Fair Labor Standards Act (FLSA)
This week’s lesson discussed the Fair Labor Standards Act (FLSA) and its mandates for such matters as minimum wage, overtime, etc. The threshold under which salaried employees must be paid overtime was set in 1975 at $23,700 USD, and was unchanged until May 2016 when President Barack Obama attempted to raise the threshold by executive order to $47,476 USD (the 1975 figure adjusted for 41 years of inflation). According to President Obama, the new salaried employee overtime rule would have provoked employers to do one of three things: 1) pay overtime wages to their salaried employees who make less than the new threshold, 2) give raises to salaried employees who are currently paid less than the threshold so that they remain ineligible for overtime, or 3) hire more employees to cover the overtime workload and constrain salaried employees paid less than the new threshold to a 40-hour work week. In November 2016 this order was blocked by federal court injunction, and has not been pursued under the Trump administration. However, consider and comment on the following questions:
1. Of the three options that Obama’s executive order was intended to provoke, which do you think businesses would have been most likely to choose and why? Are there any other options? If so, what are they and what are the legal challenges involved? It is argued that this executive order would have benefited the macro-level economy regardless of the choices that employers made. Do you agree? Why or why not?