New overtime rules
confuse employers

Isle labor law firms conduct
seminars to explain the changes

Check your paycheck starting Monday to see if new rules for overtime swell your wages or leave you shortchanged.

It's the most sweeping revision of overtime pay in 50 years, but it's anyone's guess how the changes will affect individual workers. Employers appear confused, too, judging by a Hewitt Associates national survey. It found that 20 percent of employers won't meet Monday's deadline for the change and could take months to comply.

NEW OVERTIME RULES A U.S. Department of Labor rule change means that millions of workers will get overtime and millions of others could lose it. Union contracts or employers may provide for more generous overtime benefits. The changes: >> Guarantee overtime for workers who earn up to $23,660 a year for time worked in excess of 40 hours a week. That is up from the current ceiling of $8,660, where it has been since 1975, and covers manual laborers, other blue-collar workers and managers who earn $455 a week or less, whether they are paid salary or an hourly wage. >> Let bosses exempt white-collar workers who make more than $23,660 a year from overtime pay if they do some "professional, administrative or executive" duties or are "team leaders," whether or not they supervise workers. >> Generally exempt people making $100,000 or more from overtime, even if they make an hourly wage.

Under the new rules, employers are not required to pay overtime to administrative, professional or executive employees who make more than $23,660 a year.

Workers exempt from

overtime could include computer and software professionals, financial-service employees, "learned professionals" such as lawyers, teachers, engineers and registered nurses, and "creative professionals" such as actors, musicians and chefs.

In Hawaii, labor-law firms have been holding seminars explaining the new regulations.

"The significance is if the employers mis-classify their employees as exempt from overtime when they should not be exempt, the Department of Labor can come into the company, audit two years of the employee's records and, if any employee that was reclassified should have been paid overtime, the Department of Labor can order the company to pay the overtime," said labor law attorney Paul Saito, of Honolulu firm Torkildson Katz Fonseca Moore & Hetherington.

Saito said he does not expect the new overtime rules to affect that many workers in Hawaii. The high number of union workers in the state could lessen the impact.

"Usually, the management level would be impacted the greatest because it used to be very clear that if you were the head of a division or vice president of a section of a company where you supervise employees, then you were exempt from the overtime laws," Saito said. "The new regulations are a little more lenient, so companies can say that even if the manager doesn't manage anybody, as long as that manager has discretion over matters of significance, that manager could be an exempt employee."

Small business might feel the brunt of the new rules, said Carolyn Gugelyk, a partner in labor and employment law with Honolulu-based Goodsill Anderson Quinn & Stifel.

"Those types of businesses may be paying their supervisors and exempt employees an amount that is less than the new minimum," Gugelyk said. "We've gotten calls from some small-business owners who said they're either going to have to convert an employee's status to nonexempt or raise their salary level."

The U.S. Labor Department, which devised the new regulations, says its "FairPay" rules should strengthen overtime protection for millions of Americans, including "1.3 million low-wage workers ... denied overtime under the old rules."

"Changing the ($8,660) salary threshold alone ensures overtime protection for 6.7 million workers," said Labor Secretary Elaine Chao.

But Saito, the Honolulu attorney, said changing the minimum threshold is an insignificant move.

"That's outdated since most employees make more than that anyway," he said.

Still, nearly every business group backs the change, including the U.S. Chamber of Commerce.

Organized labor likes raising the $8,660 pay threshold for low-wage workers but calls the reclassification of professional workers making more than $23,660 an overtime grab by the Bush administration.

Jason Ward, spokesman for Unite Here Local 5, said the union is opposed to the rule changes.

"Our members will not be affected immediately by the change in overtime because we have it in something we bargained collectively," he said. "What it does is make it harder for us the next time we go back to the negotiating table."

It likely will be more difficult for unions to hold onto positions that qualify for overtime under collective bargaining agreements if the positions are exempt from overtime under the new federal rules.

"This is one of the more recent and dramatic aspects of how the Bush administration attacks workers left and right," said Ward, whose union represents 11,000 hotel, service industry, restaurant and health care workers in Hawaii. It was formerly Hotel Employees and Restaurant Employees International Union Local 5.

Economist Ross Eisenbrey of the Economic Policy Institute, a labor-backed think tank, predicts that 6 million Americans "will lose the right to overtime pay and work longer hours with less in their paychecks to show for it" when their bosses redefine their jobs as "professional, administrative or executive."