|
 Legal battles over overtime pay are already common. Workers often
sue for unpaid wages, claiming they were misclassified as managers,
who generally are ineligible for overtime pay, even though they
spend most of their time handling the same tasks as
overtime-eligible hourly workers.
If, as some expect, the U.S. Labor Department reverts to a
classification test it used before 2004, it would likely make more
workers overtime-eligible, and a new round of litigation could
result as companies sort out employee reclassifications.
"It's immediately after new regulations (are in force) that
employers are particularly vulnerable to having a suit filed because
they could not act fast enough," said Littler Mendelson lawyer Tammy
McCutchen, an administrator in the Labor Department's wage-and-hour
division under President George W. Bush.
President Barack Obama, moving to bypass Republicans in Congress who
are blocking a U.S. minimum hourly wage increase, said on Thursday
he was directing Labor Secretary Tom Perez to revive "common-sense
principles behind overtime" rules, initiating a process that will
likely take months to complete.
To carry out Obama's initiative, the Labor Department will consider
raising the salary threshold above which employers do not have to
pay overtime to their managers. It will also consider changing a
test used to determine which workers are managerial and which are
not, a White House official said.
The threshold was last raised in 2004 to $455 per week under Bush,
less than half of what it was almost 40 years ago on an
inflation-adjusted basis.
Also under Bush, the department — against unions' objections — significantly revised the "primary duty" test it uses to determine
which employees can be classified as managers and supervisors.
"If you're making $23,000, typically you're not high-end
management," Obama said as he signed a memo to Perez.
The president's request underlines Democrats' pro-worker campaign
messages going into the November midterm elections, which Obama's
party is struggling to hold onto control of the U.S. Senate.
Business groups have already indicated they oppose the changes,
which they say will lead to job losses and confusion for employers.
"Employers who carefully considered the proper classification of
their workforce 10 years ago would have to go through that process
all over again, and would again be faced with uncertainty,
administrative burdens and costs that are contrary to the goal of
job creation," said David French, of the National Retail Federation,
which represents department stores, grocers, chain restaurants and
Internet retailers.
PRIMARY DUTY TEST
The president's memo was thin on detail. In coming months, the
department will invite public input on proposed changes before
issuing a final rule.
The department's "primary duty" test now classifies workers based on
the "principal, main, major or most important duty that the employee
performs." Employees who spend more than half of their time on a
specific duty, such as managing other workers, will generally
satisfy the primary-duty requirement.
[to top of second column] |
But department guidance makes clear that there is no hard-and-fast
way to determine a primary duty. Even an employee who spends less
than half their time managing others may be classified as a manager
if other factors support that designation.
"The duties test is where a lot of the litigation is," in
wage-and-hour cases, said John Meyers, a partner at Barnes &
Thornburg who defends companies in employment litigation.
Advocates for workers said the "primary duty" test was changed so
significantly in 2004 that it no longer has much meaning.
TEST OF TIME
Before 2004, the main criteria used to determine a worker's primary
duty was the amount of time they spent on a duty.
The revisions said a primary duty would no longer be based solely on
time spent, but also on other, subjective factors.
Ross Eisenbrey, vice president at the liberal-leaning Economic
Policy Institute in Washington, called the current test an
"abomination."
"Being a lead dishwasher is enough to make that person an exempt
executive even though they spend essentially all of their time
washing dishes," Eisenbrey said. "Under the law as it stands now,
it's pretty much left to the employer to say."
With his colleague Jared Bernstein, a former economic adviser to
Vice President Joe Biden, Eisenbrey last year urged the White House
to consider raising the salary threshold that puts overtime pay
beyond the reach of some so-called managers.
Some states have diverged from the department's post-Bush
administration method for determining a worker's primary duty, at
least in state-level worker misclassification lawsuits.
California, for example, uses a strict time test. Any worker who
spends more than 51 percent of their time doing non-managerial work
can get overtime pay under state law.
McCutchen, the lawyer, said there are indications that the Obama
administration favors a California-like approach. She said it would
take at least a year to complete any new regulations.
(Additional reporting by Roberta Rampton;
editing by Kevin Drawbaugh, Tiffany Wu and Jonathan Oatis)
[© 2014 Thomson Reuters. All rights
reserved.] Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
