Overtime rules, revisions worry Maine firms

BANGOR – The state Department of Labor has revised its first version of draft rules intended to protect overtime eligibility for workers that could lose it under federal standards set last year.

But members of Maine’s business community that participated in a public hearing on the draft rules last October remain unhappy. Some of the revisions they agree with but the overall premise of the state coming up with its own set of standards – thus requiring many businesses to follow two sets of overtime rules – troubles the business trade groups.

In addition, the groups believe that any substantive changes to state law such as the proposed rules should be handled legislatively instead of through the rule-making process.

One state legislator, Rep. Jonathan McKane, R-Newcastle, doesn’t want the state to establish overtime-eligibility rules at all. He has introduced a bill that would require Maine businesses to conform only to the federal overtime rules.

“It’s the state coming in and saying we have to follow two sets of rules,” McKane said. “Maine has the stigma – and rightly so – of being business-unfriendly. We have got to make a friendlier atmosphere for businesses. This is the sort of thing that makes the opposite of this happen.”

Last August, the Bush administration implemented federal overtime-eligibility requirements that were intended to simplify what was viewed by businesses as a complex set of rules. Trade unions were among the staunchest opponents, saying millions of American workers would lose the right to overtime pay under the new rules.

A week later, the state Department of Labor countered the federal government by proposing a set of rules that the Gov. John Baldacci administration believed would protect Maine workers from losing overtime because of the new federal standards.

A public hearing was held last October concerning the state’s proposed rules, and this week the Labor Department released a seven-page revised set that took into consideration concerns of the business community expressed at that hearing, according to William Peabody, director of the state’s Bureau of Labor Standards.

“It is a bit of an expansion but it was largely to address issues that people had the first time around in further detail,” he said.

The state and federal overtime-eligibility standards may overlap for some classes of workers, he said. When that happens, “the employer has to apply whatever sets of rules or regulations that provide the best protection.”

David Clough, state director of the National Federation of Independent Businesses, said the new rules could be costly to Maine’s smaller businesses because of the time and expense needed to follow both the state and federal rules.

He said the added costs could prove detrimental since many small businesses already are facing rising health insurance costs, rising worker’s compensation and liability insurance rates and rising electricity rates.

“We are concerned that the revised proposed rules will benefit some people at the expense of many others,” Clough said.

Maine already is being mentioned at the national level for trying to write its own overtime rules. An article about the state’s proposed rules was printed in the December issue of HR Magazine, a national trade publication for human resources managers. The article stated that efforts to counter the federal government’s new overtime-eligibility standards also have been discussed in Michigan and Ohio, “but so far neither of those efforts has gained much ground.”

The revised seven-page version of the proposed rules is lengthier than the first set by a couple of pages and would replace one sentence in the current state law.

Like the first set of draft rules, the revised set establishes definitions for administrative, executive, professional and salaried employees.

The draft rules are available from the Bureau of Labor Standards, which will be receiving public comment on them until mid-February. Then it is likely that they will be implemented effective immediately.

Peter Gore, senior legislative analyst with the Maine State Chamber of Commerce, said he hasn’t heard of any workers losing their overtime eligibility under the new federal standards. Instead, just the opposite.

“What we’re hearing from within the business community is that more workers are entitled to overtime,” he said. “So why do we have to come up with our own rules?”

Peabody said he’s aware that businesses still may be unhappy with the proposed rules, just like they were in October when the first draft was under review. But the changes are required to protect Maine workers, he said.

“There’s a significant portion of people who thought these rules were unnecessary,” Peabody said. “I’m sure they haven’t changed their minds.”

He said he believes the Labor Department has the authority to change the definitions of workers and pay deductions without going through the state Legislature.

“Certainly, as a matter of authority, we have the authority to adopt regulations in the manner and we have chosen to do so,” he said.

Republican Rep. McKane disagrees.

“We should be voting on that and not pushing this through,” he said.