Angry Unions Object to Shift in Overtime Rule

A change in labor law Friday that will allow businesses to reclassify certain workers as managers has angered union leaders, who contend it could prevent thousands of workers from receiving daily overtime pay.

The move allows businesses to more easily exempt employees from overtime wages by changing the critical definition of what constitutes a management employee.

The state Industrial Welfare Commission approved the change Friday in what members said was an effort to clarify legislation passed last year. It chips away at ground labor unions regained with that legislation, which restored mandatory daily overtime for workers.

“It could easily affect tens of thousands of workers,” said state AFL-CIO President Tom Rankin.

Formerly, a worker could be considered among the ranks of management in California only if he spent more than 50% of his time “primarily engaged” in management-style duties, such as writing reports or ordering others around.

The new rule considerably broadens that definition by adding an “occasional standard” of duties that employers deem part of the “realistic requirements of the job,” even if they include such mundane tasks as briefly working the cash register or cleaning up a milk spill on aisle four.

As a result, labor leaders said, countless workers with minimal management roles could soon find their wages restricted--a charge dismissed by the business groups that pushed for the change.

“This is not about Macy’s managers sweeping up the glass,” said labor lawyer Laura Ho. “This is something that could affect a whole class of low-paid workers.”

Ho said she has already been involved in numerous class-action suits on the management classification issue, involving such businesses as Enterprise Rent-a-Car and the Money Store. She said the disputes usually center on “assistant managers who are working the cash register, washing cars, making furniture,” but not being paid overtime because of their alleged management roles.

Lynn Thompson, a lawyer for the California Retailers Assn. who helped write the change, strongly rebutted charges that business was attempting to circumvent the overtime law by reclassifying a mass of low-wage workers.

“I don’t see it as a loophole you are going to drive a truck through,” Thompson said.

Asked by a commissioner whether “anyone flipping a burger now” or tending a counter at Macy’s was going to be promoted into management as a result of the change, she replied, “I don’t think there should be.”

Last year’s law to bring back daily overtime, AB 60 by Assemblyman Wally Knox (D-Los Angeles), was a major victory for labor unions. They had watched as a Republican-dominated commission appointed by Gov. Pete Wilson did away with California’s 80-year-old daily overtime rule in 1988.

Wilson’s action brought California in line with federal requirements and the standard in most states, which requires a business to pay overtime only after a worker puts in a 40-hour week. But labor was outraged, and secured a promise from Gov. Gray Davis during that year’s gubernatorial race that daily overtime would be brought back.

As a result, more than 8 million hourly workers in a variety of industries regained their overtime wages at the beginning of this year. The estimated costs to employers: more than $1 billion. The rest of California’s 15 million workers, including management and professional workers, were not included.

Now, labor leaders say, business is striking back by exploiting the management exemption--and they feel betrayed by Davis, who appoints the Industrial Welfare Commission’s members and to whom labor made large campaign donations. They promised to pressure him to force the commission to reverse its decision.

“As a candidate, Gray Davis met with groups and groups of workers to assure them their daily overtime protection would not be taken away,” Art Pulaski, treasurer of the California Labor Federation, AFL-CIO, told a commission hearing.

The change, he said, “violates our understanding of our commitment by our governor; it violates AB 60, our new law; it violates our sensibilities as workers; and it violates our trust.”

Knox agreed, testifying before the panel that the intent of his law had clearly been to use the definition that calls for managers to be “primarily engaged” in management.

But supporters of the change, led by commission chairman Bill Dombrowski, president of the California Retailers Assn., said their efforts were simply aimed at clarifying a law that had become confusing to business.

Many employers say the latest rules have proved so costly and cumbersome that they have cut wages and benefits, and even laid people off.

Dombrowski promised labor leaders Friday that he would make clear in the “statement of intent,” which is to be delivered to employers and unions around the state explaining the reasons for the rule change, that it is meant to be applied narrowly. The change will take effect after the businesses and workers are notified, which could take months.

“There is no way anyone pouring coffee 6 hours a day would be exempt,” he said.

In essence, he added, “what we are trying to get recognized is that duties that are closely related to management should be regarded as managerial time.”

But labor lawyer Marcie Bergmann said the law’s new definitions, combining management duties with quasi-management responsibilities, would only make matters worse.

“If I am an employer or employee reading this in the lunchroom, I am going to be patently confused,” she said. “An elephant is not a giraffe.”