'FairPay' Overtime Rules to Clarify Rights, Reduce Litigation; O.T. Coalition Commends U.S. Department of Labor for 'Breakthrough'.

Business Editors

WASHINGTON--(BUSINESS WIRE)--April 28, 2004

Breaking through more than 50 years of political gridlock, the U.S. Department of Labor (DOL) has moved antiquated federal regulations governing overtime pay for white-collar workers into the 21st Century, according to the O.T. Coalition. The Coalition today expressed its support for the new regulations and urged Congress to allow the rules to take full effect.

"The 'FairPay' overtime rules will clarify both employee rights and employer responsibilities," said Katherine Lugar, the director of the O.T. Coalition. "These regulations will be good for the economy and all concerned."

The federal regulations governing overtime pay have not been comprehensively updated since the early 1950's, and have not kept pace with the substantial changes in the American workplace, workers, and their jobs. What should be a simple test--determining an employee's exempt status--is often an extremely complex task with very little certainty. Employers face significant challenges in trying to classify today's jobs into categories that were created in a different era.

The antiquated nature of these workplace regulations has proven to be a bonanza for the plaintiffs' bar. While employers have been struggling with how to comply with the severely outdated regulations, trial lawyers have seized upon this as a new lucrative area to exploit. Since 1997 lawsuits under the Fair Labor Standards Act have tripled, and for the past three consecutive years, more FLSA class action lawsuits have been filed than employment discrimination class actions. The final rules issued by DOL should lead to greater clarity in application of the rules in the workplace and, as a result, should help curb the dramatic escalation of wage and hour lawsuits.

Both Democratic and Republican administrations have recognized the need to revise the "white collar" regulations. The nonpartisan GAO recommended in a 1999 report that "the Secretary of Labor comprehensively review current regulations and restructure white-collar exemptions to better accommodate today's workplace and to anticipate future workplace trends."

"We commend the Department of Labor for having the courage to continue its work despite an orchestrated campaign of misinformation and scare tactics," Lugar added. "Though the final rule may not be perfect, it is nonetheless a breakthrough accomplishment that will benefit millions of Americans."

United by their shared commitment to working for fairness and clarity in overtime laws, the O.T. Coalition is comprised of nearly 100 trade associations, companies and professional human resources organizations that together represent more than 3 million employers and over 42 million employees. The O.T. Coalition is a voice for employers of every size operating in every state and driving the growth of some 20 sectors of the U.S. economy, including small business, retail, restaurants, education, publishing, construction, manufacturing, financial services and many other areas.