A proposed Labor Department rule suggests ways employers can avoid paying overtime to some of the 1.3 million low-income workers who would become eligible this year.

The department's advice comes even as it touts the $895 million in increased wages that it says those workers would be guaranteed from the reforms.

Among the options for employers: cut workers' hourly wages and add the overtime to equal the original salary, or raise salaries to the new $22,100 annual threshold, making them ineligible.

The department says it is merely listing well-known choices available to employers, even under current law.

"We're not saying anybody should do any of this," said Labor Department spokesman Ed Frank. (AP, via the Seattle Times)

We caught the proposed changes to overtime rules back here, but thanks to Helpful Reader Eric for bringing the handy suggestions to our attention:

The Labor Department is suggesting ways employers can avoid paying overtime to newly eligible workers in its proposal. It offered this example of a "payroll adjustment":

• A worker earning $400 per week for 40 hours becomes eligible for overtime pay, which would average five hours a week.

• The employer can convert the worker to an hourly pay rate. But instead of paying him $10 an hour plus overtime, the employer can cut the worker's pay to $8.42 an hour, or $336.80, for a 40-hour week.

• The five hours of overtime pay at time-and-a-half — totaling $63.15 — get added to the reduced pay.

• The new pay with overtime equals $399.95 per week, compared with the old salary of $400 per week with no overtime.
This "payroll adjustment option ... could offset the impact of the proposed rule," the department said.

Source: Labor Department's proposal to revise overtime pay rules, published March 31, 2003, in the Federal Register