A provision in the recently signed Defense Department budget bill affecting the overtime pay cap for federal managers could put a substantial amount of money into their pockets over five years, according to a congressional estimate.

Certain managers, supervisors and other employees who formally are “exempt” from overtime pay eligibility under the Fair Labor Standards Act nevertheless get it under other federal pay laws. Under prior law, overtime pay for them was capped at one and a half times the GS 10, step 1 rate, meaning that employees who earn above roughly the GS-12, step 5 rate receive overtime pay that is, on an hourly basis, less than their regular pay-and in many cases, less than the rate their subordinates are receiving.

The DoD measure sets the cap at the greater of one and a half times the hourly rate of a GS-10, step 1, or the hourly rate of the basic pay of the employee. The Congressional Budget Office estimates that about 680,000 federal employees at GS-10 and above are exempt from the FLSA, about 37 percent of the federal work force. Assuming that those overtime hours are distributed proportionately across the upper GS pay grades, the change would yield approximately $100 million in 2004 and $700 million over the 2004-2008 period, CBO estimated.