Food Safety and Inspection Service United States Department of Agriculture Washington, D.C.  20250-3700

Office of Policy, Program Development and Evaluation

Meat and Poultry Advisory Committee Staff

National Advisory Committee on Meat and Poultry Inspection
June 5-6, 2002

Briefing Paper
Overtime Rate Structure Study

Purpose

• To present an overview of the Overtime Rate Structure Study being conducted by FSIS.

Main Points

Background

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 shift operations.
   

• 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 industry members.
   

• OMB has also directed that different cost-sharing proposals between FSIS and the regulated industry be examined.

Approach

FSIS has formulated a workgroup to examine the proposed overtime rate structure and proposed changes. The workgroup is studying the following:

- Equity within FSIS’s current overtime rate structure across industry.
- 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 Overtime Rate Study is organized to be completed in three phases. Phase one, the current period in the Study, involves examining the equity of the Agency’s existing overtime rate structure. In this phase, the workgroup is examining and comparing the cost benefit distribution for the three plant sizes, very small, small and large.
• Phase two includes an assessment of the equity of the overtime rate structure given that OMB’s proposed changes are adopted. The workgroup will study the implications of the proposed rate structure changes.

• Phase three of the study will focus on examining the impact of imposing a licensing fee.

Additional Considerations

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.

Contact Person

The FSIS contact person for obtaining additional information about the overtime rate structure study is:

Jeanne O. Axtell
FSIS-OM
Room 347-E Jamie L. Whitten Building
1400 Independence Avenue, SW
Washington, DC 20250-3700
PH: (202) 720-4425
FAX: (202) 690-1742
jeanne.axtell@fsis.usda.gov

Send mail to webmaster with questions or comments about this web site.
Last modified:  November 25, 2002