The Fair Labor Standards Act: A Historical Sketch of the Overtime Pay Requirements of Section 13(a)(1) (CRS Report for Congress)
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| Release Date |
Revised Aug. 28, 2007 |
| Report Number |
RL32088 |
| Report Type |
Report |
| Authors |
William G. Whittaker, Domestic Social Policy Division |
| Source Agency |
Congressional Research Service |
| Older Revisions |
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Summary:
Section 13(a)(1) of the Fair Labor Standards Act permits exemption of employers of bona fide executive, administrative and professional employees from the minimum wage and overtime pay requirements of the act; that is, from the basic wage and hour provisions of the statute. What constitutes a bona fide executive, administrative, or professional employee has been left by Congress for the Secretary of Labor to define and delimit. That process, begun in 1938, lapsed after 1975 and was renewed by the Bush Administration in 2003 (see 29 CFR 541).
The first Section 13(a)(1) regulation appeared in 1938. Inter alia, it imposed two classification tests. First. To qualify as bona fide, a worker had to be paid at a rate befitting an executive or administrator. Second. The worker had to perform the actual work (duties) of an executive or administrator. A salary threshold was set at $30 a week. Initially, professionals were subject only to a duties test. In 1940, an earnings threshold ($50 a week) was set for professionals.
Definitions were modified periodically (both the earnings and duties tests) so that they could serve, credibly, as indicators of who might be deemed an executive, administrator or professional for Section 13(a)(1) purposes. Updates were always contentious. With lower thresholds, greater numbers of workers would find themselves unprotected by the terms of the FLSA. Thus, it was in the interests of employers to keep the thresholds lowâand the duties tests as broad as possible. Workers, in turn, sought a higher threshold and a narrow definition of duties.
The last general revision occurred in 1975, but the effort encountered significant objections from employers. In 1978, a further update was proposed; but, in 1981, it was withdrawn by the new Reagan Administration. It never reappeared. The thresholds remain at 1975 levels: $155 per week for executives and administrators and $170 for professionalsâwith slightly lower levels for Puerto Rico, the Virgin Islands and American Samoa. The duties tests have evolved, slowly, since 1938 but remain heavily anchored in regulations from the act's early history.
On March 31, 2003, Wage/Hour Administrator Tammy McCutchen published in the Federal Register a proposed update of the Section 13(a)(1) regulation. The proposal sparked an intense public and legislative debate. (See, inter alia, H.R. 2660, H.R. 2673, H.R. 2665, H.R. 4520, S. 1485, S. 1611, and S. 1637 of the 108th Congress.) On April 23, 2004, DOL issued the rule in final form (Federal Register, April 23, 2004, pp. 22122-22274) to take effect the last week of August 2004. The new provisions have now been placed in effect. It seems unlikely that any further revisions can be expected to take place for the foreseeable future.
This report sketches the evolution of the Section 13(a)(1) regulation and explores the arguments, pro and con, that it has encountered.
