Maine, other states may write own overtime rules

By the end of 2004, Maine could finalize new regulations on the executive, administrative and professional exemptions from the state's minimum wage and overtime law with the intention of preserving the status quo that prevailed before revised federal regulations went into effect Aug. 23.

Similar moves are afoot in Michigan and Ohio, but so far neither of those efforts has gained much ground.

At the behest of Democratic Gov. John E. Baldacci, the Maine Department of Labor proposed rules that "any employee in a. position that had or should have had the right to overtime under the U.S. Department of Labor regulations at 29 C.F.R. Part 541 [the so-called white-collar exemptions] in effect on August 22, 2004, will maintain that right."

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In April, the U.S. Department of Labor (DOL) finalized new regulations that were intended to update and clarify the existing rules under the Fair Labor Standards Act (FLSA), which had not been substantially changed for over 50 years. States have the option of giving workers stronger overtime protections than the federal rules.

Besides changing the duties tests for the white-collar exemptions, DOL raised the minimum salary needed to qualify for an exemption from $8,060 to $23,660.

According to DOL, the updated regulations will strengthen overtime protection for 6.7 million low-wage salaried workers, including 1.3 million who were not guaranteed overtime pay under the old regulations when they worked more than 40 hours in a week.

Critics said DOL's changes would strip millions of workers of the right to overtime, prompting a battle in Congress to invalidate the regulations.

Meanwhile, several states have taken up the cause of preserving the overtime status quo from before Aug. 23. Illinois passed legislation in March, and Maine may do the same with administrative rulemaking.

Employers are obligated to apply whichever overtime rules are more generous to the employee. Multistate employers face particular challenges.

Maine's proposed definitions for the administrative and executive exemptions track the so-called "long test" under the old federal rule. However, its applicable salary level was so low that it didn't actually apply to many workers.

The aspect of the long test that Maine wants to keep is the requirement that employees spend no more than 20 percent of their workweek (40 percent in retail) engaged in nonexempt duties.

In an Oct. 6 public hearing by the Maine Department of Labor's Bureau of Labor Standards, about a dozen witnesses testified on the two sides of the issue.

Rep. Ray Pineau, a Democrat representing the Jay district, spoke in favor of the regulations on behalf of more than 50 Democratic members of the state legislature. "The Maine rules will cover no new workers; this just preserves worker classifications and definitions that were already in place," according to Pineau's written testimony. "This will not burden businesses, as critics may say, because they have been operating under the old interpretation of FLSA for years."

Representatives of the Maine AFL-CIO and several other labor groups testified in support of the proposal, but spokespersons for the Maine State Chamber of Commerce and for several other business groups sharply disagreed.

"The Maine Department of Labor should demonstrate prudence and patience, allowing time for the federal rules to set in before acting," testified Linda Haft, an HR professional who works in Bar Harbor and is legislative director for the Maine State Council of the Society for Human Resource Management (SHRM).

The proposed change "will not restore the state's overtime rules to a pre-August 23 status," Haft said. "Instead, the proposed ruling will create administrative nightmares for HR professionals, whose responsibility it is to classify employees as exempt or nonexempt. The proposed rule will create a multitiered system, requiring employers to administer both state and federal tests, removing the objectivity standard set in the federal rule for determining exempt/nonexempt status."

Such attempts to override the federal overtime regulations are premature at best, said David Namura, SHRM's manager of state affairs. "SHRM supports the federal FLSA updates as a good first step, and we believe that state public policy-makers need to be very prudent in at least giving the federal regulations time to take effect. Give HR professionals a chance to implement the new law."

Maine labor department officials are reviewing the testimony and comments and addressing them, explained Maine employment attorney Charles S. Einsiedler Jr.

The department is free to amend the proposal and, if there are major changes, it would not be unusual to have another public hearing, said Einsiedler, a partner in the Portland office of Pierce Atwood LLP. The next step is to propose final rules, submit them to the state attorney general for review and ultimately publish them.

Labor department officials have predicted the final rules will be out by the end of the year, according to news accounts.

In Ohio, a member of the minority Democratic party has introduced legislation pre-emptive of the federal overtime rules, but "it doesn't appear likely to move," Namura said. A Michigan legislator has drafted a similar measure. The state's Democratic governor conceivably could accomplish the same thing via regulation--as in Maine--and there may not be enough votes in the legislature to overturn it.

--MARGARET M. CLARK, J.D., SPHR

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