Fair Labor Standards Act

1. Fair Labor Standards Act “… A matter of morality and public welfare.” 1938 – A new law 2004 – The last time it was amended

2. The Great Depression

3. “No business which depends for existence on paying less than living wages to its workers has any right to continue in this country.” -President Franklin D. Roosevelt

4. “…All our able-bodied working men and women deserve a fair day's pay for a fair day's work." "A self-supporting and self-respecting democracy can plead no justification for the existence of child labor, no economic reason for chiseling worker's wages or stretching workers' hours."

5. The New Deal • The National Industrial Recovery Act (NRA) • The Blue Eagle “Badge of Honor” • Industry Codes … The Cotton Textile Code President Roosevelt] said this code made him ‘happier than any other one thing...since I have come to Washington, for the code abolished child labor in the textile industry.’ He added: ‘After years of fruitless effort and discussion, this ancient atrocity went out in a day.’”

6. The Crushing Blow – “Black Monday” Schechter Corp. v. United States A case about chickens wrecked all progress

7. “A switch in time saved nine.”

8. Major Provisions: • Minimum Wage • Overtime Pay • Youth Employment • Recordkeeping

9. Coverage More than 130 million workers in more than 7 million workplaces are protected or “covered” by the Fair Labor Standards Act (FLSA), which is enforced by the Wage and Hour Division of the U.S. Department of Labor

10. Coverage Two types of coverage: • Enterprise coverage: If an enterprise is covered, all employees of the enterprise are entitled to FLSA protections • Individual coverage: Even if the enterprise is not covered, individual employees may be covered and entitled to FLSA protections

11. Coverage: The Bottom Line Almost every employee in the United States is covered by the FLSA Examples of employees who may not be covered: • Employees working for small construction companies • Employees working for small independently owned retail or service businesses

12. Suffered or Permitted “Work not requested but suffered or permitted is work time… For example, an employee may voluntarily continue to work at the end of the shift. He may be a pieceworker, he may desire to finish an assigned task or he may wish to correct errors, paste work tickets, prepare time reports or other records. The reason is immaterial. The employer knows or has reason to believe that he is continuing to work and the time is working time.” Title 29: Labor PART 785—HOURS WORKED

13. §785.13   Duty of Management “In all such cases it is the duty of the management to exercise its control and see that the work is not performed if it does not want it to be performed. It cannot sit back and accept the benefits without compensating for them. The mere promulgation of a rule against such work is not enough. Management has the power to enforce the rule and must make every effort to do so.”

14. Week 1 • 45 hours • Week 2 • 35 hours Staff (Non-Exempt) The primary point with this example: Within a workweek (Saturday to Friday), all work hours above 40 must be paid for at the overtime rate. There are no exceptions to this rule. You can not transfer hours to another workweek or give time off in lieu of paying overtime wages. You must pay the employee overtime wages. Admin/Faculty (Exempt) The primary point with this example: Hours worked by exempt employees should not be counted or tracked for any purpose associated with compensation or for the purpose of giving time off at an hour-for-hour rate. It is acceptable to give such an employee time off following weeks in which they work excessive hours as an expression of “thanks” or to support work-life balance, though this should not be at an hour-for-hour basis.

15. Comp Time Private vs. Public Employment Standards Definition: Offering time off at the equivalent of time and one half in lieu of paying overtime wages. This practice is only available in the public sector; it is not permissible in the private sector.

16. Administrative (Exempt from FLSA) Staff (Non-exempt from FLSA) 48% 52% • Consider impacts when requesting change in classification • Risk to the university • Travel / moving expenses • Training at conferences • Take away overtime rights from employee No risk! But Less Flexibility!

17. Summa v. Hofstra University, 2nd Circuit Court of Appeals (2010) • Hofstra University had a common practice of classifying undergraduate and graduate assistants as exempt or otherwise excluded from the provisions of the FLSA. • A graduate student, Laura Summa sued, alleging that this practice resulted in the practice of subminimum wage labor and/or unpaid overtime compensation. • Laura worked as a manager of the football team, typically more than 40 hours a week but was only paid a $750 stipend for the entire semester. • She identified at least seven other students who were likewise denied appropriate compensation.

18. Question Before the Court Were the plaintiff’s “similarly situated” as required to certify the case as a class action lawsuit?

19. Holding • Yes, the other student’s demonstrated a factual nexus between the named plaintiff and themselves. They did this by submitting affidavit’s to the court identifying their position(s) at the university, approximate hours worked and pay rate. • Case was remanded back to District Court for settlement discussions. • Hofstra agreed to pay nearly a half million dollars to settle the case.

20. Waiting Time Not counted as hours worked when • Employee is completely relieved from duty; and • Time is long enough to enable the employee to use it effectively for his or her own purposes Counted as hours worked when • Employee is unable to use the time effectively for his or her own purposes • Time is controlled by the employer • Engaged to wait or waiting to be engaged • (Fire fighter playing checkers; receptionist reading a book; referee waiting on the storm)

21. On-Call Time On-call time is hours worked when • Employee has to stay on the employer’s premises • Employee has to stay so close to the employer’s premises that the employee cannot use that time effectively for his or her own purposes On-call time is not hours worked when • Employee is required to carry a pager • Employee is required to leave word at home or with the employer where he or she can be reached

22. Meal and Rest Periods Meal periods are not hours worked when the employee is relieved of duties for the purpose of eating a meal Rest periods of short duration (normally 5 to 20 minutes) are counted as hours worked and must be paid

23. Training Time Voluntary Job-related Training • Four web-based prerequisite classes (10 hours each) are required • Prerequisite classes are taken at home in prep for a voluntary job-related training • Training is offered during normal work hours and is compensated • Seats are limited; first-come first-served

24. Training Time Voluntary Job-related Training • Four web-based prerequisite classes (10 hours each) are required • Prerequisite classes are taken at home in prep for a voluntary job-related training • Training is offered during normal work hours and is compensated • Seats are limited; first-come first-served Question: Is the Company legally obliged to compensate employees for the time they spend outside of normal working hours at their own home completing the required prerequisite classes prior to taking the voluntary Tellabs training class?

25. Training Time … Compensable Test §785.27   General. Attendance at lectures, meetings, training programs and similar activities need not be counted as working time if the following four criteria are met: • Attendance is outside of the employee's regular working hours; • Attendance is in fact voluntary; • The course, lecture, or meeting is not directly related to the employee's job; and • The employee does not perform any productive work during such attendance. Special Situation Example: Courses offered by bona fide institutions of learning involving voluntary attendance   ? 

26. Travel Time • Ordinary home to work travel is not work time • Travel between job sites during the normal work day is work time • Special rules apply to travel away from the employee’s home community

27. Travel Time Continued Scenario… From a DOL Field Operation’s Handbook “The time spent by homeworkers in traveling to and from the employer’s premises … to obtain work-related materials or equipment … is primarily for the employer’s benefit and must be included in the total hours worked …. Where such trips are combined with personal errands (e.g., grocery shopping or visits with friends), the time spent in such personal pursuits is excluded from the total travel time for the trip in calculating hours worked.”  

28. Overtime Payments “Generally, overtime is not permitted at the university. However, if overtime is warranted, it must be approved by the appropriate supervisor before it occurs.” The concept makes sense, but its application is wrought with problems.

29. “The employee is “exempt” because they are salaried.” True/False

30. Minimum Wage: Basics • Covered, non-exempt employees must be paid no less than the federal minimum wage for all hours worked • The minimum wage is $7.25 per hour effective July 24, 2009 • Cash or equivalent – free and clear

31. Hot Issues Before the Courts Misclassification/Overtime Claims • JP Morgan Chase settled a class action suit for $42 million. • JP Morgan Chase settled an overtime class action suit for $9 million. • Dick’s Sporting Good settled a class action suit for $15.5 million

32. Continued… Are Interns employees? DOL suggests using a 6 part test to determine whether an intern should be treated as an employee: • The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment; • The internship benefit is for the benefit of the intern; • The intern does not displace regular employees, but works under close supervision of existing staff; • The employer derives no immediate advantage for the activities of the intern, and on occasion its operations may actually be impeded; • The intern is not necessarily entitled to a job at the conclusion of the internship; and • The employer and the intern understand that the intern is not entitled to wages for the time spend in the internship.

33. Supplemental Slides

34. The New Deal • 1933, under the "New Deal" program, Roosevelt's advisers developed a National Industrial Recovery Act (NRA). • The act suspended antitrust laws so that industries could enforce fair-trade codes resulting in less competition and higher wages. As an early step of the NRA, Roosevelt promulgated a President's Reemployment Agreement "to raise wages, create employment, and thus restore business." • Employers signed more than 2.3 million agreements, covering 16.3 million employees. • Signers agreed to: • 35-40 hour workweek • minimum wage of $12 to $15 a week • not to employ youth under 16 years of age (with some exceptions) • Employers who signed the agreement displayed a "badge of honor," a blue eagle over the motto "We do our part." Patriotic Americans were expected to buy only from "Blue Eagle" business concerns.

35. The Case of Joseph Tipaldo 1936 As if to head off further attempts at labor reform, the Supreme Court, in a series of decisions, invalidated both State and Federal labor laws. • The manager of a Brooklyn, N.Y., laundry, Tipaldo had been paying nine laundry women only $10 a week, in violation of the New York State minimum wage law. • When forced to pay his workers $14.88, Tipaldo coerced them to kick back the difference. • When Tipaldo was jailed on charges of violating the State law, forgery, and conspiracy, his lawyers claimed the New York law was unconstitutional. • The Supreme Court, by a 5-to-4 majority voided the law as a violation of liberty of contract. The Tipaldo decision was among the most unpopular ever rendered by the Supreme Court. Even bitter foes of President Roosevelt and the New Deal criticized the Court. Ex-President Herbert Hoover said the Court had gone to extremes. Conservative Republican Congressman Hamilton Fish called it a "new Dred Scott decision" condemning 3 million women and children to economic slavery.

36. A Young Worker’s Plea While President Franklin Roosevelt was in Bedford, Mass., campaigning for reelection, a young girl tried to pass him an envelope. But a policeman threw her back into the crowd. Roosevelt told an aide, "Get the note from the girl." Her note read, I wish you could do something to help us girls....We have been working in a sewing factory,... and up to a few months ago we were getting our minimum pay of $11 a week... Today the 200 of us girls have been cut down to $4 and $5 and $6 a week. To a reporter's question, the President replied, "Something has to be done about the elimination of child labor and long hours and starvation wages."

37. The First Attempt “America should be able to give all our able-bodied working men and women a fair day's pay for a fair day's work. A self-supporting and self-respecting democracy can plead no justification for the existence of child labor, no economic reason for chiseling worker's wages or stretching workers' hours… goods produced under conditions that do not meet rudimentary standards of decency should be regarded as contraband and ought not to be allowed to pollute the channels of interstate trade." On May 24, 1937, President Roosevelt sent the Black-Connery bill to Congress with a message: • Generally, the bill provided: • 40-cent-an-hour minimum wage • 40-hour maximum workweek • minimum working age of 16 except in certain industries outside of mining and manufacturing • a five-member labor standards board authorized to increase wages and shorten hours after review of certain cases

38. Supporters of the Bill • Stressed the need to fulfill the President's promise to correct conditions under which "one-third of the population" were "ill-nourished, ill-clad, and ill-housed." • Pointed out that the bill would end oppressive child labor and "unnecessarily long hours which wear out part of the working population while they keep the rest from having work to do." • Shortening hours, they argued, would "create new jobs...for millions of our unskilled unemployed," and minimum wages would "underpin the whole wage structure...at a point from which collective bargaining could take over."22 • Advocates of higher labor standards described the conditions of sweated labor. For example: Asurvey by the Labor Department's Children's Bureau of a cross section of 449 children in several States showed nearly one-fourth of them working 60 hours or longer a week and only one-third working 40 hours or less a week. The median wage was slightly over $4 a week.

39. Opposed to the Bill • Claimed the Black-Connery bill was "a bad bill badly drawn" which would lead the country to a "tyrannical industrial dictatorship." • The most bitter controversy raged over labor standards in the South: • "There are in the State of Georgia," one Indiana Congressman declaimed, "canning factories working ... women 10 hours a day for $4.50 a week. Can the canning factories of Indiana and Connecticut … continue to exist and meet such competitive labor costs?” • Southern Congressmen, in turn, challenged the Northern "monopolists" who hypocritically "loll on their tongues" words like "slave labor" and "sweat-shops" and support bills which sentence Southern industry to death. • Some Southern employers told the Department of Labor that they could not live with a 25-cent-an-hour minimum wage. They would have to fire all their people, they said.

40. Battle with Congress First Session: • Despite the changes, there was little enthusiasm for the bill, and when it reached the Rules Committee, Southern Democrats and Republicans teamed up to block consideration. Congress adjourned without taking action. Special Session: • If the first session of the 75th Congress had not been productive in producing a labor standards bill, the special session called on October 12, 1937 by President Roosevelt was even less effective • The Nation was entering a recession, with the stock market failing and unemployment rising—a major challenge to an administration which had won its spurs by promising better times. • These factors undoubtedly played a role—along with the divisions within organized labor—in the failure of the labor standards bill in the first session, and they continued to spell defeat in the special session— which gave the President none of the objectives he had set for it.

41. Congress—The Final Round On April 30, 1938, for the sixth time since taking office, President Roosevelt communicated with Congress over wages and hours through a letter to Mrs. Norton. He said he had no right as President to criticize the rules but suggested as an ex-legislator and as a friend that "the whole membership of the legislative body should be given full and free opportunity to discuss [exceptional measures] which are of undoubted national importance because they relate to major policies of Government and affect the lives of millions of people." He avoided judgment of the bill but noted that the Rules Committee, by a narrow vote, had prevented 435 members from "discussing, amending, recommitting, defeating or passing some kind of a bill." He concluded: "I still hope that the House as a whole can vote on a wage and hour bill. ...I hope that the democratic processes of legislation will continue."

42. Final Victory • When the third session of the 75th Congress met in January 1938, it was widely agreed that prospects for a wage-hour bill were much improved • House debate on the bill lasted 2 days (May 24 to 25). • After disposing of 50 amendments, the House passed the bill by a 314–97 majority • After 9 days of effort, the conference committee reported out a compromise between the House and Senate bills. • Standards were initially set at 25 cents an hour, 44 hours a week and minimum working age of 16 with a number of exceptions • but the 40-cents minimum would go into effect in every industry by the end of 7 years, unless it could be demonstrated that it would result in unemployment. On June 25, 1938, the President signed the Fair Labor Standards Act to become effective on October 24, 1938

43. … a matter of both morality and public welfare Click picture for details

44. Adkins v. Children's Hospital (1923) Minimum Wage v. the Due Process Clause of the 5th Amendment “… The clause gives citizens equal rights ‘to obtain from each other the best terms they can as the result of private bargaining.’" “The minimum wage was an arbitrary interference with the liberty to contract … [and] it imposed uniform minimum wages on women regardless of individual needs or occupations….” Click picture for details

45. Exemptions • Executive, administrative, and professional employees, outside sales employees, and employees in certain computer-related occupations • Employees of certain seasonal amusement or recreational establishments • Farm workers employed by anyone who used no more than 500 man-days of farm labor in any calendar quarter of the preceding year • Casual babysitters and persons employed as companions to the elderly or infirm • Other…

46. President Roosevelt signed this bill into law, amidst great pressure to save the nation from the Great Depression He succeeded by establishing basic workers’ rights and setting the groundwork for a middle class that thrived after World War Two The Fair Labor Standards Act (FLSA) establishes: • minimum wage • overtime pay • recordkeeping • child labor standards affecting full-time and part-time workers in the private sector and in Federal, State, and local governments • time and a half. It was this union-endorsed bill that gave Americans the weekend.