The Fair Labor Standards Act: Continuing Issues in the Debate

Source: William G. Whittaker, Congressional Research Service, Order Code RL34510, May 28, 2008

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Clinton Administration proposed restructuring of the ‘companionship exemption’ under the FLSA; in 2002, the measure was withdrawn.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

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