the aforementioned duties, the performance of which requires the same level of skills.

Outside Sales Exemption

To qualify for the outside sales employee exemption, all of the following tests must be met:

* The employee’s primary duty must be making sales (as defined in the FLSA), or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and
* The employee must be customarily and regularly engaged away from the employer’s place or places of business.

Highly Compensated Employees

Highly compensated employees performing office or non-manual work and paid total annual compensation of $100,000 or more (which must include at least $455 per week paid on a salary or fee basis) are exempt from the FLSA if they customarily and regularly perform at least one of the duties of an exempt executive, administrative or professional employee identified in the standard tests for exemption.