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Overtime rule out today

With help from Cogan Schneier and Timothy Noah.

OVERTIME RULE OUT TODAY: Vice President Joe Biden will join Labor Secretary Tom Perez and Sen. Sherrod Brown (D-Oh.) to announce the Labor Department’s final overtime rule. The rule, which will take effect Dec. 1, raises to $47,476 the salary threshold under which virtually all workers qualify for overtime pay. (We said $47,000, we said $47,500; now we’re saying $47,476, which is where it honest-to-God ended up.) That’s more than double the current salary threshold ($23,660 ) but below the Labor Department’s proposed threshold ($50,440). Workers above the salary threshold may still be eligible for overtime provided their duties aren’t executive, administrative or professional. The rule won’t affect hourly workers, whom employers already must pay overtime. More from POLITICO’s Marianne LeVine here: http://politico.pro/203zbbi

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For the first time, the Labor Department will index future salary thresholds to inflation: Every three years the threshold will rise to the 40th wage percentile for full-time salaried workers in the country’s lowest-wage region (now and for the foreseeable future that’s the Southeast). Previously, lifting the salary threshold required the department to propose a new regulation — a politically and bureaucratically arduous process. Indeed, over the previous 40 years the overtime salary threshold got updated only once, by George W. Bush (who trimmed eligibility in so many other ways that in the end not many additional workers were covered). Before Jimmy Carter, though, presidents routinely made sure that salary thresholds (in those days there were three) stayed within shouting distance of median income. In the late 1970s they stopped, first because of inflation, then because of anti-regulatory sentiment, and then just … because. Overtime went from being a middle-class benefit to largely a poverty benefit. Now it will be a middle-class benefit once again. For Pros, POLITICO’s Brian Mahoney relates the overtime threshold’s eight-decade history here: http://politico.pro/24Z83xw


— MEDICAID-FUNDED PROVIDERS GET CONCESSIONS: Some health care providers that rely predominantly on Medicaid funding won’t be subject to the new overtime rule until March 2019. These providers serve people with intellectual and developmental disabilities in homes and small facilities. Advocates had long argued that their limited funding made the proposed rule unfeasible. In response, the Labor Department issued a non-enforcement policy , giving them a little more than two years to comply.

— POST-DOCS GET SOME LOVE: It was never clear how the Labor Department would apply the new overtime rule to post-doctoral fellows–those newly minted PhDs who perform scientific research round the clock for universities and research organizations like National Institutes of Health. The Labor Department said last night that the new salary threshold would apply to post-doctoral fellows who do not primarily teach. (teachers have long exempted from overtime).

That’s should give raises to a lot of post-docs, particularly in the health sciences. Given that the average annual pay for post-docs is around $45,000, quite a few will be entitled to time-and-a-half pay under the overtime rule. But expect many universities and research institutions simply to raise salaries above the new threshold. That’s what Perez thinks will happen, according to an op-ed he wrote in The Huffington Post Tuesday. “Universities, teaching hospitals, and other institutions that employ postdocs have a choice,” Perez writes. “They can carefully track their fellows’ hours and pay overtime, or they can raise their salaries to levels above the threshold and thereby qualify them for exemption.

“Biomedical science, by its very nature, is not work that neatly falls into hourly units or shifts. So, from our vantage point, it seems that the only option consistent with the professional nature of scientific work is to increase salaries above the threshold.” http://huff.to/1R7ozBY

OT DOC DUMP: Here are some useful DOL documents about the new rule:

Fact sheet: http://1.usa.gov/1OEUfUV
FAQs: http://1.usa.gov/1TmEOB1
How the rule applies to non-profits: http://1.usa.gov/1TYmBs2
How the rule applies to state and local governments: http://1.usa.gov/1R7r8UH

GOOD MORNING. It’s Wednesday, May 18, and this is Morning Shift, POLITICO’s daily tipsheet on labor and employment policy. Send tips, exclusives, and corrections to bmahoney@politico.com, tnoah@politico.com, cschneier@politico.com, and mlevine@politico.com. Follow us on Twitter at @politicomahoney, @TimothyNoah1, @CoganSchneier, and @marianne_levine.

WELCOME COGAN SCHNEIER: POLITICO’S labor and employment team has a new recruit: former POLITICO web producer Cogan Schneier. Cogan will cover workplace issues, including worker safety and civil rights, and expand our EEOC, MSHA and OSHA coverage. She’s a graduate of the University of Wisconsin-Madison, where she served as an editor of the Badger Herald, one of the largest independent student newspapers in the country. Follow Cogan on Twitter @CoganSchneier and send her Pulitzer-worthy scoops at cschneier@politico.com.

BUSINESS GROUPS ON OT: LET THE RECLASSIFICATION BEGIN: The business community’s primary counterargument to the overtime rule is that it won’t lead to raises for the million of workers that the Obama administration promises because employers will shift newly-eligible salaried employees to hourly status and strictly enforce a 40 hour work week.

“If there are employers who have a lot of extra cash lying around, they would be happy to allow people to work overtime or give them a salary increase,” former Wage and Hour administrator and Littler Mendelson attorney Tammy McCutchen told Morning Shift. “But the reality is, in a lot of industries that don’t have high levels of profits, particularly restaurants, retail, hospitality, healthcare, they’re just going to reclassify employees and hold them to 40 hours. And so they will not be seeing more pay in their paychecks.”

The National Retail Federation, the Chamber of Commerce and the National Federation of Independent Business all sent statements saying essentially the same thing. “Entry-level management positions are going to disappear and those employees will fall back into hourly jobs,” said NFIB President and CEO Juanita Duggan. “Small businesses everywhere will be affected, but most of the damage will occur in places where the cost of living and the wage scale is much lower than it is in Washington, DC, or Manhattan, or San Francisco.”

But union leaders lauded the rule as a badly-needed update. “It is not uncommon to see managers who earn a modest salary at grocery stores and retail shops work 50 or 60 hours per week with no extra pay,” UFCW President Marc Perrone said in a statement. “By increasing the overtime threshold, we can begin to put an end to this unfair practice and see more hours given to people who really want them.”

House Education and Workforce Committee ranking Democratic Rep. Bobby Scott (D-Va.) praised the rule, saying it would help “enforce the traditional 40-hour work week.” Sen. Patty Murray (D-Wa.), the ranking Democrat on the Senate HELP Committee, said, “In this country, hard work should pay off, and when workers put in extra hours on the job, they should be paid fairly for it.”

PEREZ WADES DEEPER INTO VERIZON DISPUTE: CWA President Chris Shelton and Verizon CEO Lowell McAdam met Tuesday with Labor Secretary Tom Perez and Allison Beck, a federal mediator, in high-level talks designed to end a strike of 40,000 Verizon workers. Top union officials and company bargaining officials are also involved, and those negotiations will continue this week. “I’m encouraged by the parties’ continued commitment to remain at the bargaining table and work toward a resolution,” Perez said in a statement.


—PERSUADER HEARING: The House Committee on Education and Workforce will mark up a bill to block enforcement of the Labor Department’s new persuader rule.

The bill, from Rep. Bradley Byrne (R-Al.), would use the Congressional Review Act to block the regulation, which requires expanded disclosures from law firms and consultants advising employers on union organizing. The legislation is virtually certain to be vetoed should it reach the president’s desk.

—E.U. LAWMAKERS TALK MCDONALD’S: Members of the European Parliament will meet with the Congressional Progressive Caucus today to discuss allegations that McDonald’s is dodging taxes in Europe. Among the participants will be Reps. Mark Takano (D-Calif.); Sheila Jackson Lee (D-Tx.), Debbie Dingell (D-Mich.), Ruben Gallego (D-Ariz.), and Corrine Brown (D-Fl). The meeting comes as the European Commission investigates McDonald’s following a union-backed complaint that it dodged €1 billion in taxes.


— BOARD SIDES WITH SLUR-SHOUTING PICKETER: The NLRB Tuesday affirmed a ruling requiring Cooper Tires to reinstate a union picketer it fired for shouting racial slurs during a 2012 strike. A board judge ruled in June decision that Cooper broke the law after firing the picketer, who directed his slurs at African-American replacement workers. (“Hey, did you bring enough KFC for everyone?,” “Go back to Africa, you bunch of f—-ing losers,” etc.).

Business groups had assailed the judge’s decision, filing amicus briefs seeking reversal from the board. The board’s general counsel disagreed and argued that the speech, no matter how hateful, was still protected by federal labor law. The board’s three Democratic members didn’t issue a lengthy opinion explaining the affirmance Tuesday. Decision here: http://bit.ly/1TXnM8s

— UNION FILES CHARGE AGAINST WE WORK: A local affiliated with the office workers union OPEIU filed an NLRB charge against the startup WeWork after a New York Times story claimed the company fired a worker who refused to sign a mandatory arbitration agreement. “We researched WeWork Companies, Inc. forced arbitration agreement, company handbook, and invention, non-disclosure, and non- solicitation agreement and found blatant violations of Section 7 of the National Labor Relations Act,” an OPEIU Local 153 official told Morning Shift in an email. WeWork didn’t comment. Read the charge here: http://bit.ly/1OFv5Wf

— GOODBYE, NOEL CANNING: The D.C. Circuit Tuesday affirmed an NLRB ruling against Noel Canning, four years after the court used the same case to invalidate President Barack Obama’s recess appointments to the board.

— GARLAND CHEAT SHEET: Here’s a handy run-down of all the NLRB-related opinions authored by Supreme Court nominee and D.C. Circuit Chief Judge Merrick Garland, courtesy of Alliance for Justice: http://bit.ly/1NxrxVy


— CLEVELAND HEARS $15 TESTIMONY: Legislation creating a city-wide $15 hourly minimum made its way to the Cleveland City Council after SEIU local 1199 collected enough signatures to compel the council to act, Cleveland.com’s Sarah Dorn reports. Council members heard testimony Tuesday on the legislation, which would require most businesses with 25 or more employees to pay a $15 minimum starting January 2017. Both Democratic Mayor Frank Jackson and Council President Kevin Kelley have said they’d prefer a statewide increase. No city in Ohio currently has its own minimum wage, and some fear the state would overrule any municipal action to create one. Council committees have 60 days to review the bill and make recommendations, and an additional 30 days either to pass the bill or reject it, which would automatically put it on the ballot for November’s elections. http://bit.ly/1R78aNK

— ALL STATE SETS $15 FLOOR: The Chicago Tribune’s Becky Yerak reports that Allstate, the country’s largest publicly traded home and car insurer, is establishing a $15 hourly minimum starting pay for U.S. corporate workers, which will affect nearly 10 percent of its domestic workforce, according to its annual shareholder report. The company cited recruiting as a reason for establishing the minimum, which mostly affects workers in claims processing and call centers. In that same shareholder report, the insurance giant noted that it had “restructured” its employee pension and medical benefit costs as a way to spread benefits “more evenly across employees.” The minimum compensation includes base pay, overtime and bonuses when applicable, but not benefits. http://trib.in/1TiCl6X

THE ELITE PAY GAP: Women earn less on average than men, but highly educated women face the most stubborn pay gap of them all, the Wall Street Journal’s Janet Adamy and Paul Overberg write in a new analysis comparing pay in 466 high-earning occupations. The Journal’s analysis of Census Bureau data showed female doctors earned 64 percent of what male doctors earned over a five year period. For financial advisors, women made an average of $62,000 per year, compared to men’s $100,000 in that same period.

Many white-collar jobs give substantially larger financial rewards to those logging the longest hours and who job-hop often, phenomena that limit white-collar women who pull back for child-rearing. Researchers on the topic say ingrained workplace cultures also impede women’s earnings,” Adamy and Overberg write.

It’s a significant change from 1980, when female college graduates earned 68 percent of what their male peers did, while female high school grads earned 61 percent. Part of the narrowing of the blue-collar pay gap could also be attributed to the loss of manufacturing jobs and the decline of unionization — between 1981 and 2011, the percentage of men covered by collective-bargaining agreements halved, though women’s coverage declined only slightly.

Government at all levels has tried to grapple with ways to narrow the gender pay gap, often looking to increased transparency, such as the Obama administration’s effort to require businesses with 100 or more employees to provide the federal government with employee pay data by gender, race, and ethnicity. Policy officials say expanding paid family leave and offering more affordable child care will be necessary to remedy the gap. http://on.wsj.com/1Tevxwy


— Teamsters pilots vote for strike, from Bloomberg: http://bloom.bg/22fyGfV

— France enters Uber classification battle, from Bloomberg: http://bloom.bg/1qrVNGe

— Illinois Gov. Bruce Rauner vetoes union arbitration bill again, from Chicago Tribune: http://trib.in/1Nxl4Kx

— Tesla to probe use of visa workers after newspaper probe, from The Mercury News: http://bayareane.ws/1TXZRsk

— Larry Cohen on how to make the Democratic primary more democratic, from In These Times: http://bit.ly/1NxljFq

— Los Angeles Times, Chicago Tribune send I.T. jobs overseas, from ComputerWorld: http://bit.ly/1TmjOsD