THE FAIR LABOR STANDARDS ACT, which established the federal minimum wage and other basic protections, has stood since its enactment in 1938 as one of the pillars of modern regulated American capitalism. Ideally, its provisions would be subject to regular updating, either by legislation or by the application of transparent, objective standards — regular inflation adjustments, for example — so that both workers and employers could enjoy the benefits of stable modernization.
Alas, as the FLSA enters its ninth decade, that is far from the state of affairs. The minimum wage remains where it was 10 years ago; another key provision, overtime pay for salaried workers, has been batted around for years in the courts and regulatory agencies.
The FLSA requires that all workers get time and a half pay for hours worked beyond 40 per a week — except for “executive, administrative and professional employees” who earn a salary. Congress instructed the Labor Department to refine this exemption in light of both workers’ actual job duties and their level of pay. In 2016, the Obama administration updated a 12-year-old rule, declaring that people making up to $47,476 a year, more than double the existing threshold, would henceforth be eligible for overtime pay. This would have affected some 4.2 million middle-income workers — but a federal district judge in Texas blocked it. He said this created “a de facto salary-only test” of what constitutes a white-collar worker, contrary to Congress’s intent to include other factors.
Now comes the Trump administration with a proposal to raise the salary threshold to $35,308 per year, with increases to be considered at four-year intervals thereafter, not guaranteed as in the Obama plan. This would probably meet the judge’s concerns — and, for workers, it is better than nothing. Some 1.1 million workers who did not have coverage would get it by next year, according to the Labor Department. Opponents argue that this is still far below what the Obama administration offered and would not make up for decades of past inflation erosion in the standard, as the Obama rule would have.
In light of the federal court ruling striking down the Obama rule, however, the only way to institute it would be through a new amendment to the FLSA, enacted by Congress. A group of House and Senate Democrats proposed such a bill in 2017; Rep. Mark Takano (D-Calif.) plans to reintroduce it soon in the House. Senate action is unlikely, though, since Sen. Lamar Alexander (Tenn.), the GOP point man on the issue, pronounced himself satisfied with the new Labor Department rule. Advocates of wider coverage are talking about taking the battle to the states.
The entire episode demonstrates how much time and energy companies and workers — or, more precisely, their lawyers — can be obliged to expend when Congress fails to make its will known clearly and consistently as conditions evolve. A good compromise bill would adopt the salary threshold in the Trump Labor Department’s proposed rule, coupled with clearer criteria describing the relevant job duties and a mechanism for regular mandatory upward adjustments for inflation. Then everyone concerned could move on to other things.