Do New Overtime Rules Mean More Money but Less Status?

The complaints began even before University of Missouri administrators e-mailed more than 400 employees to confirm what might seem a harmless change — soon, the memo said, they’d be eligible for overtime pay. It was not what Mary Porter wanted to hear. It had taken Porter 35 years to climb the university’s ladder, from the copy machine operator’s job she started just out of high school, to a position with the salary, benefits and responsibility certifying her as a professional. Now the grandmother of three saw the university, armed with new government rules on overtime pay, pulling the ladder’s top rungs out from under her. “It just feels like, in a sense, I’ve had something taken away from me,” said Porter, an administrative associate who half-jokes that she’s “trained” the last four chairmen of the university’s anthropology department. “I had that (salaried) status because I worked my way up � It made me feel personally like I had accomplished something.” The Bush administration’s new rules on overtime pay have been at the center of a furious, and still unresolved, debate over charges they will cost millions of workers the right to overtime pay. But some employers are catching flak of a variety few expected — not from workers angry about losing overtime pay, but from some irritated about a change that gives them the right to receive it. Overtime pay is the quintessential pocketbook issue, but the workers’ objections are largely rooted in the immeasurable. For many, the change amounts to a difficult-to-define feeling that their work and status is cheapened. “Not every company saw this coming, and I certainly don’t think the regulators had a sense that this was going to happen,” said Jonathan Sulds, an attorney with corporate law firm Akin Gump Strauss Hauer & Feld in New York. Employers, anxious to turn the tide on a swelling wave of expensive lawsuits by workers claiming they’ve been unfairly denied overtime pay, largely favored the administration’s overhaul of wage laws. The changes, which took effect Aug. 23 despite vehement criticism by labor unions, are focused mainly on skilled and white-collar jobs, exempting many such positions from eligibility for overtime pay. Some of the changes are straightforward. Workers earning less than $23,660 a year must be paid for overtime under the new rules, almost triple the old salary requirement. Workers earning more than $100,000 and whose jobs regularly include at least one administrative or professional responsibility will now be excluded from overtime eligibility. But the new rules, part of the federal Fair Labor Standards Act, are complex and leave much to interpretation. Nobody really knows how many workers will be affected, or how he or she will be impacted. The debate has included estimates that anywhere from 107,000 to as many as 6 million workers will lose overtime eligibility. Estimates of how many will gain eligibility vary from almost none to 1.3 million. It could be some time before the reality becomes clear. Employers, though, say strong reactions from some workers whose jobs have been reclassified from salaried to hourly — giving them access to overtime pay — has already created awkward situations. At Missouri, administrators are shifting between 400 and 500 salaried workers to hourly status, eligible for overtime pay. Not one of the school’s 19,000 employees is losing the right to overtime, said Ken Hutchinson, vice president of human resources. The change has generated complaints from many of the affected employees, including administrative associates — the office managers for many academic departments — executive assistants and computer workers. A series of meetings held on the Columbia, Mo., campus in recent months drew up to 100 workers and professors who back them, criticizing the administration’s plans. “Many have come up through the ranks and finally reached a point where they were considered to be an executive, administrative or professional employee,” Hutchinson said. “So changing that has been difficult and some feel like it’s a demotion. It’s not the case at all.” Administrators responded to some criticism by grandfathering the affected workers, so they will not lose the extra vacation time to which salaried workers are entitled. But many of the employees have been at the university so long that the vacation reduction would not have impacted them, and the change has done little to salve hurt feelings. “I and other people feel like our career ladder has been cut off,” said Danni Derryberry, an administrative associate in counseling services who’s worked at the university for 38 years. Managers at fashion marketer Kenneth Cole Productions Inc. have run into similar objections from some workers at its New Jersey offices with jobs in white-collar fields like accounting and legal services. Many of those employees consider themselves professional, said Michael Colosi, the company’s corporate vice president and general counsel. But as managers informed some employees that their pay would be computed on an hourly basis, with overtime eligibility, rather than as a fixed salary, some took it as an indication that they were no longer on the management track. “That really, when you’re dealing with somebody who is college educated and works in an office capacity, sort of challenges their notion of the status of their position,” he said. When Sulds’ law firm invited client companies to a briefing on the rule changes recently, the employers and lawyers helped themselves to poached salmon and vegetables, then began picking through the topic like so much mystery meat. “There’s a real sort of a status associated with not being on the clock,” said one employer, as peers nodded in agreement. The companies’ anecdotal experience bears little resemblance to the rank-and-file discontent critics of the rules say is likely as scores of workers lose overtime pay. But it falls in line with a survey of firms indicating that, at least at first, far more are reclassifying workers as hourly with overtime rights, than are stripping eligibility away. About 26 percent of companies surveyed expected the rule changes to result in an increase in the number of workers eligible for overtime pay, while just 7 percent of firms said it would increase the proportion who don’t qualify. The May survey by WorldatWork, a trade association for people in charge of corporate compensation and benefits programs, tapped 351 companies. Consulting firm Hewitt Associates, which has also surveyed employers on the topic, found many companies were running behind in figuring out the new rules. But as they do, most firms are likely to add more workers to the rolls of overtime eligibility than vice-versa, said Tom Farmer, a senior consultant at Hewitt. “As a practical matter, most employees are going to welcome overtime eligibility,” he said. But “some of them will probably be kicking and screaming all the way to the time clock.” Sulds said that rather than reclassify such workers as hourly, some companies have beefed up their job duties so their positions more clearly meet the rules’ tests for exemption from overtime. Such expanded responsibilities are not necessarily accompanied by an increase in pay, he said. Some of the University of Missouri workers say that knowing how tight the school’s budget is, they doubt there’s any more to pay for extra hours. The school said it does not expect any of the affected employees to lose pay as a result of the change. Consultants to employers said they do not expect companies to incur substantial additional overtime costs. Workers whose jobs are reclassified as hourly could lose vacation time or health benefits accorded to management employees, Farmer said. But some companies will probably grandfather workers to minimize such losses, and maintain morale, he said. Still, the bottom line in workers’ objections goes beyond the bottom line, observers say. “It’s less about the dollars and more about the perceptions,” said K. David Hirschey of Personnel Management Inc., a Minneapolis consultant to employers. Employees at some firms feel that being shifted to the hourly ranks makes them more susceptible to layoffs, he said. Others feel the change will limit their access to positions on the professional track. For most, though, it’s that lingering discomfort that their position has been devalued. “It’s never been … about the money,” said Gail Lawrence, chair of the Staff Advisory Council representing the University of Missouri workers. It’s “about the pride in their jobs, and their pride in the university and their pride in themselves, for working their way up.” Copyright 2004 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.