Friday, June 20, 2008
Tweet[IWS] CRS: THE FAIR LABOR STANDARDS ACT: CONTINUING ISSUES IN THE DEBATE [28 May 2008]
IWS Documented News Service
_______________________________
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
________________________________________________________________________
Congressional Research Service
Order Code RL34510
The Fair Labor Standards Act: Continuing Issues in the Debate
May 28, 2008
William G. Whittaker, Specialist in Labor Economics, Domestic Social Policy Division
http://assets.opencrs.com/rpts/RL34510_20080528.pdf
[full-text, 34 pages]
Summary
On May 25, 2007, the President signed into law changes in the minimum wage
under the Fair Labor Standards Act (FLSA): P.L. 110-28. Although the wage issue
may now have been momentary settled, the act includes other provisions that have
been subject to legislation through the years and may again become the focus of
legislative consideration. Examples include the following issues.
! A youth sub-minimum wage, instituted in 1996, was not included in
the 2007 amendments, and is $4.25 per hour.
! The cash wage employers of 'tipped employees' must pay, last
updated in 1996, is $2.13 per hour.
! In 1989, the 'small business exemption' was restructured to exempt
from minimum wage requirements qualifying firms with an income
of under $500,000; but, as administered, exemptions have only been
available for employees not involved in interstate commerce.
! In 2001, the Clinton Administration proposed restructuring of the
'companionship exemption' under the FLSA; in 2002, the measure
was withdrawn. The issue has recently been the subject of a
Supreme Court ruling (2007) and of proposed legislation (H.R. 3582
and S. 2061).
! Through nearly a century, some economists (and, later, some
Members of Congress) have proposed, in various formats,
indexation of the federal minimum wage an issue that still
sometimes arises.
! In 1986, Section 14(c) of the act was amended to remove any
specific minimum wage floor for handicapped workers, replacing it
with a negotiated wage 'commensurate' with the worker's
productivity. It has been contested through the years.
! In 2003, a proposal was issued dealing with overtime pay for persons
classified as 'executive, administrative, or professional' employees
under Section 13(a)(1) of the act. At that time, the issue was
extremely contentious. How has it worked out in practice?
! Industry has threatened to leave American Samoa and the
Commonwealth of the Northern Mariana Islands were the full FLSA
to be made applicable there, as it would be under P.L. 110-28. What
will be the impact upon those islands?
! Increasingly, the states (now 34 in number) have moved to provide
minimum wage rates higher than the federal rate. What implications
can be expected, both in economic and political terms?
This report will be updated as the need may arise.
Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Youth Sub-Minimum Wage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Early Attempts at a Sub-Minimum Wage . . . . . . . . . . . . . . . . . . . . . . . 2
Bush and Experimental Youth Wages . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Clinton and the Youth Wage Made Permanent . . . . . . . . . . . . . . . . . . . 4
The 'Tip Credit' Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
The Early Statute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
The 1996 FLSA Amendments and Beyond . . . . . . . . . . . . . . . . . . . . . . 6
Companionship Services under the FLSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Some Early Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Interpretation by the Wage/Hour Administrator . . . . . . . . . . . . . . . . . . 9
Clinton, Bush and the Companionship Exemption . . . . . . . . . . . . . . . . . . . 10
The Clinton Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
The Bush Administration's Reaction . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Recent Legislative Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Indexation of the Minimum Wage? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
The Concept of Indexation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Early Concerns and Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Subsequent Legislative Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
The Small Business Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Early History of the Small Business Provision . . . . . . . . . . . . . . . . . . . . . . 15
Small Business and Current Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Treatment of Persons with Disabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Origins of Section 14(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Reform and Oversight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
The Current Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
American Samoa and the CNMI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
American Samoa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Commonwealth of the Northern Mariana Islands . . . . . . . . . . . . . . . . . . . . 22
Complications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Minimum Wage: Federal -v- State Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . 24
A New Focus of Legislative Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Decline of Value of the Federal Standard . . . . . . . . . . . . . . . . . . . . . . 24
Devolution to the States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
The Executive, Administrative and Professional Exemption under FLSA . . . . . 27
About the Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
'In Place' and 'Being Tested' . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
List of Tables
Table 1: The Tip Credit Under the 2007 Amendments to the Fair Labor Standards Act: Dollars per Hour and Percentages . . . . 7
Table 2: Status of State Minimum Wage Rates (as of January 2008) . . . . . . . . 26
______________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
Stuart Basefsky
Director, IWS News Bureau
Institute for Workplace Studies
Cornell/ILR School
16 E. 34th Street, 4th Floor
New York, NY 10016
Telephone: (607) 255-2703
Fax: (607) 255-9641
E-mail: smb6@cornell.edu
****************************************
_______________________________
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
________________________________________________________________________
Congressional Research Service
Order Code RL34510
The Fair Labor Standards Act: Continuing Issues in the Debate
May 28, 2008
William G. Whittaker, Specialist in Labor Economics, Domestic Social Policy Division
http://assets.opencrs.com/rpts/RL34510_20080528.pdf
[full-text, 34 pages]
Summary
On May 25, 2007, the President signed into law changes in the minimum wage
under the Fair Labor Standards Act (FLSA): P.L. 110-28. Although the wage issue
may now have been momentary settled, the act includes other provisions that have
been subject to legislation through the years and may again become the focus of
legislative consideration. Examples include the following issues.
! A youth sub-minimum wage, instituted in 1996, was not included in
the 2007 amendments, and is $4.25 per hour.
! The cash wage employers of 'tipped employees' must pay, last
updated in 1996, is $2.13 per hour.
! In 1989, the 'small business exemption' was restructured to exempt
from minimum wage requirements qualifying firms with an income
of under $500,000; but, as administered, exemptions have only been
available for employees not involved in interstate commerce.
! In 2001, the Clinton Administration proposed restructuring of the
'companionship exemption' under the FLSA; in 2002, the measure
was withdrawn. The issue has recently been the subject of a
Supreme Court ruling (2007) and of proposed legislation (H.R. 3582
and S. 2061).
! Through nearly a century, some economists (and, later, some
Members of Congress) have proposed, in various formats,
indexation of the federal minimum wage an issue that still
sometimes arises.
! In 1986, Section 14(c) of the act was amended to remove any
specific minimum wage floor for handicapped workers, replacing it
with a negotiated wage 'commensurate' with the worker's
productivity. It has been contested through the years.
! In 2003, a proposal was issued dealing with overtime pay for persons
classified as 'executive, administrative, or professional' employees
under Section 13(a)(1) of the act. At that time, the issue was
extremely contentious. How has it worked out in practice?
! Industry has threatened to leave American Samoa and the
Commonwealth of the Northern Mariana Islands were the full FLSA
to be made applicable there, as it would be under P.L. 110-28. What
will be the impact upon those islands?
! Increasingly, the states (now 34 in number) have moved to provide
minimum wage rates higher than the federal rate. What implications
can be expected, both in economic and political terms?
This report will be updated as the need may arise.
Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Youth Sub-Minimum Wage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Early Attempts at a Sub-Minimum Wage . . . . . . . . . . . . . . . . . . . . . . . 2
Bush and Experimental Youth Wages . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Clinton and the Youth Wage Made Permanent . . . . . . . . . . . . . . . . . . . 4
The 'Tip Credit' Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
The Early Statute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
The 1996 FLSA Amendments and Beyond . . . . . . . . . . . . . . . . . . . . . . 6
Companionship Services under the FLSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Some Early Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Interpretation by the Wage/Hour Administrator . . . . . . . . . . . . . . . . . . 9
Clinton, Bush and the Companionship Exemption . . . . . . . . . . . . . . . . . . . 10
The Clinton Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
The Bush Administration's Reaction . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Recent Legislative Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Indexation of the Minimum Wage? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
The Concept of Indexation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Early Concerns and Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Subsequent Legislative Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
The Small Business Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Early History of the Small Business Provision . . . . . . . . . . . . . . . . . . . . . . 15
Small Business and Current Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Treatment of Persons with Disabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Origins of Section 14(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Reform and Oversight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
The Current Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
American Samoa and the CNMI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
American Samoa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Commonwealth of the Northern Mariana Islands . . . . . . . . . . . . . . . . . . . . 22
Complications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Minimum Wage: Federal -v- State Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . 24
A New Focus of Legislative Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Decline of Value of the Federal Standard . . . . . . . . . . . . . . . . . . . . . . 24
Devolution to the States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
The Executive, Administrative and Professional Exemption under FLSA . . . . . 27
About the Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
'In Place' and 'Being Tested' . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
List of Tables
Table 1: The Tip Credit Under the 2007 Amendments to the Fair Labor Standards Act: Dollars per Hour and Percentages . . . . 7
Table 2: Status of State Minimum Wage Rates (as of January 2008) . . . . . . . . 26
______________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
Stuart Basefsky
Director, IWS News Bureau
Institute for Workplace Studies
Cornell/ILR School
16 E. 34th Street, 4th Floor
New York, NY 10016
Telephone: (607) 255-2703
Fax: (607) 255-9641
E-mail: smb6@cornell.edu
****************************************
# posted by SBasefsky : 1:14 PM
