Who Should Be Entitled to Overtime Pay?

by Fred Siegmund

The New York Post recently ran a story about a Port Authority Police Department (PAPD) Sergeant named Edwin Rivera who reportedly earned more than $166,000 last year in overtime pay – more than double his base salary. They made a few comparisons of salaries that included the New York governor with a salary of $179,000. Objections were not specified exactly, but outrage seeped out of every word of the piece.

Like so many stories about work and jobs, this one badly distorts the reality of overtime pay even though their specific case was outrageous. By covering an unusual abuse, the story ignores the reality that federal rules make it easy to deny overtime to broad classes of jobs.

America’s overtime rules come from the Fair Labor Standards Act, which defines overtime pay at wages not less than one and half times regular pay rates after 40 hours of work in a workweek. Any use of overtime means more work for some that could go for more jobs to others. Requiring higher overtime pay for employers gives financial incentive to avoid the added expense of overtime and hire more employees at regular pay, which helps spread available work to more people.

Even though selected exemptions from overtime rules go back to the 1940s, changes drafted during the Bush administration and adopted in August 2004 revised and expanded overtime rules. Now millions of Americans work overtime with no right to overtime pay.

The Bush regulations define an employee’s salary and duties to determine work exempt from overtime pay. The new wording introduces terms and terminology defining more terms and terminology. For example, administrative employees can be denied overtime if they are paid on a salaried basis and their primary duty is office or non-manual work directly related to management or general business operations, and whose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

The term “primary duty” defines administrative employees, but defines two more terms to define primary duty: “directly related to management or general business operations” and “exercise of discretion and independent judgment with respect to matters of significance.”

The drafters and crafters of the Bush overtime rules not only supplied the terms defining terms, they also wrote example exemptions for specific occupations like insurance claims adjuster, administrative assistant, human resources managers, purchasing agents and many more. Reading some of the example occupations, it dawned on me that employers could adjust work duties and assignments to fit the rules and deny overtime at their own discretion.

The Fair Labor Standards Act rules as amended eliminates overtime pay for broad categories of employees in executive or administrative positions, or learned and creative professionals – everyone in education but the janitors, selected computer employees, outside sales employees, motion picture employees, and other more narrowly defined categories. The Bush rules also defined chefs as learned professionals not entitled to overtime.

As a practical matter, hourly pay and overtime is preferred for some jobs, especially where work fluctuates, or work has intermittent weeks with less than forty-hour schedules. Police officers are one among a list of construction occupations and police, fire and corrections occupations specifically cited as entitled to overtime pay.

We can feel angry reading about someone with overtime pay of $166,000, but if you want to feel angry, ask why police are entitled to overtime pay when millions of us are not.

About the author: Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at www.americanjobmarket.blogspot.com

{ 1 comment… read it below or add one }

Tony @ A Young Investor July 11, 2012 at 7:35 am

I definitely think so. In this economic environment, a lot of companies are putting so much work on their employees that the employees have to work overtime, because if they don’t, they’ll fall behind on their work and get fired.

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