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Four Aspects of FLSA in Need of Modern Makeover


May 17, 2023

The 1938 Fair Labor Standards Act continues to be a bulwark against worker exploitation, but several pillars of the statute and its regulations — from subminimum wages to collective action certification — need refreshing to meet today’s workforce, attorneys said.

Employment law practitioners often bemoan how the FLSA does not jibe well with the contemporary economy. While this is true in some respects, the FLSA still serves its underlying purpose of protecting workers, said D. Michael Hancock, of counsel with worker-side firm Cohen Milstein Sellers & Toll PLLC and former assistant administrator for the U.S. Department of Labor’s Wage and Hour Division.

“I may be the only one that believes this,” he said, “But I think fundamentally it has continued to serve an important role in this society, in this economy.”

But there are key provisions that need to be tweaked, he said.

Here, Law360 explores four aspects of the FLSA that merit reconsideration and reformulation.

Subminimum Wages

The FLSA permits employers to pay certain categories of workers below the federal minimum wage of $7.25.

One such allowance is the tipped minimum wage, where employers can take a so-called tip credit and pay gratuities-earning workers as little as $2.13 per hour as long as tips carry the worker to the standard federal minimum wage of $7.25.

The tipped credit “has no place in a modern economy,” said Sarah Arendt, a partner with Werman Salas PC.

“It’s ridiculous that employees who make up a large portion of the economy are paid subminimum wages,” she said.

The precarity of low-wage work came into sharp relief amid the pandemic when many such employees were lauded as essential workers.

Hancock said he was struck by how farmworkers were identified as essential workers even though the FLSA excludes agricultural workers from its overtime protections.

Experts say this exclusion is rooted in racism because when Congress enacted the FLSA, lawmakers largely cut out agricultural, domestic and hospitality sectors, fields dominated by Black workers.

“A farmworker can work 60, 70 hours a week doing grueling work, under really harsh conditions, and they’re denied overtime,” he said. “And there’s just no rational reason why.”

Employers can also pay people with cognitive or physical disabilities less than the minimum wage if the employer secures certificates from the U.S. Department of Labor under Section 14(c) of the FLSA.

That is another “gross injustice,” Hancock said.

“We’ve learned enough that we now know that most of the people who are labeled Section 14 workers are very productive, are perfectly capable of doing productive work,” he said. “It’s signaling to them that we value them less and that they’re not as good as others, and I just think it’s morally wrong.”

Read Four Aspects of FLSA in Need of Modern Makeover (subscription required).