OPM’s new overtime plan. Extra pay wouldn’t be automatic for most GS employees

 
Source: FedTimes.com
By TIM KAUFFMAN

Two years ago, the Labor Department overhauled the rules that determine who is eligible for overtime pay. Unions shrieked, warning that millions of employees would be excluded from time-and-a-half pay for working extra hours. And managers scurried for answers on how the changes would affect their staffs and payroll budgets.

Now federal employees will soon fall under similar rules.
Should federal managers and employees be concerned? Perhaps. Will they see a big impact because of the changes? Probably not.

Experts say a tiny fraction of the 1.8 million federal employees covered by the regulations will see any change under the rules.

For federal managers, the biggest impact will be having to field employee questions about who’s affected or not, and why.
 
Who’s affected
About 50,000 low-grade General Schedule employees will no longer automatically qualify for overtime pay under the Fair Labor Standards Act. The proposed rules would change the threshold for deciding who’s automatically eligible for overtime, from a grade level (Grade 4 and below) to a salary level ($23,660 and below). Of the 67,000 employees who rank GS-4 or below, about 75 percent earn more than the proposed salary threshold and would no longer be automatically eligible.

But pay is not the only factor in determining overtime eligibility. Generally, an employee would continue to receive overtime pay unless he or she is a supervisor or manager, or performs high-level administrative tasks without direct supervision, or is in a professional job that requires specific degrees or advanced training.

“It might be tempest in a teapot in that you’re unlikely to qualify [for the overtime exemption] in the duties test at such low grade levels,” said a union attorney who litigates overtime cases. The attorney asked not to be identified because she was not authorized to speak on behalf of the union.

For its part, the Office of Personnel Management declined requests to discuss the proposed rule, except to say that the number of employees who would be affected by the rule changes would be “quite small.” It also declined to make the public comments on the proposed rules available for review.

Even if an employee is no longer eligible for overtime under the Fair Labor Standards Act because of the rule changes, he or she still could be eligible under a different authority — Title 5 of the U.S. Code, the rulebook that governs federal personnel. Title 5 overtime — which, unlike FLSA overtime, requires preapproval from a supervisor and which limits time-and-a-half pay to those at GS-10 or below — will not change.

Some employees farther up the pay scale who currently are eligible for overtime could become ineligible under the proposed rules, while some who are now ineligible may discover they qualify for overtime. Such changes likely will affect few employees, if recent history is any indicator.

“We saw very little change,” said Mike Aitken, director of governmental affairs for the Society of Human Resources Management (SHRM), which studied the impact of the Labor Department’s revised overtime rules that took effect two years ago. “There were stories being written by everybody, saying as many as 8 million people were going to lose overtime, and those stories have not borne out to being anywhere close to the truth.”

Many of the employees who could be affected by the change work in various clerical, medical and technical support positions across government, including in the Defense Department, IRS, Census Bureau and Veterans Affairs Department.

IRS, for instance, employs a quarter of all employees at GS-4 and below. Most are clerks, data transcribers and mailroom operators.

And the Veterans Health Administration employs almost 13 percent of employees in those grades, mostly as nursing assistants or clerical staff. Neither IRS nor VA responded to a request for comment.

Grade vs. salary test
The two largest federal unions — the American Federation of Government Employees and the National Treasury Employees Union — both oppose moving from a grade-based test to a salary-based test because they say it will lead to disparate treatment of employees based on where they live.

Employees at GS-2, Step 5, in the Washington area exceed the minimum $23,600 salary. In New York, the cutoff would be GS-2, Step 2. Employees in San Francisco, which has the highest locality pay in the country, would lose their automatic coverage at GS-1, Step 5.

Unions also complain the salary threshold will not be adjusted from year to year for inflation or other circumstances, so employees gradually will lose their automatic overtime eligibility as their pay increases.

“There clearly is no logic in adopting a dollar-figure test that results in such disparate treatment depending on an employee’s location,” NTEU President Colleen Kelley said.

OPM previously rejected moving to a specific salary, which the Labor Department always has used, because “such routine actions as within-grade increases and yearly comparability increases could affect an employee’s exemption status,” according to a 1986 overtime rule from OPM.

Kelley said it makes no sense for OPM to reverse course now.

“Having previously rejected a minimum-salary test as ill-suited for use with the government’s classification system, OPM cannot now adopt such a test without even attempting to explain why harmonizing with DOL’s rule suddenly makes sense,” NTEU said in its prepared comments to OPM.

No more ‘80 percent test’
The changes also could make it harder for some employees above GS-5 to qualify for overtime.
The proposed rules would abandon a requirement that employees at GS-5 and GS-6 must spend at least 80 percent of their time on executive, administrative or professional duties to be declared ineligible for overtime. Those employees would be treated no differently than employees at higher pay grades, who are ineligible for overtime if they spend more than 50 percent of their time on such duties.

OPM has little choice but to get rid of this requirement, called the 80 percent test, since Labor abandoned it in its final regulations, experts note. OPM can deviate from Labor policy only when following the policy would create conflict with existing federal pay and classification laws.

Administrative exemption
The overtime exemption for administrative workers would be broadened. Currently, administrative employees are excluded from overtime pay if they formulate or affect management policies or operating practices. The new rules would expand that definition to exclude employees who interpret or implement such policies. The change, said AFGE in its comments to OPM, “broadens the term to the point that it could encompass any employee who carries out management policy.”
The exemption also would cover employees who lead project teams, even if they do not have supervisory responsibility over team members. This exemption could apply to employees who lead teams that conduct acquisitions, negotiate real estate deals or collective bargaining agreements, design and carry out productivity improvements, conduct program reviews or lead investigations.

Professional exemption
OPM left unchanged another overtime exemption that affects professional employees. That exemption prohibits overtime to employees whose work requires at least a bachelor’s degree specific to the field or who have specialized education or training and experience. However, the proposed rule changes would allow for additional jobs to be excluded from overtime when an advanced specialized degree, specialized curriculum or certification program becomes a standard requirement for a particular occupation.

AFGE argues that this addition would allow management to exclude more employees from overtime whenever a school creates a new advanced degree for a profession. AFGE said such exclusions should be limited to situations in which a job has been significantly redefined.

Executive exemption
OPM’s rule changes would expand the so-called executive exemption to include those who exercise executive discretion occasionally, rather than day to day as currently required.

Attorney Michael Harris, who specializes in labor and employment law as a partner at Harris Dowell Fisher & Harris in Chesterfield, Mo., said the rewritten executive exemption actually would make it more difficult to be considered an executive. Previously, employees could meet the executive exemption even if they didn’t have the right to hire or fire employees or effectively recommend hiring or firing employees. The new rules clarify that employees without that authority, such as first-line supervisors, can’t be disqualified from overtime under the executive exemption.

Many managers unaware
Managers contacted by Federal Times mostly were unaware that OPM was changing overtime rules. Most who had some knowledge of the proposed changes said they perceived little impact on their employees. The Federal Managers Association, for instance, which represents the nearly 200,000 middle managers and supervisors, opted not to submit comments on the proposed changes.

OPM is updating the overtime rules to bring them in compliance with changes the Labor Department made in 2004 to the Fair Labor Standards Act. Before the 2004 revisions, the act hadn’t been updated in decades.

The changes were designed to update the minimum earnings test to reflect current salaries, update the duties exclusions to reflect workplace changes and judicial rulings, and make the regulations easier to understand, Labor said in issuing the final rules.

It is unclear from OPM’s proposed rules whether managers would be able to increase salaries for employees who will no longer be eligible for overtime as a way to compensate them for the lost income.

This was a common practice used by many non-federal managers to cushion the blow for employees who became ineligible for overtime under the Labor Department rule changes, SHRM’s Aitken said.