Overtime Pay Lawyers More About the FLSA  
I. AN OVERVIEW OF THE FAIR LABOR STANDARDS ACT
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     Congress passed the Fair Labor Standards Act in 1938, largely as a response to the Great Depression.11

The Act was a response to a call upon a Nation's conscience, at a time when the challenge to our democracy was the tens of millions of citizens who were denied the greater part of what the very lowest standards of the day called the necessities of life; when millions of families in the midst of a great depression were trying to live on incomes so meager that the pall of family disaster hung over them day by day; when millions were denied education, recreation, and the opportunity to better their lot and the lot of their children; when millions lacked the means to buy the products of farm and factory and by their poverty denied work and productiveness to many other millions; and, when one-third of a Nation was ill-housed, ill-clad, and ill-nourished.12

     The law had several objectives. Congress theorized that the FLSA would create an economic incentive for employers to increase the size of their work force, thereby reducing the unemployment rate.13 Congress believed that requiring employers to pay an overtime premium whenever an employee worked over forty hours in a workweek would motivate employers to hire additional workers rather than pay the overtime penalty.14

     Another objective of the FLSA was to ensure a fixed, fair minimum wage and a reasonable workweek for industries where workers did not have sufficient bargaining power to achieve "fair working conditions and collective agreements."15 The FLSA, therefore, was primarily aimed at the "unprotected, unorganized and lowest paid of the nation's working population."16 Instead of achieving these laudable goals, the FLSA's evolution has created a maze of laws, regulations, opinion letters and interpretative manuals which defy logic.

     Although the assumption that overtime premiums resulted in increased employment was accepted in 1938, it is no longer sound. As opposed to 1938, markets are now international in scope. As markets have become internationalized, economic theories based solely on national supply and demand factors have become flawed.17 Additionally, many factors, including increased "moonlighting" by employees, different skill distributions between employed and unemployed workers, difficulties integrating new workers into team production processes, establishment size, and non-compliance with the FLSA, have been found to blur any correlation between the FLSA maximum hours standard and employment levels.18

     The FLSA's failure to address Congress' other concern, protecting unprotected workers, is illustrated by an analysis of the scheme of overtime pay exemptions. For example, Congress created an exemption for agricultural workers; however, given Congress' intent to protect the downtrodden, an exemption for low-paid agricultural workers seems irrational.19 Similarly, the exemption of many sales employees, including low wage earners, appears to belie the intent to provide such protection.20 Such groups seem to be the exact population which the FLSA was enacted to protect. On the other hand, high-paid technical workers, and even high-paid executives and administrative employees, are entitled to overtime if they are not paid on a salary basis.21 For example, there seems to be no justification for a law that provides an exemption from overtime premium pay requirements to an administrative employee earning $24,000 a year, but requires overtime premium pay for some salespeople and technicians earning four times as much.22

     The adherence to, and the evolution of, the exemption covering executive, administrative and professional employees further frustrated the achievement of the goals behind the FLSA. Segregation between clerical and blue collar workers and administrative, executive and professional employees was fairly well delineated in 1938. The explosion of job classifications and blurring of job titles did not occur until much later.23 Reflecting upon the history of the FLSA, one senator found that the "needs, structure and the composition of the workplace have changed drastically. . . Not only is the composition of the work force more diverse. . ., but there is a need for diverse work arrangements."24 Because there are now so many more types of administrative, executive and professional employees who require more flexible work schedules, the rigid FLSA exemptions are no longer serving the same objectives that they served in 1938.

     The United States Department of Labor, federal courts, employment counsel, and human resource professionals have devoted tremendous resources to determine who is entitled to receive overtime pay under the FLSA. Despite the expenditure of these resources, however, the test to determine which administrative, executive and professional workers may be exempt from the maximum hours standard is not clear.25 Much of the work done in determining who may be deemed exempt from the FLSA's overtime pay requirements involves identifying individual workers' primary duties and deciding whether such primary duties involve discretion and independent judgment.26 This is an onerous and burdensome, if not impossible, job. Classification of many positions is further complicated by varying notions of supervision, discretion and judgment. Further, job duties often change. These problems are compounded by the fact that the criteria upon which the positions are judged were drafted based upon now outdated assumptions of workplace structure.27 The 2004 Fair Pay initiative will shed some light on the confusion. However, there still will be plenty for employment lawyers to argue about.

     In short, requiring overtime premium pay was originally enacted as a means to: (1) ensure that employees with little bargaining power were not overworked; and (2) decrease unemployment levels. These goals have not been reached. Employees are working more hours than they did forty years ago.28 Further, there is no definitive evidence to support the proposition that the FLSA's overtime pay requirement decreases unemployment levels. The objectives of the FLSA as it applies to today's work force must, therefore, be rethought.
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11. John Maynard Keynes, The General Theory of Employment, Interest and Money (1936) arguing that laissez-faire policies were faulty, and the trauma of the Great Depression were major reasons for the passage of the FLSA (cited in Willis J. Nordlund, A Brief History of the Fair Labor Standards Act, 39 Lab. L.J. 715, 724 (1988)) (back)
12. H.R. Rep. No. 871, 89th Cong., 1st Sess. 21 (1968) (back)

13. See generally Juliet Schor, The OverWorked American: The Unexpected Decline of Leisure 66-67 (1991); (back)
14. Id. (back)
15. Legislative History of The Fair Labor Standards Act, 1937, at 177 (1938); see also Brooklyn Savings Bank v. O'Neill, 324 U.S. 697, 707 n.18 (1945) (back)
16. O'Neill, 324 U.S. at 707 n.18. (back)
17. See, e.g., Robert B. Reich, The Work of Nations 172 (1991) (back)
18. Ronald G. Ehrenberg & Paul L. Schumann, Longer Hours or More Jobs?: An Investigation of Amending Hours Legislation to Create Employment (1982). The assumption that "executive work" was not easily divided among employees was used to support the executive exemption because "executive" work was not "spreadable" among a greater number of employees. Harold Stein, U.S. Dep't of Labor, Report and Recommendations of the Presiding Officer at Public Hearings on Proposed Revisions of Regulations, Part 541, at 22 (1940) [hereinafter "Stein Report"] (back)
19. 29 U.S.C. § 213(a)(6) (1988) (back)
20. 29 U.S.C. § 213(a)(1) (1988) (back)
21. See 139 Cong. Rec. E616 (daily ed. Mar. 11, 1993) (statement of Rep. Petri). "[E]ven six-figure income CEO's could be considered hourly employees, eligible for overtime pay." Id. (back)
22. Martin v. Cooper Electric Supply Co., 940 F.2d 896, 906 (3d Cir. 1991). "[W]e find no error in the district court's reasoning and judgment that Cooper's inside salespersons fail to qualify for section 13(a)(1)'s administrative exemption from the Act's overtime requirement. . ." Id. (back)
23. Reich, supra at 49-50. (back)
24. 135 Cong. Rec. 3743-44 (daily ed. Apr. 12, 1989) (statement of Sen. Wallop). (back)
25. In fact, the FLSA has had a problem with clearly defining exempt categories since its inception, although at that time the confusion stemmed from deciding what industries to exempt, not applying the duties and the salary basis test. See generally Nordlund, supra note 13, at 724-27. (back)
26. 29 C.F.R. 541.1(a)-(e) (1993); 29 C.F.R. 541.2(b)-(d) (1993); 29 C.F.R. 541.305 (1993). (back)
27. Governmental adherence to these outdated notions of workplace structure is evidenced by the U.S. Census' use of "social-economic status" categories that, as of 1990, were 40 years old. See Reich, supra at 173-174. The inherent change from the original structure of the workplace that existed when the FLSA was drafted is also exhibited by the fact that at one time the regulations utilized a joint definition for administrative and executive employees. See Stein Report, supra at 3. (back)
28. Schor, supra note 15, at 1. Schor estimates that, by the end of the century, American workers will be working as much as they did in the 1920's. Id. (back)
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