Fatter paychecks for many who work overtime
By Laura Bruce • Bankrate.com

There's good news for over a million low-paid workers who spend more than 40 hours a week on the job; they now qualify for overtime pay.

The overhaul of overtime regulations contained in the Fair Labor Standards Act will result in guaranteed overtime protection to every worker earning less than $23,660 per year, according to the U.S. Department of Labor. The previous law guaranteed overtime only to those making less than $8,060. The government estimates 1.3 million workers will gain overtime protection under this new rule that became effective Aug. 23, 2004. Assistant managers in fast-food restaurants, who are low-paid but don't receive overtime because of their managerial title, are an example of the type of employee affected.

The Department of Labor says the new rules also provide equal or greater overtime protection to workers earning between $23,660 and $100,000 per year. Employees in this pay range are often misclassified as being exempt from receiving overtime. An estimated 2.6 million workers will benefit from changes in the so-called "duties test."

"You can't be denied overtime unless you perform professional duties," says Tammy McCutcheon, administrator of the Wage and Hour Division at the Department of Labor.

"The 2.6 million is comprised of a lot of lower-level office workers where there's a lot of misunderstanding. Many employers believe that if you have someone in an office and pay them a salary, you don't have to pay them overtime -- bookkeepers, clerical, paralegals. In our opinion they should be getting overtime today, but many of them are misclassified. They're entitled to overtime."

Additionally, McCutcheon says the revised rules strengthen overtime protection for 2.8 million blue collar workers such as police, firefighters, EMTs, paramedics and other first responders to emergencies. For instance, a sergeant who directs the work of officers, but who spends most of his shift on patrol, could not be denied overtime.

New law clarifies eligibility
The Department of Labor says the overhaul was long overdue. The minimum salary level was last updated in 1975, and the job duty requirements haven't been changed since 1949. Many of the jobs mentioned in the previous rules -- key punch operator, legman and straw boss -- no longer exist.

The outdated rules led thousands of employees to file complaints seeking overtime compensation.

"I have 900 investigators and 250 offices all over the country," McCutcheon says. "We receive complaints from employees and handle about 40,000 cases a year. Last year we collected $212 million in back wages for overtime and minimum wage violations. Most cases get resolved in 90 days without having to go to court because (other sections) of the law are clear.

"But misclassification violations are the difficult ones. Even our investigators have a hard time figuring out whether a particular employee qualifies for overtime. Too many employees have to go to court and spend two to three years trying to recover overtime pay. The (revised) rules will allow us to do as well in misclassification as with the other types of violations we see."

McCutcheon says few, if any, workers who earn between $23,660 and $100,000 and qualified for overtime under the old rules will find themselves ineligible for overtime as a result of the changes. But the Department of Labor estimates that the revised rules will make approximately 107,000 people, who earn more than $100,000 annually, ineligible. The only employees who would be affected are salaried. Anyone making over $100,000 who is paid hourly -- perhaps, a carpenter or electrician -- still qualifies for overtime.