By Rebecca Ferrar, The Knoxville News-Sentinel, Tenn. Knight Ridder/Tribune Business News
Aug. 21--The new federal overtime regulations set to take effect Monday may have little impact on some local businesses, but labor organizations say the rules will hurt working men and women.
Unions argue that revision of the Fair Labor Standards Act of 1938 will benefit businesses that want to pay less overtime.
But the U.S. Department of Labor, which devised the rewrite, contends that more workers will get overtime under the updated policy.
The rules will increase from $155 a week to $455 a week the wage cap used to determine when workers can receive overtime. That's the benefit the Bush administration argues will help workers.
But the rules also allow a change in the definitions for classes of employees who qualify for overtime. Employees falling into those new categories that earn from $23,660 to $100,000 a year will no longer be eligible for overtime. That's where labor groups and critics say some 6 million people stand to lose the extra pay.
The Bush administration's revision applies to white-collar jobs -- not blue-collar workers.
'This weekly increase in the cap from $155 to $455 -- that is going to lead to more than 1 million new individuals being guaranteed overtime pay,' said Matt Murray, professor of economics at the University of Tennessee's Center for Business and Economics Research. 'That's the good news, but estimates far and wide suggest millions of other individuals on the high end of the scale will lose the right to overtime -- people making between $23,000 and $100,000.'
As an example, team leaders who oversee employees but have no direct supervisory authority may no longer get overtime.
'If you take the business perspective, this is intended to reduce the uncertainty on behalf of employers, to reduce litigation and reduce labor costs,' Murray said. 'So despite adding some people on the lower end of the scale, I think business is strongly in favor of the policy. On the other side of the table are the labor organizations that are opposed to it.'
Brad Rayson, district director for UNITE HERE of Tennessee and Kentucky, a union formerly known as the Union of Needletrades, Industrial and Textile Employees that recently merged with the Hotel Employees and Restaurant Employees union, said the new regulations will cause more litigation to determine exactly who is affected.
'It's another example of the current administration's attempt to roll back protections American workers have fought hard to gain over the years,' Rayson said.
'White-collar workers are at risk. In the professional category, under the current rules, the standard is based on having an advanced degree and advanced level of study. Now your employees may have some other form of training that may be an equivalent (to be exempt for overtime). That's a much looser standard,' he said.
Unions will not be immediately affected because they have collective bargaining agreements with their companies. But Rayson said unions can expect the issue of overtime to be on the table when new contracts are negotiated.
'I think it puts more pressure on all of us when we go to the table,' he said.
Mike Edwards, president and CEO of the Knoxville Area Chamber Partnership, said the demand for skilled labor in this area is so high that employees may expect jobs with overtime.
'If employers do not remain competitive, employees will simply leave and go somewhere else, and there's plenty of opportunities,' Edwards said. 'If the unemployment rate starts to change here, it could affect local businesses.'
The greater the surplus of employees, the more employers would be tempted to apply the rules paying less overtime to workers, he said.
One area that will not be affected is nursing, and Edwards noted that nurses are in high demand in this area.
Mary Leidig, spokeswoman for St. Mary's Health System, said the hospital expects little impact from the new policy.
'All of St. Mary's Health System's staff nurses are nonexempt, and there will be no change for them as a result of the new Fair Labor Act regulations,' Leidig said. 'They will continue to receive overtime pay.'
That applies to staff nurses, supervisory team leaders, charge nurses, case managers, nurse practitioners and other nursing positions.
'Not even 1 percent will be impacted by the new regulations,' Leidig said.
Both UT and TVA say they, too, expect little effect from the new regulations.
'We've been looking at this for a little over a month, and the best we can tell is it will have minimal impact,' said Sylvia Davis, UT's vice president for administration and finance. 'The teaching profession is exempt from overtime.'
She said she doesn't expect many other UT employees to meet the new definitions outlined in the new rules.
Gil Francis, spokesman for TVA, said the federal agency will implement the rules.
'We're still in the process of assessing its impact,' he said. 'We believe its impact on TVA will be very modest. A lot of what this is directed at is lower-paid supervisors in the service industry. We're not a service industry.'
Many TVA employees -- administrative, engineers and craft workers, including electricians and boilermakers -- are covered by unions.
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