Congress passed the Fair Labor Standards Act in 1938, and it last was amended in 2007. Among other things, the FLSA allows the Labor Department to define who, in a business, is a manager and who is not.
There are two problems with this, either of which alone is sufficient to demonstrate the need for a further amendment. One problem is that it lets government dictate to business owners—private citizens—how they will run their businesses by dictating to them who they may have on their management teams.
The other problem, the one of interest in this post, is that Labor’s definition of who can be a manager is determined by the man’s salary and not by what he does. This definition matters because managers are “exempt employees,” that is, businesses do not have to pay them overtime for working more than full-time hours (nominally, 40 hours per week or 80 hours per two-week periods; although Obamacare muddles that definition).
Sean Higgins, of The Washington Examiner, had some thoughts on that earlier. I’ll just comment on a couple of them here; RTWT.
The president and administration officials have indicated they plan to increase the $23,000 minimum amount a worker must make before his employer can opt to exempt him from federal overtime rules….
Groups such as the liberal Center for American Progress, which has close ties to the White House, have called for the threshold to be raised to $50,000.
That’s the set up.
Higgins then quoted Joshua Parkhurst, a New York labor rights lawyer:
A fast-food restaurant can slap an “assistant manager” title on someone and…that exempts them from overtime. The white-collar exemption is far and away the most litigated issue under the act.
I’ll ignore the fee-generating litigation Parkhurst alluded to; the “error” is his implication that being an assistant manager is, of necessity, a bogus status. How many managers does a fast-food restaurant (or other small business) need? Exactly one. Who’s in charge on the shifts where the manager isn’t working? Somebody? Anyone? Answer: the assistant manager. Businesses doing 24-hour operations need at least three assistant managers—one for each shift (because the day shift’s manager would benefit from the help, and so the business would), plus one (or more) to fill in when someone gets sick or goes on vacation. How many more properly is a business decision, not a government one.
Doubling the threshold, the Center for American Progress argues, would force businesses to pay workers the overtime they are due or force employers to raise salaries to meet that level. “The average worker works 11% more hours than he or she did in 1975. If we as a nation could afford overtime rights then, we can afford them now,” center policy analyst Brendan Duke wrote….
This, of course, is nonsense. Raising the threshold (not even doubling it) would not at all force businesses to pay overtime or to raise wages. Businesses also have the option of restricting their business hours. They also have the option of restricting those workers’ hours and hiring temporary, part-time help. The former could harm the business, but it’s a business decision whether the higher labor costs or the reduced business hours would be the less harmful. The latter would be good for the temporary hires, albeit their hours and income would be uncertain. It would harm the existing workers, though, by capping them, ending their upward mobility and limiting their ability to build resume material for later, better jobs. This is what most of the workers in this sort of business are doing anyway—getting work experience and looking to improve themselves.
Or, the businesses could (and this is the most likely alternative) simply cut back on the benefits provided in order to compensate for the increase in labor cost from government’s redefinition of “manager.”
And the pseudo-logic that, just because “we as a nation could afford overtime rights” 40 years ago when we worked less, we surely can afford to pay increased costs today is breathtaking to hear from an “analyst.” Or maybe not.
Finally, here’s Parkhurst, again:
The point is, if you are shifting someone back and forth from administrative tasks to manual labor, they aren’t a manager. And slapping a title on them doesn’t change that.
This, too, is nonsense. By Parkhurst’s logic, “if you are shifting someone back and forth from administrative tasks to manual labor, they aren’t a” laborer. And calling him that doesn’t change that.
This gets to the crux of the matter. What makes a man an assistant manager is what he does, not how much he’s paid. And what he does is a matter for business to determine, not government. Or a “labor rights” litigator.
The FLSA would benefit from one more amendment, and so would the country.