[Congressional Record Volume 150, Number 129 (Sunday, October 10, 2004)]
[Senate]
[Pages S11187-S11189]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                TRUTH BEHIND OVERTIME: IT HELPS WORKERS

  Mr. TALENT. Mr. President, I am very grateful to the majority leader 
and the Democratic whip for allowing me this time. I am sorry to run in 
breathless at the end of the evening to ask for it. I thought I would 
have an opportunity, perhaps in the wee hours of the morning, to make 
this statement. I think it will be evident when I get into it why I 
want to do it now. I will explain that also.
  Let me say I agree completely with the statement of the Senator from 
Nevada regarding the staff. I have presided, myself, during this 
weekend, on several occasions. I am grateful to the staff for coming in 
and sorry to keep them a few minutes later than they would otherwise 
have to stay. I just want all the staff to know that, in compensation 
to them as a small token, if they would like to come to my desk after 
we adjourn, I have plenty of Russell Stover candy, pecan rolls and 
almond rolls--and low carb candy also, I say to the majority leader. I 
am more than happy to share it with all the staff who worked so hard 
this weekend.
  I want to talk a little bit about overtime. I have not talked about 
overtime on the floor of the Senate despite the fact that there has 
been a lot of controversy over it. There are a lot of reasons I have 
not to this point. I have had other priorities. But the overtime 
regulations that went into effect about 6 weeks ago are actually, of 
course, having an impact in the United States. In other words, they are 
now the law. People are having to comply with them. Employers are 
having to comply with them.
  So we have reached a new stage in the controversy over those rules 
because we don't have to speculate anymore what their impact is going 
to be. We know what their impact is because they have become law. What 
we are finding is that these overtime regulations, as many of us 
thought and as the Secretary of Labor said over and over again, are 
working the most significant enlargement of overtime pay, the most 
significant increase of overtime coverage in the history of the 
overtime law, at least since 1938.
  I wanted to say this on the floor of the Senate before we left 
because I think it is owing, in particular, to the Secretary to say it. 
She has been criticized by many outside of this body and some in this 
body. They have said these overtime regulations the Department has 
issued would restrict overtime for people. It is not working that way, 
and there are a lot of us who knew it wouldn't work that way, which is 
why we always voted to allow that process to move forward.
  So I want to say this evening, and I am going to go through the 
reasons why and then talk about what exactly is happening out there in 
my 20 minutes, but I want to repeat, these overtime regulations, far 
from restricting overtime coverage, are working the most significant 
enlargement in overtime protection since 1938.
  I want to explain now why those of us who have some familiarity with 
this field of law always thought that would be the case. I read these 
proposed regulations when they came out about a year ago. I looked at 
them and said to myself, as a person who used to practice labor and 
employment law, my gosh, there are going to be a lot more people 
getting overtime under these regulations than have gotten it before. 
Let me explain why.
  This is a rather arcane field of law, but it is possible to 
understand it. You have to start from the assumption that unless the 
law provides otherwise, every employee in the country is entitled to 
overtime if they work more than 40 hours a week. You are entitled to 
overtime unless the law exempts you from overtime, so the bigger the 
exemption, the less the overtime. When we talk about exemptions 
expanding, we are talking about overtime restricting, and it is 
important to keep that in mind.

  We start from the proposition that all employees are covered by 
overtime. The law exempts management employees. It has always been an 
aspect of the law that if you are in management, if you are one of the 
people who run the company, you are not entitled to mandatory overtime.
  So how does the law define management? First of all, to be a 
management employee you have to be salaried. If you are paid by the 
hour, you get overtime. It doesn't matter what else your job may 
entail, you get overtime. So you have to be salaried.
  Second, you have to be salaried above a certain level. This is very 
significant because it has changed. Under the old regulations, before 
the new regulations were issued and took effect, under the old 
regulations, if your salary was below about $13,000 a year you 
automatically got overtime. You could not be considered management 
unless your salary was at least $13,000 a year. That wasn't much 
protection because just about everybody in the country who worked full 
time and got a salary earned more than $13,000 a year. But the new 
regulations raised that threshold to $23,600. What the law is now, if 
you get paid a salary of less than $23,600, you get overtime 
protection. You get mandatory overtime regardless of what the rest of 
your job may entail.
  When I saw that, I knew immediately that there were going to be tens 
and tens of thousands of people who had been exempt, whose overtime had 
been denied them legally under the old regulations, who would now get 
it automatically. I am talking about people who work as assistant 
managers of restaurants or in some cases you might be a line leader in 
a plant or you might have some other job which looks like it may be 
management so you got exempted under the old regulations. But where you 
were not paid $23,600, automatically those people come under 
protection.
  It is not enough to be paid a salary above $23,600 or above the 
threshold, whatever it is, to be considered management, and it never 
has been. The first step is, are you paid a salary? Is it above that 
certain level? If it is, you might be exempt. You might not be entitled 
to overtime if you fell into one of several categories of management.
  I am not going to go through them all, but let me take two very 
briefly. One of them is if you were an executive. If you got a salary 
above the threshold and you were an executive, you were not entitled as 
management to overtime.
  How do you define executive? The old rule said--I hope you are 
sticking with

[[Page S11188]]

me here, Mr. President, and through you, all the vast numbers of 
Senators who are here on the floor listening to this--if you got paid a 
salary above the threshold and under the old regulations you supervised 
at least two people--and by ``supervising,'' the law meant you did at 
least one of the things that typically supervisors did. So it might be 
directing their performance on the job; it might be deciding what their 
schedules were, when they could come in to work, when they took 
vacations; it might be training them on the job. If you did any of 
those things and you supervised two people and you had a salary above 
$13,000, you were exempt from coverage.

  You can see that covered a lot of people, a lot of your first-line 
supervisors. Think about this for a second. A lot of your first-line 
supervisors, your shift foremen, your line leaders, your assistant 
managers, they get paid above $13,000, they have two people underneath 
them, and they decide, for example, when you come in to work or which 
clothesrack you should be working on, if it is an assistant manager in 
a clothing store, right? So those people were exempt from overtime.
  Now under the new regulations you have to be paid at least $23,600, 
you have to supervise two people, and then here is the thing: You have 
to hire or fire or effectively recommend the hiring or firing of 
employees. If you don't do that, you are not exempt, under that 
exemption anyway.
  Look at the difference. Under the old law you weren't exempt, you 
were exempt if you got above $13,000 in salary; you supervised two 
people, and you did anything in terms of the direction of their work. 
But now you have to get above $23,600, you have to supervise two 
people, and you have to effectively recommend hiring or firing on a 
day-to-day basis. That very substantially restricts the exemption, 
which very substantially increases the number of people who are covered 
by the overtime laws.
  You may be exempt if you supervise people. I just went through that. 
You also may be exempt if you supervise functions. Under the old law, 
typically the classic example is somebody who is the lab director in a 
laboratory. They may not have people under them, but they supervise the 
lab. But that exemption has been restricted, too, under the new 
regulations because it always required that you exercise what is called 
independent judgment or discretion with respect to whatever function 
you are supervising. But now the independent judgment and discretion 
must be with respect to something, to an operation that has a 
significant impact on the workplace. It is no longer enough to 
supervise a piece of a function; you have to supervise the whole thing. 
This, too, increases the number of people who are covered by overtime 
by reducing the breadth of the exemption.
  The same thing could be said with regard to the professional 
exemption. There are many aspects of these regulations which were 
designed to and do work an enlargement of overtime coverage.
  How do we know they do that? Because the regulations have been in 
effect for 6 weeks and all the general counsels of all the big 
companies are looking at them. Do you know what they are recommending? 
They are telling their employers we have to reclassify these job 
duties. These job classifications, they are no longer exempt from 
overtime. We have to start paying people overtime.
  A survey was recently done among Fortune 500 companies by the HR 
Policy Association, and the return was this: Half of the Fortune 500 
companies said they were going to treat more employees as eligible for 
overtime. The other half said there would be little or no change.
  The University of Missouri at Colombia--of course we all know that 
fine institution in Missouri--they said 400 to 500 workers would be 
reclassified as eligible for overtime who were not eligible before.
  Sears Roebuck & Company said 2,000 employees will be reclassified as 
nonexempt, and nonexempt means you are covered. Overtime has to be paid 
to you.

  Burdines-Macy's, 3M, McDonald's, St. Jude Children's Research 
Hospital, the University of Kansas, they are all reporting that they 
are going to reclassify employees so they are covered by overtime, 
where under the old regulations that Members of this body have been 
fighting for a year to preserve, these people did not get overtime.
  Senator Bond and I were contacted by police sergeants of the St. 
Louis City Police Department. These sergeants had earlier, under the 
old regulations, been found exempt, not entitled on a mandatory basis 
to overtime. They believed, reading the new regulations, that they 
would be entitled. I believe they have a good case. I don't want to 
prejudge it. Senator Bond and I asked the Department of Labor to 
investigate. They are investigating. My prediction is--I can't be 
certain because this gets down to the details of the job on a day-to-
day basis, but my belief is that they will be entitled to overtime 
unless the police department changes their duties or arranges for them 
to work under 40 hours a week.
  The new regulations contain specific references to police sergeants 
and firefighters and say they are entitled to overtime as examples of 
people who would be entitled under the new rule who were not 
necessarily entitled under the old--this with respect to a regulation 
that again I say for the last year Members of this body have been 
saying over and over again will restrict overtime. Yet I tell you and 
the Senate that it will work out to be the most significant enlargement 
of overtime since 1938. Not a single company reported that they were 
going to reclassify people downward to make them exempt. We are aware 
of thousands and thousands of cases already, in 6 weeks, where we know 
people are going to be reclassified as covered by overtime when they 
were not covered before.
  We don't yet know--I asked the Department of Labor this today. I 
asked them if they knew of a single case that had gotten up to their 
level where a person who had been receiving overtime under the old 
regulations had lost it under the new. They don't know of a single case 
where that happened.
  It could happen. There is one aspect of the regulation that applies 
to people who are getting salaries of $100,000 a year or more. I talked 
with a lady today who worked in Wage and Hour and was responsible for 
this. She said: As I read it, I don't really think it is going to 
restrict overtime. It could. I could probably construct a law school 
hypothetical where somebody in that position lost overtime. It is 
possible. We may see a handful. I don't believe we will see more than 
that.
  I am not going to go through all these remarks because I know the 
staff has worked all weekend and I don't want to keep them any later. I 
thought it was important to say this. It is owing to Secretary Chao and 
for the hard work she has put in to make this statement and to make 
clear to the Senate how significant these new regulations are in that 
they are going to enlarge overtime.
  I do think it is important to say also that if the efforts of Members 
of this Senate who have fought these regulations had succeeded, then 
these thousands and thousands of people who are now getting overtime 
would not be getting it. If the bill that has been sponsored--
I understand we are going to vote on it through a voice vote--were to 
pass, it would mean the withdrawal of overtime protection for all the 
people in the last 6 weeks who have been reclassified as entitled to 
it. That would be a great shame. But it will happen because, as I read 
these regulations and as they are working in practice, they are working 
a significant expansion of protection for employees around the United 
States.

  I congratulate the Department. They have taken care of inequities 
that have existed in this system for decades and decades. When you look 
at the struggle they have gone through, you understand why it was not 
remedied before now.
  This is an arcane and a difficult area. Misinterpretations are 
possible. I do think many outside this Senate and some inside the 
Senate have been subject to a misinterpretation of these regulations. I 
hope I have cleared it up, and I wanted to have the opportunity to do 
that before we adjourned, until the election.
  Mr. President, how much time do I have left?
  The PRESIDING OFFICER. The Senator has 4 minutes.
  Mr. TALENT. I think I will give that 4 minutes as a gift to the staff 
and to

[[Page S11189]]

you. I appreciate your staying afterwards to preside, Mr. President, 
and I yield my time.

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