Overtime Pay Lawyers More About the FLSA  
Introduction »
An Overview of the Fair Labor Standards Act »
FLSA Overtime Pay Exemptions »
A Bright-Line is Needed »
Our Proposal For Further Study - The United States Department of Labor's "Solution" Did Not Go Far Enough »
Conclusion »
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     This paper is an update of: A Call for Bright-Lines to Fix the Fair Labor Standards Act, authored by Robert D. Lipman*, Esq., Allison Plesur**, Esq. and Joel Katz, Esq., Hofstra Labor Law Journal, Vol. II, No. 2, Spring 1994.

     The Fair Labor Standards Act1 ("FLSA") was enacted in 1938 to combat unemployment and help safeguard the standard of living for low paid employees. The FLSA establishes minimum wage requirements and a maximum hours standard.2 Under the FLSA, employers are required to pay employees who work over the maximum hours standard (40 hours per workweek) overtime premium pay equal to one and one half times their regular rate of pay.3 Congress has created certain statutory exemptions from the minimum wage requirement and the maximum hour standard.4 In an effort to define who qualifies for these exemptions, the Department of Labor has promulgated regulations concerning who may be classified as exempt.5 The outcome of these exemptions and regulations is a shaky framework which is at best problematic. As a result, there is currently a resounding cry for federal wage-hour law reform.

     In response to the increasing attention given to the overtime provisions of the FLSA, various entities have offered proposals for FLSA reform. The AFL-CIO has issued its perennial recommendation that overtime pay be raised to double time.6 In addition, bills have been introduced in Congress which would permit administrative, executive and professional employees to remain exempt from the maximum hours standard even though they are not paid a salary.7 Such pronouncements, although indicative of the attention being paid to the need for reform, are short-sighted. The FLSA requires a much more extensive overhaul.

     Recently the exemptions that have drawn the most comment are the "white-collar" exemptions that exempt administrative, executive and professional employees from the maximum hour standard.8 These exemptions apply to workers who perform certain primary duties only if they are paid on a salary basis.9 This requirement is what is commonly known as the salary basis test.

     The salary basis test10 has proven to be unworkable. Its rigidity does not take into account the increasing flexibility used in establishing methods of compensation.

     This article will discuss the confusion over properly classifying administrative, executive and professional employees as either exempt or non-exempt from the FLSA's overtime pay requirements. Finally, it will review this paper's original 1994 proposed solution designed to offer bright-line guidance to employers and employees who must operate within the confines of the FLSA in light of the 2004 regulations.
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1. 29 U.S.C. §§ 201-219 (1988) (back)
2. 29 U.S.C. §§ 206, 207 (1988) (back)

*B.S., New York State School of Industrial and Labor Relations at Cornell University; J.D., Buffalo Law School; Member of the employment and labor firm, Lipman & Plesur, LLP. (back)
**B.S., New York State School of Industrial and Labor Relations at Cornell University; J.D., New York Law School; Member of the employment and labor firm, Lipman & Plesur, LLP. (back)

3. 29 U.S.C. § 207 (1988) (back)
4. See generally 29 U.S.C. § 213 (1988) (back)
5. See 29 C.F.R. §§ 500-687 (1993) (back)
6. The AFL-CIO's recommendation is based on the premise that overtime pay should be a deterrent to employers from requiring overtime work. The argument follows that employers will prefer to work a smaller number of employees longer hours because of the high fixed costs of employment, primarily from the high costs of benefits and relatively low marginal cost of overtime work. The AFL-CIO believes that a higher overtime premium pay requirement is necessary to encourage employers to hire additional workers rather than employ workers in excess of forty hours in a workweek. Some commentators are calling for an even higher overtime pay penalty, up to triple time, to encourage employers to hire additional workers. Harry Bernsein, Raising Overtime Penalties Might Create More Jobs, L.A. Times, Mar. 2, 1993, at D3. (back)
7. See H.R. 1309, 103rd Cong., 1st Sess. (1993); see also 135 Cong. Rec. S3743 (daily ed. Apr. 12, 1989) (proposed amendment of Sen. Wallop); 138 Cong. Rec. S10532-33 (daily ed. July 23, 1992) (statement of Sen. Kassenbaum). (back)
8. See 29 C.F.R. §§ 541.1-541.3 (1993) (back)
9. See 29 C.F.R. § 541.118 (1993) Professional employees may also be paid on a fee basis. 29 C.F.R. § 541.313 (1993) (back)
10. 29 C.F.R. § 541.118 (1993). (back)
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