Welcome to the Carpe Diem Blog, designed to help us keep in touch and to keep current on events and developments of interest to us all.
Let’s start with the tactic that many employers use to avoid paying overtime.1
The Fair Labor Standards Act (FLSA) was passed in 1938 and is administered by the seriously understaffed U.S. Department of Labor. It has been updated piecemeal and only infrequently over the last 85 years and needs serious attention in order to adequately address its main raisons d’etre: overtime pay for working more than 40 hours, regulation of child labor, and payment of prevailing minimum wages. I am not an oracle, but the FLSA will undoubtedly continue to languish in the currently polarized political environment.
One tried and true method of circumventing the obligation to pay for overtime has been the deliberate misclassification of lower-level employees as “professionals” or “white collar” workers, magically metamorphosing them into “managers,” a recognized FLSA exception to the obligation to pay overtime.2 This category excludes them from the FLSA overtime coverage and essentially transforms many whose functions are clerical or administrative into managers for the limited purpose of evading this legal responsibility. Time Magazine recently reviewed the ubiquity of this stratagem. 3 The research out of Harvard University and the University of Texas-Dallas 4, disclosed that over the years 2010-2019, there was a 485% escalation in pseudo-promotions at just over minimum wage ($455/week) to justify not paying overtime. The most recent metaphor for this kind of fabrication came from the U.S. Representative who “embellished” his resume; he also submitted questionable hotel bills for $199.99, apparently designed to avoid having to declare the expense for other purposes. The artificial elevation of employees to “manager” represents a similar type of device to dodge overtime obligations.
Who is mostly affected by this subterfuge? Disabled workers (see unpublished case study, Mark Bell’s unpublished study5, “People with Intellectual Disabilities and Employment Discrimination Law: a US Case Study,”)6 secretaries, maintenance workers, nurses, clerks, executive assistants who answer phones or buy lunch for their bosses – you get the idea. This problem does not address the demands of “exempt” employees – those managers and executives who are legitimately not entitled to overtime pay – who must put in 50, 60 or more hours per week without extra remuneration. That is a topic for another blog post.
There are severe penalties (treble damages) that could result if an employer is found to engage in this ploy intentionally. That rare finding has required mens rea of a sort – “evil intent” in criminal law (this is civil law) – and recurrence of the transgression. With the DOL’s chronic understaffing, especially considering the dramatic increase in the number of going concerns and the advances in technology, the imposition of such a penalty is improbable and may be considered the cost of doing business.7
Why does this interest us at Carpe Diem?
Our philosophy, beside adhering to legal constraints and working with integrity and within other legitimate boundaries, calls for respecting and valuing employees. This mindset obliges us to add moral parameters to any actions we take. If we take the simple Golden Rule seriously, we would never resort to this type of end-around. And yet, many employers appear to do it, even some that consider themselves, and are thought of, as reputable.8 These are not evil people who are utilizing loopholes to benefit their companies; however, it could be argued that greed or insensitivity might be motivating employers to treat employees like widgets. It recalls the American Empathy Deficit.
1At this time, we will not address how employees take advantage of employers’ time, although that is a subject worth scrutinizing.
2Employers may also unintentionally misclassify employees, to the detriment of the employees and perhaps of the employer if detected and administratively addressed by state or local authorities. The tendency to overclassify is something that your Classification and Compensation experts should closely evaluate.
4https://www.nber.org/system/files/working_papers/w30826/w30826.pdf
5Regius Professor of Laws, Trinity College Dublin, University of Dublin: mark.bell@tcd.ie. I am very grateful to Professors David Oppenheimer, Mark Brodin and the anonymous reviewers for feedback, as well as the participants of the Annual Conference of the Berkeley Comparative Equality and AntiDiscrimination Study Group, University of Melbourne, 11-12 June 2018.
6 Pre-Edited Work; Accepted for Publication in the International Journal of Comparative Labour Law and Industrial Relations (2019).
7The D.O.L. under the current Administration does pursue cases, though. See, e.g., Connecticut bakeries that did not pay overtime to 74 bakers and did not keep records of time worked. In a consent order, those bakers received $952,000.00. https://www.dol.gov/newsroom/releases/whd/whd20221004-0
8See class action against for Facebook, https://news.bloomberglaw.com/daily-labor-report/facebook-will-pay-1-65-million-to-end-class-overtime-pay-suit, and a class action against Family Dollar https://abelllaw.typepad.com/files/morgan-v.-family-dollar-stores-inc.-no.-07-12398-11th-cir.-december-16-2008.pdf
