Tuesday, September 7, 2004

Analysts say new OT rules help Ky.

The Associated Press

LEXINGTON - More Kentuckians will benefit from sweeping changes to the nation's overtime pay rules than will be hurt by the new law, according to economists and government officials.

They say the state's relatively low wage scales most likely will mean more workers will gain overtime eligibility than will lose it, but they have few solid numbers to back up that conclusion.

"We should be a net-gainer," said Leslie Renkey, general counsel for the Kentucky Department of Labor, "but it's all estimates at this point."

Under the new requirements, non-management workers earning less than $23,660 a year, or $455 a week, are entitled to overtime pay after they work 40 hours in a week.

The old benchmark was $8,060 a year, or $155 a week.

The change means 1.3 million more Americans will be guaranteed overtime pay, says the U.S. Department of Labor.

But there will be losers under the new law, too.

A provision says those making $100,000 or more a year are generally not eligible for overtime pay. And for those making between $23,660 and $100,000, overtime eligibility is determined by the law's "duties tests."

If employees can hire or fire workers and perform other management functions, they are not eligible for overtime pay even if they are paid by the hour. If they only follow the orders of others, they are eligible.

Federal officials say duties tests and the $100,000 cutoff mean an estimated 107,000 workers will lose overtime eligibility.

Union leaders and worker advocates counter that these changes, plus the rewording of other regulations, will cost 6 million workers their overtime pay eligibility.

The Kentucky Department of Labor estimates that 1,200 Kentuckians who earn more than $100,000 a year are expected to lose eligibility, Renkey said.

Another department estimate is that as many as 90,000 Kentuckians will gain overtime pay under the law's requirements, Renkey said, but he thinks the number will be closer to 26,000, based on the size of the state's labor force and other factors.

Estimates are difficult because employers can make changes to comply with the new law's requirements without paying overtime. They can, for example, give pay raises that would push eligible employees above $23,660 a year.

Employers can also eliminate the need for overtime work by adding machinery to increase production or even by hiring part-time workers to meet production goals without paying overtime to regular employees.

"They won't pay overtime," said University of Louisville economist Paul Coomes, "even if they have to hire more people."

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