White House nixes compromise on overtime pay provision

The White House has flatly turned down a compromise on overtime compensation rules floated by Senate Labor-HHS Appropriations Subcommittee Chairman Arlen Specter, R-Pa., to break the impasse that has held up the $470 billion fiscal 2004 Labor-HHS spending bill for weeks.

Specter offered to drop a Senate-approved amendment blocking proposed Labor Department changes in overtime pay regulations-an amendment which he and Appropriations Chairman Ted Stevens, R-Alaska, support-in exchange for the administration dropping other rules on union transparency, according to sources familiar with the meeting.

The White House has threatened to veto the Labor-HHS measure if the overtime provision is included in a final bill.

During a Tuesday meeting with Labor Secretary Elaine Chao, Specter offered to drop the amendment in exchange for the administration "backing away" from unrelated rules that would require unions to file more detailed financial disclosures known as LM2 forms, sources said. Unions vehemently oppose both sets of rules. Chao rejected the offer.

"They told him that there really is no compromise," said one business lobbyist who favors the proposed overtime regulations. The administration threatened a veto when both House and Senate bills were on the floor in anticipation of a possible LM2 amendment, but it was not offered.

Specter is facing a tough 2004 re-election campaign in labor-friendly Pennsylvania and needs union support to stave off a primary challenge from conservative GOP Rep. Patrick Toomey. His offer on the union disclosure rules is seen by some as aiming to cover his bases with labor in case he is perceived as folding in the face of White House pressure on the overtime amendment. Specter's office did not return calls seeking comment.

The Senate amendment, sponsored by Labor-HHS Appropriations Subcommittee ranking member Tom Harkin, D-Iowa, would effectively block the department from enacting rules that would make it easier for employers to classify workers as exempt from overtime pay requirements. Critics of the rules say they could cut as many as 8 million workers from overtime eligibility. The House rejected a similar amendment by a narrow margin, but later adopted a nonbinding resolution instructing conferees to retain the Senate language.

The proposed rules could have an impact on overtime pay for federal employees. The Office of Personnel Management is in charge of overseeing overtime rules in the federal sector. OPM's current criteria for deciding if an employee is exempt or nonexempt are based on the Labor Department's criteria.

The continuing stalemate and Specter's apparent concern over the overtime rules makes it more likely that the Labor-HHS appropriations bill will be tucked into an omnibus spending bill, where the amendment will simply be stripped out, sources said.