Comments Regarding ESA Proposed Rule Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees [03/31/2003]
Contrary to the department's analysis published in the Federal Register estimating that some 640,000 workers would lose overtime protections under the proposed regulations, they would in fact deny overtime protections to millions of U.S. workers. While making it clear that some fast food and retail assistant managers are covered by overtime, most of the low-paid managerial and administrative employees the regulations would bring under the provisions of the FLSA are in fact already covered since "managers" spending more than 20 percent of their work time on non-managerial duties are currently entitled to overtime pay. In substituting an already obsolete title- and wage-based standard for the existing standard based on job duties, the department, far from simplifying existing law, would give employers who have been routinely misclassifying such employees as exempt a clear economic incentive to expand this practice. It seems clear that more, not less, litigation would result as workers seeking to enforce their rights are obliged to establish the purely pretextual nature of the administrative and executive titles which are already routinely given to workers who do not in fact hold such positions.
For example, the proposed regulations specify that dental hygienists would be considered exempt professionals. Current Bureau of Labor Statistics data shows 267,840 persons employed as dental assistants (and 3.1 million in similar occupations which would presumably be similarly affected), with an average annual income of just $27,650. It is clear that simply tallying the number of persons employed in positions currently covered under FLSA overtime regulations who would specifically be exempted from such protection under the proposed regulations would yield a total figure in excess of the indicated 640,000. But the examples given are explicitly provided as guides, and do not begin to offer a comprehensive listing of affected positions.
It is clear that the proposed regulations would in fact ultimately eliminate overtime protection for millions of workers, who would be reclassified as professional or administrative employees. (At present, most of these employees are paid on an hourly basis, but the regulations would provide employers with strong incentive to convert employees to salaried positions, thereby evading the requirements of the FLSA.) Unlike the current rules, which presume that employees are covered under the FLSA, under the proposed rules workers who hold a "position of responsibility" or have learned specialized job skills through on-the-job training or a trade school would be exempt from overtime protection. The indicated standard of a two-year college degree or its equivalent to establish exempt status as a professional would have sweeping consequences. Currently about half of all high school graduates enroll in college for at least a brief period of time, and many more enroll in trade schools and apprenticeships which could be held to be equivalent. Many employers now request or demand college degrees for jobs such as customer service, retail clerk, or telemarketing. No one could credibly argue that such positions could be considered exempt under the existing regulations.
Far from "modernizing the regulations, " the proposals ignore the changed nature of the employment market (which requires higher levels of education in order to perform jobs formerly considered completely unskilled, the actual duties of which have not been substantively changes) in order to by their own admission "exempt more classifications of workers from overtime pay." In doing so, the proposed regulations would turn the overtime laws on their head -- creating a presumption that workers are exempt from overtime protection where the old standards (and the legislation they were drafted to implement) assumed they were covered. This is a fundamental change in regulatory stance, and one utterly inconsistent with clearly established legislative intent. Adopting such regulations is certain to result in prolonged litigation to determine whether the Department has the authority to so boldly reverse the intent (and in some cases the actual language) of the statute in the guise of implementing it. In addition, in many ways the new regulations are less clear that the long-established ones, which also benefit from decades of court decisions and other interpretative materials that offer employers guidance. The proposed regulations are filled with phrases such as "requiring a high level of skill or training, " "work of substantial importance," or "primary duty" of "performing ... non-manual work" - all of which exempt employees from overtime protection - the definitions of which are far from clear.
The regulations would also negatively impact many employees in positions that combine exempt and non-exempt functions. For example, workers who sell and deliver soft drinks or snacks to local grocery stores could lose overtime protection even if they spend many hours delivering the cans and candy bars. Currently such employees are clearly covered by the FLSA. Journalists have generally been held to come under FLSA protections despite the predominantly routine nature of their work. The proposed regulations would reverse decades of court decisions upholding their rights under the Act; the precedent would also impact many other employees whose tasks require some initiative and discretion, but which are not at all of the independent, self-directed character Congress contemplated when drafting the exemption for professional employees. Indeed, even many manufacturing assembly workers are required to exercise initiative and discretion in the performance of their duties. Following the reasoning embodied in the current proposal, relatively few employees would continue to be covered by the Fair Labor Standards Act's provisions.
According to employer-sponsored researchers, employers are currently shortchanging employees by $19 billion a year in overtime pay they are entitled to under current law. Lawsuits against Wal-Mart and other employers have resulted in judgements for millions of dollars in damages, and many more such lawsuits are pending. Such lawsuits are successfully challenging the widespread misclassification of employees as exempt. The Department proposes to address these complaints not by stepping up its enforcement efforts to confront this massive violation of the law, or even with an educational campaign to assist employers in meeting their legal obligations to employees, but rather by in effect saying that since employers seem determined to flout the law the Department will abolish these legal protections for millions of workers. This is unacceptable as a matter of social policy, contrary to the public interest, and not consistent with the laws the agency is charged with enforcing.
The Department's own analysis estimates that employers would pay a modest $334 to $895 million a year in increased wages and overtime payments under the proposed regulations, but would save up to $1.9 billion a year in savings from workers who would no longer have to be paid for their overtime. (Although the Department's analysis treats the former as a cost and the latter as a benefit, the situation is quite the opposite to the workers affected - and indeed to society at large.) This seriously understates the potential savings to employers, as it assumes that employers will not take advantage of their new right to require unlimited unpaid overtime to lay-off current workers and require the survivors to pick up their work. Indeed, employers are presently doing just that. In the information sector, where computer programmers and support staff are largely considered exempt employees, most analysts agree that one in five trained professionals in the field is presently either unemployed or working in lower-paid work outside the sector. However, employees in this field typically are required to put in 60 hours a week or more - sometimes much more - in order to hold their jobs.
By eliminating millions of workers' protections under the FLSA, the Department would extend the disastrous consequences of this practice far beyond the information sector. Employers would have enormous economic incentives to convert existing hourly employees to salaried status, to lay off a third or more of their employees, and to require the surviving staff to work as much overtime as it takes to get the work done. Such an outcome, inevitable under the proposed regulations, runs directly contrary to the intention of the Act.
The department asserts that "the rule will not adversely affect the well-being of families," a determination that evidently assumes that it requires neither time nor money to care for and raise children. However, this is clearly false. Already, U.S. families, and society in general, are under severe stress as a result of long work hours and a badly frayed social safety net. The proposed regulations would dramatically exacerbate the time shortage that plagues the United States, with widely recognized consequences for family well-being, individual health, community involvement, social cohesion and democratic participation.
U.S. workers already work longer hours each year than do employees in most industrialized countries. The average Western European worker puts in a full nine weeks less per year on the job, and the general trend around the world continues to be to press for work-time reduction. The U.S. is virtually alone in bucking this trend, with a slow but ominous trend toward increased work hours over recent decades. The Fair Labor Standards Act was adopted in an attempt to establish shorter working hours as national policy, and to compel employers to respect that policy. The Act has fallen short of those goals in many ways, in part as a result of lax enforcement, but that is no reason to abandon them altogether, as the proposed regulations do. Making it easier and less expensive for employers to compel their employees to work unlimited and uncompensated overtime is bad social policy. It will undermine individual and public health. It will lead to increased fatigue and many more injuries and deaths in workplaces and on the roadways. It will exacerbate endemic unemployment rates that already see more than one in ten U.S. workers jobless, underemployed, or forced from the labor market altogether. It will rob millions of workers of the time they so desperately need to live their lives, and raise their families, and participate in their communities.
The proposed regulations are inconsistent with the intent and the letter of the Fair Labor Standards Act. They are bad social policy. They will exacerbate the current economic difficulties that have hit workers particularly hard. The benefits of these regulations will accrue only to unscrupulous employers; the costs would be born by society as a whole. These regulations can not be salvaged by tinkering at the edges, or by clarifying a few definitions. They must be rejected in their entirety.
Jon Bekken Boston Area Shorter Worktime Network Editor, the Industrial Worker Associate Professor of Journalism, Suffolk University
Submitted June 25, 2003
===== ***************************************************************** “How would we live?” He kept asking this question. Of course, I wondered whether we were doing anything more than merely existing. I saw most of our work time as being superfluous. On the other hand, Fred’s need for things and creature comforts had grown too much to be sustained by any reduction in our income. Thus, spending our lives to obtain credits had become the norm.
from WAGE-SLAVE'S ESCAPE
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