Putting in the hours
Employers study impact of new federal overtime rules
Political candidates and labor union officials are debating the true impact of new federal overtime pay rules that went into effect last week.
At the same time, employers are studying the rules to see how their payrolls will be affected.
Proponents say millions of low-income workers who were previously unable to collect overtime now will be eligible. Critics of the new regulations adopted by the Department of Labor are predicting employers will be able to rewrite some job descriptions to reduce overtime budgets.
The changes to federal overtime laws mark the first time they have been revised in more than 50 years. The Department of Labor reports the new rules will increase the ability of 6.7 million Americans to collect time-and-a-half pay when they work more than 12 hours in a day or more than 40 hours a week.
Unions, including the AFL-CIO counter that the rules will prevent 6 million workers from being paid overtime.
John Thrasher, director of human resources for the city of Steamboat Springs, said although overtime policy is a significant issue for the city work force, but the new rules are not expected to have a big effect. For one thing, the city doesn’t hire new full-time employees at levels below the minimum federal threshold of $23,660 a year, Thrasher said.
Federal wage guidelines generally state hourly wage earners are eligible for overtime and many workers on annual salary are not. The old rules provided that the minimum salary for employees to be exempt (ineligible) for overtime was $155 a week, or $8,060 a year. The new rules modernize that threshold at either $455 a week or $23,660 a year.
“What we found is that the biggest issue is exempt versus nonexempt,” Thrasher said. “In the city’s system, we don’t have anybody below that level who is currently exempt.”
White-collar employees who make more than $100,000 a year automatically are exempt from overtime under the new rules. That wasn’t previously the case, though many employees at those salary levels already were exempt for other reasons.
Another test of exempt/nonexempt is more of a gray area. It is the “duties” test, which establishes eligibility based on the work an employee performs every day. Federal law states that a worker whose job is “executive,” “professional” or “administrative” in nature does not qualify for overtime.
The new rules are meant to clarify these roles. Critics say the rules could make a fast-food worker, who supervises a small team of employees flipping burgers but spends much of his or her time doing the same work, ineligible for overtime.
For some job categories in the city of Steamboat — most notably snowplow operators and for the past six years, police patrol officers — overtime is a regular part of their working lives. Other city employees — department leaders, assistant department leaders and city planners, are not eligible for overtime and are expected to work more than 40 hours a week.
“Department heads often work in excess of 40 hours a week, and 50 hours is not unusual,” Thrasher said. “In the case of people who have nightly meetings, it could be 60. They are compensated at a level that allows for that.”
Snowplow operators in Ski Town USA have unusual working conditions, Thrasher said. In the course of a winter where it may snow day and night for weeks at a time, they often are expected to work a great deal of overtime. The time-and-a-half pay augments their beginning salary of $15.50 an hour, but the demands on their lifestyle are significant. They have to check the weather report before engaging in social drinking, even at home, because they must be prepared to safely operate heavy equipment.
“Snowplow operators are pretty much on call from Oct. 15 to April 1,” Thrasher said. “They are at the beck and call of their supervisor for six months. They pretty much understand they won’t be taking vacation. They might work from midnight until 8 a.m., go home for some rest until 11 a.m., and then go back to work until midnight.”
In some cases, snowplow operators are offered compensatory time off at a time-a-half proportional to hours worked.
Patrol officers in the Steamboat Springs Police Department work overtime because the department has been unable to hire a full complement of officers since 1998.
The patrol department is down two officers and the officers on the payroll work overtime to cover the number of shifts required each week.
Director of Public Safety Services J.D. Hays said his 2004 budget for patrol salaries is $713,000 and that he is budgeted for $68,400 in overtime.
From that standpoint, the overtime looks like a bargain for the city — it would cost more than $68,000 to cover the salary and benefits of two or three officers. However, Hays said he is looking forward to lessening the workload on his patrol officers next month when he anticipates being fully staffed for the first time in years.
Just like the city, the Steamboat Ski & Resort Corp. has multiple layers of job categories with varying overtime policies.
Colorado State University reports that the state’s overtime policy follows closely the federal Fair Labor Standards Act, and there are exceptions for some workers in the automotive, agricultural and ski industry.
Trish Sullivan, vice president of human resources for Ski Corp., said she doesn’t expect the new federal rules to result in many changes at the ski area. She confirmed that ski patrollers and ski instructors are subject to a higher hours threshold before they get time-and-a-half.
Rules that pertain to employees working on U.S. Forest Service land mean that ski instructors work 56 hours in a week before receiving overtime, and ski patrollers can work up to 48 hours before they get overtime.
Instructors have incentives in place in their compensation plan to encourage them to work those long weeks, Sullivan said.
There are periods in the ski season, during the holidays, three-day weekends and some weeks in March, when the ski area needs its ski instructors to work long hours, Sullivan said.
The ski area and Steamboat Grand Resort Hotel together employ as many as 1,800 workers during the peak of the winter season.
Ski area executives work long hours, but most hourly wage earners such as lift operators, parking lot attendants and cafeteria workers are eligible for overtime after 12 hours in a day or 40 hours in a week.
Sullivan’s department is reviewing the effects of the new federal rules on an ongoing basis, she said. The human resources managers rely heavily on a nonprofit organization, Mountain States Employers Council, for advice.
— To reach Tom Ross call 871-4205
or e-mail email@example.com
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