January 4 2012
Depression-Era Rules Only Benefit Bureaucracy
Carrie L Lukas
The U.S. Department of Labor recently determined that scores of gas station owners in New Jersey had failed to comply properly with the Fair Labor Standards Act, such as paying sufficient overtime to some eligible workers.
Is this a tale of big, bad business trying to take advantage of the little guy? Maybe. But … maybe not.
There's no excuse for circumventing tax laws or ignoring minimum-wage requirements, but in many of these cases, gas station owners could just as easily be cast as the “little guy” struggling to make sense of complicated, antiquated regulations set by the real lords of power in the modern economy — the government.
Sal Risalvato, director of the New Jersey Gasoline, C-Store, Automotive Association explained that many gas station owners without professional payroll departments weren't short-changing their workers— in fact, many were paying more than they were legally compelled to. They had just failed to follow the precise calculations and bookkeeping requirements of the law.
The Department of Labor has promised to hold training seminars to help gas station owners understand the nuances of what's required by law. Yet New Jersey residents worried about the state's economy might rightfully wonder just how much time they want small business owners spending on learning the ins and outs of bureaucratic red tape.
The public wants basic workers' rights protected, but intuitively understands we've gone too far in allowing government to micromanage the minutiae of business life. This is part of what's driven our economy to its present crisis.
The Fair Labor Standards Act, in fact, is a good place to start for a tutorial on what’s wrong with our current regulatory regime. FLSA was enacted in 1938 during the Great Depression. In Franklin Roosevelt’s day, most jobs could be easily categorized; work was typically performed for certain hours during the day, at a specific place of employment.
Obviously, our 21st century workforce is radically different, which makes it a challenge to apply many of FLSA's out-dated concepts. FLSA, for example, requires that all nonexempt employees must be paid a minimum wage (currently $7.25) and time-and-a-half for work in excess of 40 hours per week. To comply, employers must carefully monitor exactly how much time these employees work. Exempt workers — generally white collar, professional workers — who receive a set salary rather than an hourly wage operate differently, and don't necessarily accrue overtime.
Who can companies safely put on salary? The Department of Labor requires that exempt employees' work must involve the “consistent exercise of discretion and judgment.” What does this mean for accountants, computer technicians and other engineers, whose valuable technical skills will command far more than minimum wage, but whose early work is often closely supervised and focused on following complicated procedures and protocols? Are they exercising discretion and judgment?
Employers face an equally difficult challenge in deciding exactly what constitutes “work.” Does checking email from home count? Indeed, working from home opens a Pandora's box of question.
Such flexibility can be a boon to workers, but if at-home work creates major administrative hassles — and worse, potential liability exposure — many companies may simply default to disallowing at-home work entirely. That’s bad news for workers, particularly for many women, who often choose flexible work arrangements to balance work and family.
Americans understand big business boogiemen don't just pay a price for outdated regulations. Workers and our entire economy suffer, too.
It’s past time for Congress to take a new look at existing laws like the Fair Labor Standards Act, in order to create streamlined rules that will protect workers’ basic right, but without unnecessarily burdening employers and hamstringing our economy.