New overtime pay regulations within the Fair Labor Standards Actwent into effect Monday, signaling the first overhaul in overtimepay rules in over 50 years. While the new regulations, called theFairpay rules, are shorter than the old, there are still 50 to 60pages worth of new guidelines that discuss who is not eligible toreceive overtime pay.
The new policy will affect nearly 7 million workers, accordingto the Labor Department, and uses a three-step test to determinewhether an employer is obligated to pay an employee time-and-a-halffor working more than 40 hours in a week.
"There is no real simple way of explaining it," Patrick Barkey,director of economic and policy studies, said.
"There is a dollar threshold which says if you make more than'X' a week you are subject to these regulations. It tried todescribe the kinds of content of jobs not eligible to overtime pay.For example, it does not apply to work that is primarilyintellectual or managerial."
The first test is the salary-basis test, which says worker whoare paid a yearly salary and not an hourly wage are not eligible tobe paid overtime. The old rules included the salary-basis test.
Changes are first seen in the second test, the salary leveltest. The old laws stated that a person who made up to $155 a weekwas guaranteed overtime pay. The new rules increased that amount to$455 a week. However, according to a Department of Labor FactSheet, the exemption rules do not apply to"blue-collar workers whoperform work involving repetitive operations with their hands,physical skill and energy" as well as "non-management employees inproduction, maintenance, construction and similar occupations."
The new law also exempts white-collar employees earning morethan $100,000 a year.
The third standard is also different from the old. Theduties-test provides job-description restrictions on overtime,declaring those people with jobs described as administrative,executive or professional are exempt from overtime pay.
While the categories have remained the same from the old to thenew, the new rules have attempted to describe the duties thatqualify a person's work as administrative, executive orprofessional. Barkey said this is where the administration isgetting the most grief about the new rules.
Mike Scarberry, president of Muncie's local chapter of theInternational Brotherhood of Electrical Workers, said the new ruleshurt workers.
"From what I've seen, I think they are really screwing theworking people," he said. "It's employer friendly, not peoplefriendly. I don't understand, it wasn't broke before, and I don'tknow why they had to mess with it."
Barkey said he feels new regulations were needed.
"It's not that outrageous to update regulations, but in terms ofwhat happens, there will always be winners and losers," Barkeysaid. "Exactly how they were updated is where I get weaker in myperspective."
Barkey said he isn't sure how the new laws will pan out, butthey could allow employers to give workers more flexible schedules.This could mean wage increases and more employment as well ascontribute to the health of the economy.
While it is estimated that 6.7 million people will be affectedby this law, either shifting to eligibility or ineligibly, Barkeysaid that in a work force of more than 135 million people, 6.7million is not huge.
College students entering the professional workforce aftergraduation shouldn't be effected much, Barkey also said. Becausemost would probably enter professional jobs, students wouldn't havequalified in the old rules either.
Barkey and Scarberry both said they think the new rules arevague and are not sure what effect they will have.
"I don't really know what the lasting effect is going to be,"Scarberry said. "Probably your generation will find out."
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