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American Morning

Overtime Rules May Change for American Workers

Aired June 30, 2003 - 08:34   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


RENAY SAN MIGUEL, CNN ANCHOR: To some economic news now, 1.3 million more low-wage earning Americans would get overtime pay under a Labor Department proposal, but millions of middle-income workers may lose their overtime if the new rules are adopted.
(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I barely survive if I get 40 hours of work. So, if I don't get the overtime, I'm making ends meet.

(END VIDEO CLIP)

MIGUEL: Joining us now from our Washington bureau, Jared Berstein of the Economic Policy Institute, and Ron Bird of the Employment Policy Foundation.

Gentlemen, thank you both for joining us.

JARED BERSTEIN, ECONOMIC POLICY INSTITUTE: My pleasure.

RON BIRD, EMPLOYMENT POLICY FOUNDATION: My pleasure.

MIGUEL: Jared, let me start with you. You call the Labor Department's proposed changes to these overtime rules a stealth attack on American workers. To continue the metaphor, why do you think they're trying to sneak this under the radar of American workers?

BERSTEIN: Well, this administration, as well as this Labor Department, has had a long time agenda to take apart some of the key regulations that protect workers. The Fair Labor Standards Act has made sure for the last 60 years that people who work overtime receive time-and-a-half. And by if these proposed changes are implemented, as many as eight million workers may lose their current overtime, time- and-a-half pay. That is -- as the person talked about in the introduction, that's a very serious issue, because many people depend on their overtime to make ends meet.

The new rule creates very strong incentives for employers to switch the status of their workers from hourly to salaried, and therefore not have to pay them overtime anymore.

MIGUEL: Mr. Bird, what has changed in the nature of the workforce, work, salaries, payrolls that would necessitate these changes?

BIRD: Well, over the last 60 years the workplace has changed dramatically. The existing rule is just out of touch with the current realities of the workplace, both in terms of the way it describes occupations, and in terms of its view of the workplace hierarchy. The workplace is much more diverse today, and duties, especially the duties of managers and professionals -- and these are the people we're primarily talking about when we talk about people who might be affected by this regulation. The duties of managers and professionals are much more diverse and flexible than they were 60 years ago. And that reality needs to be reflected in how the rules define the way in which you determine who should properly be classified as hourly and who should be classified as a salaried employee.

This is not about taking pay away from anybody. This is not about a stealth attack on American workers. This is about taking a regulation that is so complicated because it's archaic and out of step that it costs employers up to $2 billion a year just to go through the administrative red tape and motions of figuring out who's covered and who's not.

MIGUEL: Let me...

BIRD: Simplifying it will cut that down and remove a major obstacle to investment and job creation.

MIGUEL: Let me stop you right there and I'll let you respond to this. But, you know, critics say that some of these changes and some of those simplifications will favor the employer and not the employee. This is what Kathy Roder, a spokesperson from the AFL-CIO, said about these changes: "You can take an employee, switch them from hourly to salaried, add one or two job duties and maybe give them a $4,000 raise, and then save $8,000 in overtime pay. It works the same at the bottom end of the scale. It's cheaper to get them over that $22,100 threshold and avoid paying overtime than to keep the workers below that wage."

What do you think?

BERSTEIN: Yes, I think that's absolutely correct. And I'll tell you something, Ron would lead you to believe that these changes are somehow necessitated by the change in the evolution of the labor force over time. Two years ago, this Labor Department looked at these rules and decided that the rules themselves were fully flexible enough to work in the new economy just as well as they were in the old economy. And by the way, one of the officials who wrote these rules at the Labor Department said, I think quite candidly, if these rules are passed, there will be -- quote -- "a deluge of lawsuits trying to clarify them and figure them out."

These rules are extremely vague, but what they clearly do is allow employers to move millions of workers from an hourly position, where they are guaranteed time-and-a-half when they work overtime, to a salaried position. Now, that's a very strong financial incentive that even, you know, many employers who may not want to go that route will find themselves pressured to do so when other employers are cutting their labor costs by moving workers from hourly to salaried pay and therefore ending their eligibility for overtime.

And the reason I used the word "stealth" in my discussion is because this is not a congressional legislation. This is regulations that the administration can unilaterally pass. They can put them on the books tomorrow if they want to. The Congress can, and if that occurs I hope they do, reverse the decision.

MIGUEL: We could go another four minutes on this, but unfortunately we are out of time. Jared Berstein, Economic Policy Institute, Ron Bird with the Employment Policy Foundation, gentlemen, thank you both for joining us this morning.

BERSTEIN: Thank you.

BIRD: Thank you.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.







Aired June 30, 2003 - 08:34   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RENAY SAN MIGUEL, CNN ANCHOR: To some economic news now, 1.3 million more low-wage earning Americans would get overtime pay under a Labor Department proposal, but millions of middle-income workers may lose their overtime if the new rules are adopted.
(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I barely survive if I get 40 hours of work. So, if I don't get the overtime, I'm making ends meet.

(END VIDEO CLIP)

MIGUEL: Joining us now from our Washington bureau, Jared Berstein of the Economic Policy Institute, and Ron Bird of the Employment Policy Foundation.

Gentlemen, thank you both for joining us.

JARED BERSTEIN, ECONOMIC POLICY INSTITUTE: My pleasure.

RON BIRD, EMPLOYMENT POLICY FOUNDATION: My pleasure.

MIGUEL: Jared, let me start with you. You call the Labor Department's proposed changes to these overtime rules a stealth attack on American workers. To continue the metaphor, why do you think they're trying to sneak this under the radar of American workers?

BERSTEIN: Well, this administration, as well as this Labor Department, has had a long time agenda to take apart some of the key regulations that protect workers. The Fair Labor Standards Act has made sure for the last 60 years that people who work overtime receive time-and-a-half. And by if these proposed changes are implemented, as many as eight million workers may lose their current overtime, time- and-a-half pay. That is -- as the person talked about in the introduction, that's a very serious issue, because many people depend on their overtime to make ends meet.

The new rule creates very strong incentives for employers to switch the status of their workers from hourly to salaried, and therefore not have to pay them overtime anymore.

MIGUEL: Mr. Bird, what has changed in the nature of the workforce, work, salaries, payrolls that would necessitate these changes?

BIRD: Well, over the last 60 years the workplace has changed dramatically. The existing rule is just out of touch with the current realities of the workplace, both in terms of the way it describes occupations, and in terms of its view of the workplace hierarchy. The workplace is much more diverse today, and duties, especially the duties of managers and professionals -- and these are the people we're primarily talking about when we talk about people who might be affected by this regulation. The duties of managers and professionals are much more diverse and flexible than they were 60 years ago. And that reality needs to be reflected in how the rules define the way in which you determine who should properly be classified as hourly and who should be classified as a salaried employee.

This is not about taking pay away from anybody. This is not about a stealth attack on American workers. This is about taking a regulation that is so complicated because it's archaic and out of step that it costs employers up to $2 billion a year just to go through the administrative red tape and motions of figuring out who's covered and who's not.

MIGUEL: Let me...

BIRD: Simplifying it will cut that down and remove a major obstacle to investment and job creation.

MIGUEL: Let me stop you right there and I'll let you respond to this. But, you know, critics say that some of these changes and some of those simplifications will favor the employer and not the employee. This is what Kathy Roder, a spokesperson from the AFL-CIO, said about these changes: "You can take an employee, switch them from hourly to salaried, add one or two job duties and maybe give them a $4,000 raise, and then save $8,000 in overtime pay. It works the same at the bottom end of the scale. It's cheaper to get them over that $22,100 threshold and avoid paying overtime than to keep the workers below that wage."

What do you think?

BERSTEIN: Yes, I think that's absolutely correct. And I'll tell you something, Ron would lead you to believe that these changes are somehow necessitated by the change in the evolution of the labor force over time. Two years ago, this Labor Department looked at these rules and decided that the rules themselves were fully flexible enough to work in the new economy just as well as they were in the old economy. And by the way, one of the officials who wrote these rules at the Labor Department said, I think quite candidly, if these rules are passed, there will be -- quote -- "a deluge of lawsuits trying to clarify them and figure them out."

These rules are extremely vague, but what they clearly do is allow employers to move millions of workers from an hourly position, where they are guaranteed time-and-a-half when they work overtime, to a salaried position. Now, that's a very strong financial incentive that even, you know, many employers who may not want to go that route will find themselves pressured to do so when other employers are cutting their labor costs by moving workers from hourly to salaried pay and therefore ending their eligibility for overtime.

And the reason I used the word "stealth" in my discussion is because this is not a congressional legislation. This is regulations that the administration can unilaterally pass. They can put them on the books tomorrow if they want to. The Congress can, and if that occurs I hope they do, reverse the decision.

MIGUEL: We could go another four minutes on this, but unfortunately we are out of time. Jared Berstein, Economic Policy Institute, Ron Bird with the Employment Policy Foundation, gentlemen, thank you both for joining us this morning.

BERSTEIN: Thank you.

BIRD: Thank you.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.