Time's Up

New laws tell you who gets overtime--and who doesn't.
Magazine Contributor
2 min read

This story appears in the October 2004 issue of Entrepreneur. Subscribe »

Who's eligible for overtime? Under new Department of Labor (DOL) rules that took effect in August, employees earning more than $100,000 a year in executive, administrative and professional jobs will no longer be eligible; workers earning less than $23,660 a year will.

Backers say the rules will lead to less overtime litigation. "The regulations haven't changed in 50 years," says Larry Lorber, employment and labor partner with Washington, DC, law firm Proskauer Rose, who argued before Congress in favor of the new rules. Employers have had "confusion as to who's exempt."

But critics say the rules will let employers squeeze more work out of employees for less money. "The last thing workers need is a major pay cut," said AFL-CIO president John Sweeney in a May statement. The Economic Policy Institute, a Washington, DC, think tank, estimates that as many as 8 million U.S. workers will lose their right to overtime. But the DOL estimates that while 107,000 workers earning more than $100,000 per year might lose overtime benefits, as many as 1.3 million workers will be newly eligible.

Some legal experts complain that aspects of the rules-such as determining which job duties disqualify employees from collecting overtime-are as clear as mud. State laws can also be more employee-friendly than federal laws; in fact, the new rules haven't taken effect in 18 states that have labor laws modeled after older, more generous rules. Employers must "be cautious about adopting changes assuming we have some standard for overtime when we have a patchwork," says Mary Pivec, Washington, DC, labor and employment partner with law firm Greenberg Traurig.

This leaves it up to state legislatures to move toward the new federal rules, an iffy proposition in an election year. Visit the Web sites of your state's labor department and the DOL for compliance information, and tread carefully.

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