A Matter of Overtime

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Proposed changes in federal overtime rules may put more money in the pockets of a few lower-paid youth workers, but will probably not affect the majority of social workers and other professionals in the youth service field.

Some young workers, however, may find themselves out of work or earning flat salaries that are lower per hour than their current wages.

The U.S. Department of Labor (DOL) proposed the changes April 1 to provisions of the Fair Labor Standards Act, which was enacted in 1938 and last revised in 1975. The proposal is intended to clarify which employees are eligible for overtime pay by using their base salaries and job responsibilities.

While that might mean more labor costs for youth-serving agencies, as of now “it’s impossible to discern what that impact might be,” said Peter Goldberg, CEO of the Alliance for Children and Families, which represents more than 350 private, nonprofit child- and family-serving agencies.

Under federal regulations, an employee automatically qualifies for overtime payments after working 40 hours in a week if his weekly salary is $155 or less, or $8,060 a year. The proposal would increase that minimum threshold to $425 a week, or $22,100 a year, meaning more lower-paid workers would qualify for overtime.

“We think we’re automatically guaranteeing overtime to 1.3 million workers” who don’t get it now, said DOL spokeswoman Yvonne Ralsky.

The DOL does not have a specific job category for youth workers, making it difficult to determine how many would be affected. However, the government estimates there are 2.3 million social service workers, with a mean annual salary of $23,370 – slightly more than the proposed new threshold.

Using a comprehensive analysis of the proposal conducted by CONSAD Research Corp. of Pittsburgh, the DOL said the proposed changes could cost the social services industry an estimated $21.4 million a year in additional wages.

Workers with degrees in social work probably wouldn’t see any extra money, according to the National Association of Social Workers, even though the association believes most work well beyond 40 hours a week. In 1999, the association said, child welfare and family social workers earned an average of $48,000 a year, while school social workers earned $40,000 and adolescent social workers earned $37,920.

Agencies Can Avoid Overtime

Employers will have several options if they find themselves with a work force suddenly eligible for overtime. Instead of paying someone time-and-a-half for work over 40 hours, companies could raise the person’s base salary to slightly above the threshold, or reclassify the employee as “exempt” from the overtime rules.

The guidelines for determining who is exempt from overtime are easy to apply in some cases – such as using the salary threshold – but more complicated in others. The proposed rule is intended to clarify the criteria, DOL officials said.

“There’s a lot of confusion about the current rules,” DOL’s Ralsky said. “Our expectation is this will shrink the gray area.”

Employees who are exempt include managers, “learned” professional employees in fields of science that require special education or extended training, and creative professionals, such as artists. Licensed social workers are considered “learned” professionals because they require a specialized degree.

The exemption proposal would continue to apply mostly to white-collar workers, but would eliminate some of the ambiguous requirements and caveats that lead companies and agencies to exempt their workers from overtime. That ambiguity has led to a recent spate of multimillion dollar settlements against companies that incorrectly classified workers as exempt.

Clarification is long overdue, youth workers said.

“There has been confusion,” said Harry Blackmon, past president of the Ohio Association of Child and Youth Care Professionals and now the executive director of LHS – Family and Youth Services in Toledo, Ohio. It is particularly difficult to determine if an employee is exempt, he said, because “there are no categories for childcare and youth workers” in the current guidelines.

Employers who find the new exemption classifications easier to understand are expected to reclassify more workers as exempt. The DOL estimates that 640,000 more highly paid, skilled and educated workers will be reclassified as exempt, Ralsky said.

Less Money For Workers?

Although the youth development profession is historically overworked and underpaid (see “Human Services Work Force in ‘Critical Condition,’” April 2003), requiring overtime is not going to make much of a difference to most of the youth field.

“I’m not sure it’s going to have an impact on our workers,” said Goldberg of the Alliance for Children and Families. “It increases [agencies’] expenses without increasing their resources. ... There’s a work force crisis that’s not addressed by minimum wage issues or overtime issues.”

Labor organizations are not embracing the proposal, arguing that it will lead to less overtime pay, not more.

“The Bush rules could mean that many workers would face unpredictable work schedules because of an increased demand for extra hours for which employers would not have to pay overtime,” the AFL-CIO said when the proposal was released.

The Service Employees International Union, an AFL-CIO affiliate that represents public service workers, said the proposal would “erode the 40-hour workweek and could deny overtime pay to millions of America’s workers.”

The results may not be as dire as the unions predict, but it is impossible to estimate the effects, said Andrew Sum, a professor of economics at Northeastern University in Boston and director of the school’s Center for Labor Market Studies. The CONSAD report notwithstanding, he said, “when you get down to minute, detailed issues, no one in the Department of Labor knows.”

The proposal was printed in the March 31 issue of the Federal Register. The department will accept written comments on the proposed rules until June 30.

Contact: DOL’s Wage and Hour Division, 866-487-9243, www.dol.gov/esa/whd.