Ever since the passage of the 1938 Fair Labor Standards Act, a great majority of workers have been eligible for overtime pay; that is, they were paid time-and-a-half for all hours over 40 during a given week. As of 1999, about 79% of the workforce was eligible.
Chao claims that this law needs revision. Since 1975 the threshold pay above which one is no longer eligible has been $155 per week. So Chao plans to increase the threshold to $425 per week.
This is good. According to Chao, this will add 1.3 million low-wage workers to the eligibility list.
However, at the same time she is making these low-wage workers eligible for overtime pay, she is making many currently eligible workers ineligible. How? In 2 ways:
1 - Increasing the number of people who are exempt by reclassifying them as executive, professional or administrative. So now a paralegal is a professional, for example.
2 - Setting a limit of $65,000 a year, above which a worker cannot be eligible for overtime, even if the worker is NOT classified as executive, professional or administrative.
It has been estimated that these rules will remove about 8 million currently eligible workers from the list.
In addition, the Labor Department is now offering businesses tips on how to minimize labor costs by taking advantage of these rules.
Who stands for labor in the Bush administration? Nobody. Even the Department of Labor works overtime for business.
