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Eliminating the Right to Overtime Pay: Department of Labor Proposal Means Lower Pay, Longer Hours for Millions of Workers

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Publication Date: January 2003

Publisher(s): Economic Policy Institute

Author(s): Jared Bernstein; Ross Eisenbrey

Topic: Labor (Labor conditions, wages, salaries, and benefits)

Type: Brief

Abstract:

On March 31, 2003, the Department of Labor (DOL) proposed regulatory changes, which if adopted, could make more than eight million white-collar employees ineligible for overtime pay. Under the current Fair Labor Standards Act (FLSA) regulations adopted in 1938, most workers--an estimated 79% as of 1999--are guaranteed the right to overtime pay, or time and a half, for every hour worked beyond the normal 40-hour workweek. For white-collar workers, three tests determine whether they are exempt, and thus ineligible for overtime pay, or nonexempt, and thereby eligible for overtime pay.

The rule changes proposed by the Bush Administration in March 2003 would make drastic changes to these tests, vastly increasing the number of exempt employees and making it likely that millions of them will work longer hours at reduced pay.