Fair Labor Standards Act:

Labor Made Key Decisions in Studies of Updated Overtime Rule and Contractor Provided Support

GAO-05-580R: Published: Jun 3, 2005. Publicly Released: Jul 6, 2005.

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In 2004, the Department of Labor (Labor) updated the rule that determines who is entitled to overtime pay of "time and a half" when they work more than 40 hours a week. As part of the rule-making process, Labor was required to estimate the impact of the updated overtime rule and publish the results in the Federal Register. Labor contracted with the CONSAD Research Corporation (CONSAD) to assist the agency in studying the impact of both the proposed and final overtime rule. Because of Congress' interest in these studies and how they were conducted, we agreed to identify: (1) CONSAD's contractual responsibilities in assisting Labor with estimating the impact of the updated overtime rule on workers and (2) CONSAD's actions in carrying out these contractual responsibilities. To determine CONSAD's responsibilities, we obtained and analyzed two contracts between Labor and CONSAD. The first contract covered CONSAD's responsibilities related to Labor's impact study for the proposed overtime rule, while the second contract covered CONSAD's responsibilities related to Labor's impact study for the final overtime rule.

The contracts required CONSAD to provide technical and analytic support to assist Labor in estimating the impact of the updated overtime rule. For the proposed rule, the contract tasked CONSAD with writing reports on the costs and benefits of the rule as well as the impact of the rule on businesses and state and local governments. Although the contract did not specifically require CONSAD to estimate the impact of the proposed rule on workers, it did provide for CONSAD's assistance in performing other analyses. In keeping with this provision, Labor asked CONSAD to estimate the number of workers who could gain or lose overtime pay as a result of the proposed rule. After CONSAD completed its work on the proposed rule, Labor and CONSAD set up a second contract to have CONSAD assist with the study of the final overtime rule. The contract language covering CONSAD's work on the final rule specifically required CONSAD to estimate the impact of the updated rule on workers. CONSAD was required to provide information on affected workers, including their ages, educational backgrounds, and occupations. For both contracts, Labor was responsible for overseeing CONSAD's work and had the authority to select the direction and scope of CONSAD's analyses. Consistent with the contracts, CONSAD provided Labor with technical and analytic support, and Labor made all of the key decisions in estimating the impact of the updated overtime rule. CONSAD conducted literature searches, proposed certain research methods, analyzed data, and wrote summary reports. Labor, in turn, selected the research methodologies, picked the data sources, and provided the legal and policy interpretations used in the studies. Labor officials wrote the impact studies published in the Federal Register. For the CONSAD reports and the impact studies in the Federal Register, Labor noted it was responsible for creating the numbers that estimated the impact of the updated overtime rule on workers.

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