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New Overtime Rule Passed

Contributed by mm | September 8, 2004 7:26 AM PST

Working men of the United States, unite!

Recently U.S. Depoartment of Labor announced the effectiveness of an updated Overtime Security Rule:

"Under the new rule, workers paid less than $23,660 or $455 per week are now automatically guaranteed overtime regardless of their titles or duties. A number of salaried workers earning above this threshold will also gain the right to overtime under the new, stronger rules."

According to the press release, up to 1.3 million salaried white collar workers will become eligible for overtime pay, and businesses will shell out an additional $375 million per year.

Being defined as an exempt worker, I am not eligible for any overtime pay before and after the new rules. But philosophically, is overtime a better arrangment for the relationship between me and my employer?

Probably not.

I work a lot more than 10 hours a day in certain times of the year, but work less than 6 for the rest. On average I work around 8 hours a day. Let's assume that if I am converted to a hourly paid worker, my hourly rate equals to my current annual salary divided by 2080 hours (52 weeks * 40 hours/week). What are the consequences?

Of course my first intention is to get more money comparatively effortlessly, so I will stay in the office for more hours during the low season. I can always browse my favorite web sites sitting in my office, so it does not really hurt my work/life balance. Nothing else, I will earn more than in the exempt system.

However, my employer will not be stupid. My boss will push me to go home early or recommend me stay at home during most of the low season to improve his controllable cost, and I need to justify my existence in the office time and again. Suddenly, I'm in a position that I need to argue to get the same pay in the exempt system.

The problem is: for most knowledge workers, the output of each additional hour of work is not tangible. It will become a weak argument if you say: "for an additional hour in the office, I can add three charts to my Excel model, or complete 5 PowerPoint slides." Such bargaining will be detrimental to the employment efficiency and thus bad for both employees and employers.

On the other hand, if the hourly output is visible (like number of hamburgers produced, number of toys assembled, etc.), it's truly a win-win for both parties in the employment relationship, because no time will be wasted in bargaining how many hours one needs to work.

So, I am happy about my exempt status after this cerebral exercise. How about you?

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