Saturday, August 27, 2016

Legislative History of Fair Labor Standards Act From 1932-2015


1. Who sponsored the bill, debate, how employers' behavior changed

           Fair Labor Standards Act 1938 was coined as FLSA or Wages and Hours Bill. This legislative act (Pub.L) is the United States’ federal statute (Time Magazine, 1937). At the beginning the FLSA introduced 40 hours per week for the national minimum wage. In certain jobs, the legislation guaranteed overtime of ‘time and a half’. More employment of minors was prohibited in the legislation for protecting child labor, and termed it as “oppressive child labor”.  The act was also applicable to the commercial enterprise, interstate commerce or in the production of goods of commerce.
Senator Hugo Black drafted the original FLSA, in which employers were to adopt a 30-hour workweek, but the proposal was stiffly resisted. After the implementation of the Act, the Act was termed as “most significant New Deal Legislation” by President Franklin Roosevelt. 700,000 workers were affected by the FLSA (Barrera, 2013).
The United States Supreme Court, in its 1946 ruling in Anderson v. Mt. Clemens Pottery Co. case changed the preliminary control of work activities by the employers. The case was against the entire employers’ benefits. The Congress had to pass an amendment, in response to the Supreme Court’s ruling and to narrow down the ruling. The Portal to Portal Act in 1947 had exactly specified the type of time, compensable for work. The act was considered important because of the engagement of the employees by the employer and the employers were obliged to pay for the engagement. The act also specified that the travel time from and to the workplace should also be counted, regardless of the employees’ performance (Howard, 2000).
The wartime inflation during 1940s had compelled the postponement of full effect of FLSA of 1938, because of increase of nominal wages. The Fair Labor Standards Amendment on October 26, 1949 can be seen at (ch. 736, Pub.L. 81–393, 63 Stat. 910, 29 U.S.C. § 201), which included the changes in the compensation for the overtime and termed it as “regular rate”. The amendment was also noted for redefining the term “produced”, while raising 40 cents of the minimum wage to 75 cents per hour. The child labor coverage was also extended by the amendment. For special workers’ classes, the amendment was also to effect a few new exemptions for special workers.  
Another amendment was made in the FLSA in 1955 for increasing the minimum wage up to $1 per hour. In 1961, FLSA was further amended for ensuring “enterprise coverage”, which is applicable to only those businesses which are engaged in interstate commerce and have the gross per year business volume of $500,000 (minimum). The amendment was to benefit all the employees working in these types of enterprises (Forsythe, 2008). The other care facilities included in the 1961 amendments were residential, nursing home, hospitals and school cares. All governmental facilities, of all levels, were also included in this amendment. In this year the minimum wage was also increased to $1.25 per hour. The provision for suing for back wages was also included in this year’s amendment (Grossman, 2008).
However, in the next year, i.e. 1962, without amending the FLSA, a new act Contract Work Hours Standards Act came into effect. The act was the rule for employee compensation for the federal contractors, in which often ambiguous and always confusing “Eight Hour laws” was replaced with a “single comprehensive law” enforced as the governance hours for the laborers’ works.
The next year, 1963 is remembered for the “Equal Pay Act”, for amending FLSA, in which discrepancies of illegal or favored payment was the bug. Hence the new act was coined as “equal pay for equal work”. The act is mainly noted for the wage discrepancies, as was in vogue, for the female workers. The earlier pay structure for the female workers was less for the same job done by the male workers, as the female workers were not the bread earners for the family. So the new act disregarded the role in family and established Equal Pay Act.
The FLSA was again amended in 1966 for increasing minimum wages to $1.60 per hour and also for expanding the benefits to the farm workers. Cesar Chavez, the labor leader, was very much in the forefront in this effort, drawing national attention towards the rights of the farm workers. Further to these, both local and state government employees were brought under this protective umbrella.
The next year, 1967 is noted for ADEA (Age Discrimination in Employment Act). The act prohibits age discrimination against those who are 40 or above in age. Before the enactment of the ADEA, persons of 40 years or above were denied certain health benefits and were also bereft of training opportunities. The Act was applicable to the enterprises where the employee strength was more than 20 workers.
The FLSA was again amended in 1974 for expanding the coverage to both local and state government employees, who were uncovered so far. Besides this, domestic workers were also covered and the minimum wage was raised to $2.30 per hour and in the next year, i.e. 1975 through 1981, the minimum wage was raised in stages up to $3.35 per hour. Further changes were also effected as the tip credit and the tipped employees. Repeal of exemption of partial overtime in restaurants, motels and certain hotels was also made effective during this time (Parker, 2015).
In the year 1983, MSPA (Migrant and Seasonal Agricultural Worker Protection Act) came as a new act for extending benefits to the seasonal and migrant firm workers’ working condition, pay and other work-related conditions. These workers were to register with the US Department of Labor.
Local and State Government employers were allowed to compensate the overtime hours of their employees with the paid time when the employees were away from work (as the compensation in) in 1985. In the next year, i.e. 1986, the DDAA (Department of Defense Authorization Act) was passed for repealing the requirements of daily eight-hour overtime for all federal contracts.
The Wage Amendment that took place in 1989 was aimed at increasing minimum wages to $4.25 per hour along with the elimination of distinction between the wages on non-retail and retail sector. Workers employed in laundry, dry cleaning or in construction sectors were included under the ambit of the wage benefits (U.S. Department of Labor Wage and Hour Division, 2010). Tip credit system was also taken care of. “Training wage” was introduced in which workers below 20 years were entitled for 85% of minimum, youth minimum or sub-minimum wage (USDL, 2010).
The next amendment of FLSA was in 1996 when the minimum wage was again raised to $5.15 per hour. Nonetheless, the year is notable for introducing Small Business Job Protection Act of 1996 (PL 104-188) and tipping the employers from the minimum wage increase for the upcoming years. The amendment had frozen the tipped minimum wage by the enactment of the federal law (29 U.S.C. § 203). The state law which used to grant higher wages was kept in force (Wilson, 2012).  
FLSA was further amended in August 23, 2004, when exemptions pertaining to overtime and minimum wage came into being. This was considered as the substantial modifications, when discussed about the term “exempt” for an employee. In USA, the low-level supervisors in the industries were reclassified as “executives”, who had to do away with their “over time”. The new regulation was termed by Bush administration as the “FairPay”. However, the regulation drew lots of flaks from AFL-CIO, who reacted that the new changes would turn millions of additional workers incapable to make use of FLSA relief from overtime pay. The Congress unsuccessfully attempted to overturn the regulations.
President George Bush signed a new law “H.R. 2206”, a supplemental appropriation in the name of Fair Minimum Wage Act of 2007. The new law increased minimum wages through incremental plan up to $7.25 by 2009 July. By amending Section 7 of Patient Protection and Affordable Care Act (H.R.3590), the nursing mothers were provided extra facilities of expressing milk and that too in an appropriate place where none can intrude (Hicks, 2012).

In April 2014, the Senate debated the FLSA for increasing wages up to $10.10 per hour over two years’ period i.e. 2016. [8] The bill has been strongly supported by many of the senators and the President Obama, but has been opposed by the Republicans. President Obama, in January 2015 has asked the US Congress to pass the Healthy Families act. If the bill is passed, the employees will be eligible for an hour of paid sick leave after their completion of 7 days’ 30 hours of work. The Act also extends the facility of 56 hours of paid sick leave per year. The applicability of the bill under FLSA will be for those enterprises where there are 15 or more workers in an establishment (Hicks, 2012).

2. What law governing the topic must be considered, summarize the law: for example:

Equal pay act (1963)

The Equal Pay Act 1963 is the amendment of FLSA for removing any sort of discrepancies, pertaining to favored or illegal payment. This was considered to be legally offensive hence the phrase, “equal pay for equal work” was brought into the ambit of legalities. The main beneficiaries were the women folk.

Age Discrimination Act 1967

The Age Discrimination in Employment Act or ADEA (1967) was specially meant for benefitting any person of 40 years or above that age. It was a long cry that this segment of workers was discriminated for a long time either for their training opportunities or for their health ground. After the FLSA amendment this age related discrimination was brought to an end.

Exemption 2004

By amending FLSA in the year 2004, the workers were extended an important income source. The workers in the guise of “So called Executives” were denied overtime. However, different court cases had unearthed the actual facts or tricks by the employers. The Bush administration’s initiatives of “FairPay” had brought reliefs to thousands of such workers, who were designated as “Executives” for avoiding overtime and such benefits, but were made to work low level duties.

Fair minimum Wage 2007

In the history of US Labor Laws, 2007 is one of the most significant years for legalizing Fair Minimum Wage Act. The act was a supplementation of the existing FLSA. Section 7 of the FLSA was amended for protecting patients with the affordable health care facilities. The nursing mothers were also provided with many extra facilities, including expressing milk to the newborn.

3. Summary of four recent cases:

a) Tyson Foods, Inc. v. Bouaphakeo - Supreme Court

The Case No. 14–1146, argued November 10, 2015, and the court’s decision came on March 22, 2016.
The employees of Tyson Foods are the respondents in the case. The duties of the respondents are to kill, cut and retrim pork in the Tyson Foods in Iowa. The work of the respondents involved wearing protective gear. However, the exact type of the protective gear was dependent on a given day. For donning and doffing of the employees, some amounts were compensated by the petitioner, but not all. Neither the employer nor the petitioner had recorded the time spent by each of those employees for these donning and doffing activities.
The filing of the lawsuit in accordance with the FLSA was based on the argument that donning and doffing of the protective gear was the indispensible and integral part of the hazardous work, but the policy of the petitioner was not to pay for those activities, so the employees were denied compensation for overtime, which is against the FLSA 1938.
Further to these, a claim under Iowa Law was also raised by the respondents in which they sought the class action to be certified under FLSA case and Federal Rule of Civil Procedure 23, which is as per 29 U. S. C. §216.  However, certification of both the classes was objected by the petitioner with the argument that there are variances in the protective gears used by the employees, so the claims of the employees cannot be taken as sufficiently similar and resolvable on a class-wide basis.
The conclusion of the District Court was donning and doffing is compensable under FLSA and so eligible for class wide resolution, irrespective of the fact that all workers might not have used the same gear. The case was decided in favor of the respondents towards the recovery of FLSA’s overtime provision, as petitioners were found to have violated the rule. The respondents were to prove that each of the workers had worked more than forty hours a week that includes the donning and doffing timing.
Since the employers did not record the time required for donning and doffing, the respondents had to primarily depend on the study by Dr. Kenneth Mericle, an industrial relations expert, who had videotaped different activities of donning and doffing and the timings involved therein. An average time of 18 minutes (per day) was calculated for the cut & retrim departments and the average time for the kill department was 21-25 minutes. These calculated timings were added to each employee’s time sheets for ascertaining which of the class members had worked more than forty hours a week and by this way class-wide recovery’s value was determined. The petitioner tried to argue that the timings of donning and doffing were varying and by sampling Mericle’s video tape was improper for those who had not worked for 40 hours a week. But the jury had awarded $2.9 million unpaid wages to the respondents. The judgment was affirmed and awarded (Legal Information Institute, 2016).

b) STEELE v. LEASING ENTERPRISES, LTD

United States Court of Appeals Fifth Circuit
The case No. 15-20139 was filed on June 14, 2016
A novel question was addressed by the Fifth Circuit Court of Appeals in the case No. 15-20139 to settle the employers’ ability in the deduction of certain service fees, received as tips through credit cards. The case is about a restaurant chain, “Leasing Enterprises, Limited”, which retained 3.25% of the tips received by its employees from the customers through credit cards.  The court observed that the deduction had exceeded the collection of credit card tips’ direct costs.
The court also observed that restaurants and other establishments that use the partially compensated money of the employees as tips can claim “tip-credit”, in accordance with the requirements of FLSA’s Minimum Wage Act. Nonetheless, servers’ entitlement is strictly regulated by FLSA that is connected with the customers’ gratuities. The case Steele v. Leasing Enterprises, Ltd. had initiated a novel question by addressing the employer’s jurisdiction to cut a portion of the service fees in kind of tips via credit cards.
In this case employees were paid “tipped amount” applicable under FLSA’s minimum wage i.e. $2.13 to make up the difference of the standard minimum wage and this through the claim of the “tip credit”. But in this case the deduction by the employer was server tips’ 3.25% paid through credit cards. The deductions, as attributed by the employer were:
1) Cost of credit card conversion receipts to cash being paid daily to the employees and
2) the fees for the issuers of the credit card.
The collective action FLSA case was filed by the plaintiffs that the defendant was improper to deduct fees which was the former’s income from the tips.   
By keeping note of the regulations of the Department of Labor, in adherence to FLSA, the court agreed to allow the employers to cut only the amount being charged by the credit card companies. Further to it, the court observed that the other portion of the cash conversion of the fees was against the DOL rules, as the amount from the tips through credit cards was as per the decision of the employer to pay cash tips on a daily basis, and which was not from the fees related with the credit cards’ uses.
It was also observed by the court that employers are allowed by the DOL rules to average some part of the fees to be deducted from the tips but these deductions are not to be included with the amounts which have no direct connection between the charges of the credit card users and the business. If the restrictions are not adhered to, it will lead to the applicable tip credit loss. For this, the employer is subjected to pay the penalties like double damages, fees of the attorneys and minimum wage payments claim (ParkerPoe, 2016).

c) Integrity Staffing Solutions, Inc. v. Busk

The case No 13–433, argued in the Supreme Court on October 8, 2014, and was decided on December 9, 2014 with the revision order as, “We hold that the time is not compensable. We therefore reverse the judgment of the United States Court of Appeals for the Ninth Circuit”.
United States Court of Appeals for the Ninth Circuit
CITATION 574 US _ (2014), GRANTED on Mar 3, 2014, ARGUED on Oct
8, 2014 and DECIDED on Dec 9, 2014.
Integrity Staffing Solutions, Inc. the petitioner is the provider of staffing solutions to the warehousing of Amazon.com, pan USA. The respondents Laurie Castro and Jesse Busk were the hourly employees of Integrity Staffing Solutions, Inc. at their respective warehouses in Las Vegas and Fenley and Nevada. Retrieving products from the shelves and packing them before delivery were their work responsibilities.
In this case, the employer required its warehouse employees to undergo an anti-theft process as the security screening, before the employees could leave the warehouse after their duty hours. The question in the case was, whether the time spent by the employees during this security checking is compensable under FLSA. Reference in this case was made under 29 U. S. C. §201 et seq., in accordance to the Portal- to-Portal Act of 1947, §251 et seq.
The opinion of the Court of Appeals was the requirement of the Integrity Staffing was its employees to undergo security check at the end of a day, before the employees leave the warehouse. This screening process involved employees to remove their belts, keys and wallets from their possessions and pass through a metal detector. The lower court rejected the argument of the employees by finding that the employees’ waiting time for undergoing the security screening was compensable under the FLSA act and the employer should have reduced the time a de minimis amount. The court observed that these arguments were to be properly put forward at the bargaining table under 29 U. S. C. §254(b)(1), instead of bringing to a FLSA claim.
When the matter went to the Supreme Court, the court concluded with two critical issues that the indispensable and closely related activities are to be included in the “compensable principal activities” by quoting “ante, at 6 (quoting 29 CFR §790.8(c)(2013))” The Supreme Court observed that both the precedence and the Department of Labor regulations clarify the fact that the principal activity means if an employee cannot dispense the “principal activity” without a particular task safely and effectively, the time involved in it is compensable under FLSA.

d) LIZETH LYTLE, v. LOWE’S HOME CENTERS, INC. 

On August 15, 2012, Lytle filed a collective action complaint. Case No. 8:12-cv-1848-T-33TBM, in the US District Court, Middle District of Florida, Tampa Division.
In 2012, a former employee of HR Division, Lizeth Lytle, of Lowe’s Home Center sued the warehouse for unpaid overtime. As per Lytle’s claim, Lowe’s Home Center purposefully misclassified its HR manager and classified as exempt employees so that they can avoid paying overtime. Lytle expanded the suit to include all the HR employees and HR managers in the country.
Lytle’s claim was denied by Lowe’s by asserting that nationwide HR managers were not situated alike and that also each store had the individualized differences, making the position inappropriate for hour and wage related collective actions. The court rejected the facts submitted by Lowe’s. The court’s certification of all current and former HR managers and all HR store employees with any title, employed with Lowe’s, were referred as “collective” for taking action under the FLSA. The suit against the Lowe’s was joined by 891 individuals. Lowe’s was penalized to distribute the amount of $3,564,000 as compensation. For this a pro rata share was to be received by each class member on their total workweeks, dated retrospectively from the 10th of January, 2011 till the approval date of the settlement.
Lowe’s had to pay $500,000 towards administrative cost spent by Lytle’s lawyer, which was in addition to the legal fees $1,300,000. Apart from this, Lowe’s had to reimburse up to $70,000 as litigation costs.
Further to it, as per the settlement, the parties agreed that calculation of overtime should be proper and for this calculation of fluctuating weekend method must be used. By this method, the HR employees of Lowe’s were allowed for half-time recovery of their claimed hours. The average per employee was awarded $4,000 through the settlement (United States District Court Middle District of Florida Tampa Division, 2014).

4. How was the FLSA law enforced? New York State Department of labor and Fair Labor Standards Act.

There are several procedures and methods for enforcing the provisions of FLSA for establishing minimum wages, record keeping, overtime pay and the standard of child labor. These procedures and methods are as below:
·      US Department of Justice can criminally prosecute the erring person or party
·      Lawsuits or civil actions by the Federal Government
·      Private Law suits by the workers or employees that may include collective actions or individual law suits
US Department of Justice (DOJ): Criminal actions can be brought by DOJ for willful FLSA violations. A willful violation refers to voluntary, deliberate and intentional breach of law.
    DOJ can enforce Act either in addition to or instead of the Secretary of labor for injunctive relief or back wages. If there are willful violations by an employer, the employer will be ordered to pay back pay or liquidated damages and also be penalized for criminal penalty or fine, imposed by a court. The criminal penalties can be: for the first conviction, a fine up to $10,000, a fine up to $10,000 or up to six months of imprisonment or both after the first conviction.
Government Civil actions:  US Sectary of Labor is empowered to enforce criminal proceedings for the violation of over time provision and minimum wages through two types of civil actions. They are as follows:
Under FLSA’s § 216(c) the Secretary has the power of suing the erring party for liquidated back wages and recovering back wages from employers, related to pay or salary, would have been earned by an employee. The liquidated damages refer to the amount of pre-determined or fixed money. That means an employee is eligible for getting back wages plus and also an amount which equals to that in the form of liquidated damages.
§ 217 empowers a Secretary to file a lawsuit for a court order or for an injunction that prevents an employer from violating the law and thus can order an employer to pay back wages.
Private suit by employees: Enforcement actions can be filed by workers in two ways under FLSA. They are collective collections and individual lawsuits.
Individual actions
        Employees, who are the victims of violation of FLSA, can sue their employer through private action for recovering unpaid overtime or minimum wages, in addition to liquidated damages. Besides this, an employer can be sued by his employee if the former either discriminates or discharges against the employee for asserting rights provided by FLSA under Anti-discrimination provision. However, the employee’s right does not hold good if the action has already been filed by the Secretary of Labor. The employee cannot also file a lawsuit if the two actions are towards the same allegation of violation of FLSA (Lawyers.com, 2015).

5. Opinions about Fair Labor Standards Act, wages, hours, exemption.

There are different types of opinions and revelations about FLSA. A few came from different corners and a large number had ended with different court rulings, including the Country’s Supreme Court.

Realities of Economy

Among the media corners, an opinion posted by Doug Hass in Independent Contractors, dated September 18, 2015, was headlined as “Do Sharing Economy Cases Show that the FLSA is Outdated? (Hass, 2015). This was cited from the Workplace ProfBlog, where Prof. Sachin Pandya was quoted. The answer was with a single word, “Yes”. The reference was made in connection with the recent cases where pioneers from “top notch” sharing economy could well define the difficulties of applying the laws, which were drafted in the middle of the 20th century and to be applicable to the business model of the 21st century, which is submerged within the technology advancements. One of the judges termed the FLSA as “appear outmoded” in the context of sharing economy.
In another Administrator’s Interpretation by Dr. David Weil, USA’s Administrator, Department of Labor Wage and Hour Division (WHD) in the DOL blog post had stressed that expansive viewing of FLSA is the need of the hour, so that most of the workers can qualify as the employees. The other critic of the Administrator, Dr. David Weil, is of the views that he had shifted from the “realities of economy” and has landed on something different, which can be termed as “economic dependence”. The glaring weakness in the FLSA becomes vivid when it is compared with similar laws of other countries.

Increase in Court cases

In another post Doug Hass has come up with the other Court Opinions, dated January 4, 2016, with the headlines, “Overtime Lawsuits of FLSA Minimum Wage, sets New Record in 2015”. He added that “Filing Growth Continues” (Hass, 2016). Since 1990, there are many number of FLSA related cases in the federal courts. If the statistics of PACER is to be referred to, between 1st of January 2015 and 31st of December, the numbers of cases were 8,954. In 2014, the total FLSA related cases for comparison purposes, filed by plaintiffs were 8,086. The number is 30% more than the year since 2011.
In a startling information it was found that there are sharp increases in FLSA cases on overtime and minimum lawsuits over the past two and half decades, particularly since 2002.
By studying the chart, it becomes clear that there were only 888 FLSA lawsuits in 1990 (as per PACER). The number did not fluctuate much till 2000. With the dot-com implosion in 2002 and following the 9/11 attacks, the number of lawsuits rose to 3,886. In 2004 alone the filing reached more than 4000 counts and went on increasing and the Great Recession added fire to the fuel. During 2009 the number of filing was 6,120 and in the next year it reached 6,786, and the following 2013 it reached 7,900. In the year 2014 the number of FLSA lawsuits reached 8,086, which is noted to be all time high.

Conclusion

According to Mark Wilson, the former deputy assistant secretary of the U.S. Department of Labor and also the former head of the Applied Economic Strategies, LLC, with almost three decades of experience researching labor force economic issues, “these laws discourages the employers from paying wages below a mandated level” which is not advantageous for the country’s economy. He furthered to say decades of economic researches have proved that minimum wages actually harm both the broader economy and the workers. In fact, minimum wages minimize minorities’, youth’s and low-skill workers’ job opportunities.
In fact policy makers try to help these people while on the other side, the employers adjust the pay due to the additional costs. The employers, as the remedial measures, cut employee work hours, reduce hiring, charge higher prices and also reduce employee benefits. It may be the conception of some policy makers that the businesses absorb the extra costs towards minimum pay and suffer reduced profits, but the fact is they respond rationally and cut employments, and take other decisions for maintaining their net income. This type of business-responses actually disrupts the results of the positive labor market for which the policy makers plan for.
References
Barrera, V. (2013). Hugo L. Black. Encyclopedia of Alabama.
Forsythe, J. (2008). Legislative History of the Fair Labor Standards Act. U.S. Department of Labor Wage and Hour Department.
Grossman, J. (2008). Fair Labor Standards Act of 1938: Maximum Struggle for a Minimum Wage. United States Department of Labor.
Hass, D. (2015). Do Sharing Economy Cases Show that the FLSA is Outdated? Yes! The Day Shift.
Hass, D. (2016). FLSA Minimum Wage, Overtime Lawsuits Set New Record in 2015, Filing Growth Continues. The Day Shift.
Hicks, S. (2012). The Fair Minimum Wage Act of 2007. New York Publishing.
Howard, S. (2000). "Troubled passage: the labor movement and the Fair Labor Standards Act" Monthly Labor Review. United States Bureau of Labor Statistics.
Lawyers.com. (2015). Enforcement of the Fair Labor Standards Act.
Legal Information Institute (2016). TYSON FOODS, INC. v. BOUAPHAKEO.
Lizeth Lytle, et al. v. Lowe’s Home Centers, Inc., et al., Case No.8:12-cv-01848 (2014). United States District Court Middle District of Florida Tampa Division.
Parker, Katharine (2015). "No End In Sight For Wave of Paid Family and Sick Leave Laws". The National Law Review.
ParkerPoe (2016). Employers Limited in Service Fees Deductions From Credit Card Tips. EmployNews Bulletin.
Pub.L. 75–718, ch. 676, 52 Stat. 1060, June 25, 1938, 29 U.S.C. ch. 8
United Stated Department of Labor. (2010). ”Wages: Subminimum Wage".
U.S. Department of Labor. Fair Labor Standards Act of 1938. Dol.gov
U.S. Department of Labor Wage and Hour Division. (2010). “Fact Sheet #32: Youth Minimum Wage - Fair Labor Standards Act". 
Wages and Hours”. (1937). Time Magazine.
Wilson, M. (2012). Policy Analysis: The Negative Effects of Minimum Wage Laws. CATO Institute.

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