Overtime and Discrimination

Should the Market Be Constrained Against Too Much Work or Discrimination?

Overtime in America

     Americans work more hours per year than workers in any other industrialized nation. In 2001 we averaged 1,979 hours; Mexico was second with 1,863 hours, and Japan was third with 1,842 hours.

   

Overtime

 As the face of shift workers changes, overtime mounts. Americans working around the clock these days often are in health care, technology, customer service, retail and media industries.

Shift or "extended hour" employees worked an average of 5 hours extra per week in 2003, up from 4 hours in 2000. Also, 41 percent of employers said they use mandatory overtime to some extent.

Legal Conflicts

Among the lawsuits charging American companies with overtime violations is a class action suit in Dakota County where employees accuse Wal-Mart of requiring them to work through breaks and lunch hours without pay.

Bush Proposes Overtime Overhaul

The proposed changes will modify the 1938 Fair Labor Standards Act that guarantees most Americans overtime pay - at time and a half - if they work more than 40 hours a week. The law always has exempted professionals - doctors, lawyers and company owners and managers. Now the U.S. Department of Labor says it's time to move more jobs into those ranks - to recognize the mounting skills of average workers and the change from the days of "straw bosses" and "legmen" to "Webmaster."

Redefining Workers

For workers earning more than that, new lists of job "duties" help redefine who is eligible for overtime.

For example, there are changes in the definition of "administrators" - who don't qualify for overtime pay. Now, one defining duty is "discretion and independent judgment." The new, broader definition would be "position of responsibility." The department estimates 644,000 Americans will lose overtime pay as a result of these changes.

Pay Threshhold—Bottom

Those earning $22,100 or less per year automatically qualify for overtime pay.

That cap is up from the current $8,060, and the Labor Department said this would bring overtime protection to 1.3 million more workers.

Pay Threshhold—Bottom

Those earning $65,000 or more per year are most likely to lose overtime pay.

The department calculates that more Americans will win overtime pay than lose it under its proposal.

It also expects the changes to stop the proliferation of wage-and-hour lawsuits that cost businesses $2 billion a year in class actions and sometimes keep workers waiting years for a resolution.

Proponents

Most business groups, including the U.S. Chamber of Commerce and the National Association of Manufacturers, support the proposed changes.

    

Opponents

Among the most vocal opponents is the Economic Policy Institute, a liberal think tank in Washington, D.C. It calculates that fewer than 700,000 low-wage workers will gain overtime protections. More dramatically, it calculates that 8 million U.S. workers stand to lose overtime.

Union opposition

Union Fear Negotiating Away Overtime

     Union members say they could be just one contract negotiation away from the loss of overtime. Union leaders say they expect employers to offer continued health benefits in exchange for reclassifying some union members so they wouldn't be eligible for overtime.

Veteran Groups

 Veterans groups are upset about one change: They could lose overtime pay in later civilian jobs because "training in the armed forces" would become a credential that bumps them into one of the "overtime exempt" categories.

Low-Wage Effect

Under current law, anyone who earns less than $8,060 a year automatically qualifies for overtime. That cap would be raised to $22,100.

Example: Jane Smith is head waitress for the morning shift at ABC Diner. Her title is director of customer service, and she has an annual salary of $10,500. She's not currently entitled to time-and-a-half overtime pay, but she would be under the new regulations.

Medium Wage Effect

Workers earning between $22,100 and $65,000 a year may lose overtime if they are paid a salary instead of an hourly wage and their duties fall under the new definitions of professional, administrative or executive jobs.

     Example: John Smith is a loan officer at ABC Bank. His job is to determine

whether a potential customer's finances meet the bank's loan criteria. His annual salary is $30,000. Under current regulations he is not an administrator because he doesn't use "discretion and independent judgment" in his work. However, he could be classified as an administrator under the proposed regulations, where one test is "position of responsibility." He no longer would qualify for overtime pay.

High Wage Effect

Workers earning $65,000 or more are the most likely to lose overtime pay, because the proposed duties test at this level makes it easier to classify them as professional, administrative or executive.

     Example: George Jones is a police detective with a salary of $70,000. As a person with a "high level of skill or training" - new wording in the proposed regulations - Jones would not be entitled to overtime.

Typical Occupations Likely to Lose Overtime Protection

Loan officer - Travel consultant - Computer network and Internet administrator Customer service - Highway and bridge inspectors -Social services case managers - Broadcast journalists - Store display designers - Dental hygienists - Veterinary technicians - Legal assistants

- School interpreters

Philosophy of Overtime

Disincentive to assigning overtime Workers become dependent on overtime

income Fixed hours more rigid regulation Should the market be constrained by

regulation? And should the constraint be hours or overtime requirement?

Discrimination

Basic Laws Protected Group concept How Do You Prove Discrimination? How Do You Enforce Anti-Discrimination Policies What Are the Protections of Nonunionized Workers?

– Employee at will (with no contract)– Public Policy Constraints

Civil Rights Act 1964

– Bars segregation in places of public accommodation, including restaurants, hotels, and theaters; ordered the desegregation of public schools; set uniform voting standards; and required employers to provide equal employment opportunities

– Title VII of the Civil Rights Act of 1964 prohibits employment discrimination based on race, color, religion, sex, or national origin

Protected groups

Equal Pay Act 1963

the Equal Pay Act of 1963 protects men and women who perform substantially equal work in the same establishment from sex-based wage discrimination

Age Discrimination

the Age Discrimination in Employment Act of 1967 (ADEA), which protects individuals who are 40 years of age or older– 40+ protected group

Disability Discrimination

Title I and Title V of the Americans with Disabilities Act of 1990 (ADA) prohibit employment discrimination against qualified individuals with disabilities in the private sector, and in state and local governments

Title IX

Title IX of the Education Amendments of 1972 is the federal law that prohibits sex discrimination in education. Title IX requires schools receiving federal funds to give women and girls an equal chance to play sports.

EEOC Enforcement

U.S. Equal Employment Opportunity Commission (EEOC) enforces all of these laws. EEOC also provides oversight and coordination of all federal equal employment opportunity regulations, practices, and policies

Disparate Impact

In employment law, when a company policy appears on its face to be non-discriminatory but in practice has the effect of disproportionately affecting members of a protected group.

* The theory used by plaintiffs in a growing number of employment discrimination cases.

* A type of case that can be successfully defended by an employer by showing that the policy is required by business necessity.

* A subject of conflicting opinion from various federal appeals courts, particularly in cases involving age and disability discrimination.

* A basis of a suit filed against Raytheon Co. by a former employee who was not rehired after successful drug rehabilitation because of a policy prohibiting rehiring of workers who violate company policies.

An issue ducked by the Supreme Court in its ruling in the Raytheon case last week.