National Advisory Committee on
Meat and Poultry Inspection
June 5-6, 2002
Overtime Rate Structure Study
The President’s FY 2003 Budget signaled the Administration’s interest
in revisiting the Agency’s overtime rate structure with the aim of
modifying it in FY 2004.
OMB proposes that FSIS examine the current overtime
rate structure to determine if the current structure results in
inequities among industry sectors. Large establishments are seen
as paying less proportionately than small and very small establishments
due to the greater use by larger establishments of established second
The study is to determine if a different overtime rate
structure might “level the playing field” among various industry
sectors and reduce the disproportionate share of costs paid by smaller
OMB has also directed that different cost-sharing
proposals between FSIS and the regulated industry be examined.
FSIS has formulated a workgroup to examine the proposed
overtime rate structure and proposed changes. The workgroup is studying
- Equity within FSIS’s current overtime rate structure
- Cost benefit of OMB’s proposed overtime rate structure changes.
- Implications of imposing a licensing fee.
The workgroup is presently examining the equity of the
current overtime rate structure by measuring the cost benefit ratio
across industry. In particular, equity is being measured by looking at
the establishments’ annual costs in comparison to their benefits.
The theory behind the cost benefit ratio is that each
plant is deriving a certain level of benefit from each hour of
inspection service provided by FSIS. OMB has theorized that
presently large plants are receiving a greater share of the industry
benefits. Or stated differently, that FSIS’ current overtime rate
structure is inequitable.
- We are currently examining the annual overtime billings for the
approximate 7600 establishments FSIS provided inspection service in
FY 2001. This data when integrated with benefit information
on the establishment and other data will allow us to examine the cost
benefit ratio for each plant. A statistical variance analysis will then
be performed to see if there are significant differences in equity
among the three plant sizes (i.e., large, small and very small).
Process For Completing The Study
The Farm Security Act of 2001 includes language that
reflects changes in the overtime and holiday pay rates for certain FSIS
inspection service. The workgroup will factor the implications of this
new legislation into- the Study.
The FSIS contact person for obtaining additional
information about the overtime rate structure study is:
Jeanne O. Axtell
Room 347-E Jamie L. Whitten Building
1400 Independence Avenue, SW
Washington, DC 20250-3700
PH: (202) 720-4425
FAX: (202) 690-1742