U.S. PIRG, a federation of about 400 state nonprofit groups, on Monday said it opposes the Obama administration’s new overtime rule, which vastly expands the number of workers who must be paid time and a half after 40 hours in a week, saying it will have to hire fewer staffers.
The liberal coalition group said that complying with the regulatory change would undermine its members’ ability to engage in government and consumer watchdog activism.
“To cover higher staffing costs forced upon us under the rule, we will be forced to hire fewer staff and limit the hours those staff can work – all while the well-funded special interests that we’re up against will simply spend more,” said U.S. PIRG Executive Director Andre Delattre. The acronym stands for Public Interest Research Group.
It is an ironic development for the Obama administration, since the rule change was intended to crack down on businesses that are exploiting workers by deeming their duties “managerial” in nature. Managerial employees are exempted from the Fair Labor Standards Act’s overtime requirement.
It is particularly ironic given that one of the veterans of the activist group is President Obama. After graduating from Columbia University in 1983, he spent a year as an organizer for the New York PIRG in Harlem, which is not part of the federation. In 2004, Obama reportedly told then-U.S. PIRG Executive Director Gene Karpinski, “I used to be a PIRG guy. You guys trained me well.” If his new rule had been in place then, they may not have been able to train him.
The administration’s overtime rule, issued last week, more than doubled, from $23,000 to $47,000, the annual income an employee must make before he can be deemed managerial. The rule goes into effect Dec. 1 and is expected to cover an estimated 4.2 million workers.
“Companies will have a choice to make: Either they pay their workers overtime or they cap the work week at 40 hours. Either way, the worker wins,” Vice President Joe Biden told reporters last week.
The move was cheered by labor unions, which have long argued that the exception is widely abused. Business groups have complained loudly, arguing that the economy is still too fragile to be increasing labor costs and that small companies in particular will not be able to afford the added expense.
Among those small companies are U.S. PIRG’s members. Delattre said many simply cannot afford to pay what the new regulation would require.
“Doubling the minimum salary to $47,476 is especially unrealistic for nonprofit, cause-oriented organizations. Organizations like ours rely on small donations from individuals to pay the bills. We can’t expect those individuals to double the amount they donate,” he said.
The administration has attempted to mollify the concerns of nonprofit activist groups by stating that the rule applies only to organizations that engage in interstate commerce. Delattre said that doesn’t help, given how broadly interstate commerce is defined by the federal government.
“In today’s world, any employee who regularly uses the Internet, email, phone or snail mail as part of their work will be engaged in ‘interstate commerce,'” he noted.
PIRG was founded in 1971 by Ralph Nader, who is no longer affiliated with it.
