Potentatus - Politics and Policy

Politics and Policy Blog

Wednesday, August 25, 2004


New overtime rules are bad for employees

The U.S. Department of Labor has set about updating who is, and is not, eligible for overtime. According to an analysis by the Economic Policy Institute, overtime pay accounts for up to 25% of weekly earnings of eligible employees, with the average amount being $161. In additon, overtime stimulates employers to create new jobs rather than paying overtime.

The good news about the new overtime rules is that if you make less than $455 a week ($23,660 a year), you are eligible for overtime. The old rule set overtime for anyone who made less than $250 a week. The exception for this rule is teachers, doctors and lawyers. They do not get overtime, no matter what they are paid.

However, there are many negatives to the new overtime rules:
1. Any employee who earns more than $100,000 a year is ineligible for mandated overtime, period.
2. Any employee who earns between $23,660 and $100,000 a year, and who is in most executive, professional, or administrative positions, is not eligible for overtime. This does not, however, apply to salespeople. They are still eligible.
3. Managers are not entitled to overtime if they oversee two or more people and have the authority to hire, fire, or recommend that someone be hired or fired.
4. Administrative employees who have decision-making power and run some sort of operation are not eligible.
5. Employees whose job requires imagination, invention, originality, or artistic or creative endeavors are not eligible for overtime.
6. Employees whose main duties are computer-related and involve the implementation, analysis, development, or application of computer systems or designs are also not eligible for overtime.
7. Sales staff that regularly work outside of the employer's place of business are not eligible.

I don't understand how any of those negatives are negative. Why should we help people making six figure salaries (doctors, lawyers, exectuvies) make more money?

Furthermore, the anaemic labor market of Europe has demonstrated that the more restrictive the labor practices, the worst for productivity (inefficient sorting of labor) and the worst fo unemployment (the cost of hiring is dramatically increased).
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