Sass is among the more than 600,000 workers, including at least 7,000 who work with him at the shipyard, who could become exempt from overtime pay under new proposed changes to the Fair Labor Standards Act. For some of Sass’s colleagues, who work more overtime hours than he does, that could mean the equivalent of a 40 percent pay cut.
“I think everyone is kind of in shock here,” says Sass. “Quite a few people would be severely impacted. It seems like a slap in the face to people who are doing a good job.”
Victoria Lipnic, assistant secretary for employment standards at the U.S. Labor Department, says the proposed changes are intended to “protect workers who were not being protected” and to clarify and update the 65-year-old Fair Labor Standards Act.
“What we are trying to do is make sure there is no excuse for abuse of the law,” says Lipnic.
She points out that the department’s proposal to raise the salary threshold below which workers would automatically qualify for overtime from $155 a week to $425 a week (or about $22,100 a year) is the first increase since 1975, and the largest percentage increase since the law was enacted. An estimated 1.3 million Americans would see an increase in pay from that change.
But it’s the proposed changes to the types of employees categorized as exempt from the Fair Labor Standards Act’s overtime pay rules that have labor unions up in arms.
Under those proposals, which are open to public comment through the end of June, workers who make $65,000 or more annually and those who fulfill a number of new duties outlined by the regulations–like having the authority to hire and fire other employees, supervising two or more employees, and performing work “of substantial importance,” for example–would be exempt from overtime pay rules.
Those at risk of being reclassified under the new provision range from high-level administrative assistants to factory machine operators, healthcare lab technicians and firefighters. The Labor Department estimates that about 644,000 white-collar workers could lose their eligibility for overtime under the new provision and duties tests for employees.
But opponents say the number would be higher.
The AFL-CIO and other labor groups say the proposed changes could also encourage employers to give workers who now earn just under the $22,000 threshold a raise in order to avoid paying overtime. And they believe the number of workers reclassified as exempt from overtime pay under the new duties test would be higher than the department estimates–including everyone from police sergeants to supermarket department managers, many of whom have come to count on overtime pay as a regular part of their checks.
Matt Biggs, legislative and political director of the International Federation of Professional and Technical Engineers, says “virtually everyone” in his 80,000-member union will be affected–including Sass.
Under the current law, Sass would probably need a four-year specialized degree to be considered a professional, exempt from overtime. But the proposed changes would also qualify workers doing a job “requiring knowledge of an advanced type in a field of science or learning acquired …by alternative means such as an equivalent combination of intellectual instruction and work experience.” Sass got his training on the job and during the more than a dozen years he spent in the Navy (much of it on a nuclear-powered submarine).
“I’ve gotten completely outstanding reviews each year. Then all of a sudden, they are just going to cut my pay,” he says. “I don’t understand why I deserve that.”
The Labor Department’s Lipnic insists, “Our intent is not to make it easier for people to be exempt for overtime pay, but to make it easier for people to determine who is or is not entitled to overtime.”
She points out that those who would now be exempt are largely workers who are more highly skilled and higher-educated–“the opposite end of who the law was originally intended to protect.”
But labor advocates argue that the law was intended to protect workers, while it is the employer who seems to benefit most from the proposed changes. “Millions of workers depend on overtime pay in their checks to meet their regular needs like mortgages and rent, and tuitions and day care. This will mean a dramatic decrease in income to those people–it is, in effect, a pay cut,” says Nick Clark, senior assistant general counsel for the United Food and Commercial Workers. He predicts about 25,000 of his union members could be reclassified under the new rules.
“Even department heads in retail stores would be reclassified as executives,” says Clark. “The impact of all these changes is dramatic.” Mike Leibig, general counsel for the International Union of Police Associations, says nearly half the nation’s police forces could be negatively affected by the changes. “This has changed the definition of a professional,” he says.
Even if the number affected turns out to be lower than he expects, he says the changes would have a ripple effect as supervisors would be more inclined to give overtime assignments to officers who are exempt from overtime pay so the department could save money on overtime costs. That means that even those who would continue to qualify for overtime pay might be offered less work.
“The volume of [overtime] coverage is key,” says Leibig. “The damage is done even if just 20 percent are now exempt.”
Labor unions are also concerned that a proposed bill now going through Congress might exacerbate the effect. The so-called Family Time Flexibility Act, or H.R. 1119, offers employers the option of granting comp time in lieu of pay to employees who work overtime. Labor unions fear that workers would be pressured to accept the comp time, and that employers would offer overtime work first to those who accept comp time in lieu of payment, so others would lose out.
“If you get the vacation time, you are losing cash, and you are not really going to get to choose when you get to take off the time,” says Clark. “Most people would just want the cash.”
Labor Department officials say opponents to the bill are blowing it out of proportion. “It’s not like comp time will be forced on anyone. The only thing the legislation allows is the employees’ choice of taking the comp time,” says Lipnic.
The proposed legislation, which was sponsored by 83 lawmakers, is not directly related to the Labor Department’s recommended changes to the overtime rules, though both would amend the Fair Labor Standards Act. The department’s recommended changes will not go before Congress, for one thing–though Lipnic says public comments will be carefully considered. The final rules could go into effect as early as next year.
That has workers particularly concerned.
“This is the number one issue among union workers right now,” says Christine Owens, director of public policy for the AFL-CIO, which includes more than 13 million of America’s workers in 65 member unions. “These people have thought that they have a right to overtime, and when you start messing around with them they get pretty upset about it. We see this as part of an ongoing effort to undermine protections that workers have really counted on for decades.”
Sass says he simply sees it as a pay cut.
“You’re sticking your hand deeper in my pocket without my okay,” he says. “If this goes through, it will not make for a happy job market–or work environment.”
