The 66-year-old Fair Labor Standards Act (FLSA) is set to be overhauled by August 23. But new rules were in flux at presstime, muddying a process that the Labor Department estimates will cost employers $738 million next year. The holdup? Politics. Months ago, Secretary of Labor Elaine Chao proposed granting overtime to more low-income workers, reducing it for $100,000+ earners, and redefining eligibility for the service sector.
Sensing that the White House would avoid an election-year overtime fight at all costs, Democratic senators (aided by five Republicans) voted to grandfather into the system everyone who currently receives time-and-a-half, even though achieving uniform rules was the whole point of FLSA reform. Patrick Lyden of the National Federation of Independent Businesses complains that overtime coverage "would be all over the board" if the measure becomes law. While the grandfather amendment is unlikely to survive a vote in the House of Representatives (or a Bush veto), the August deadline approaches fast. That leaves employers to begin reclassifying workers according to overtime rules that, unfortunately, aren't clear yet.