Today, less than 12 percent of the U.S. workforce can use a collective bargaining agreement to improve wages and working conditions. Consequently, workers are increasingly reliant on federal, state and local laws for protection around their pay, schedules and unpaid leave. Yet these baseline requirements often fail to ensure that people can earn a decent standard of living through family-supporting wages and steady, predictable hours. Learn the basics of wage-and-hour laws, as well as how policies and organizing can address the inadequacies of these current laws.
>> Download the PDF: Wages and Hours 101
What is the minimum wage and who is eligible for it?
The Fair Labor Standards Act (FLSA), originally enacted in 1938, establishes standards for the federal minimum wage, while allowing states and localities to establish higher minimum wage rates. The federal minimum wage is currently $7.25 an hour. As of June 2014, 22 states plus the District of Columbia maintain higher rates. Several categories of workers are excluded from minimum wage requirements, including professional or salaried employees, workers employed on small farms and fishing operations workers.
What is the tipped minimum wage?
Under the FLSA, the minimum wage requirements differ for those who are considered “tipped” employees, specifically workers who regularly earn more than $30 per month in tips. Employers are only required to pay a minimum of $2.13 an hour in direct wages to tipped employees. If the employee does not earn enough in tips to equal the federal minimum wage, employers are required to (but don’t always) make up the difference.
Has the minimum wage kept up with inflation?
If the federal minimum wage had kept up with the rate of inflation over the past 40 years, it would be $10.86 instead of $7.25. The value of the federal minimum wage peaked in 1968, when two adults and one child could live off of this income and still remain above the federal poverty line. But the current minimum wage doesn’t provide enough income to ensure that a family of three stays above the poverty threshold. Likewise, the tipped minimum wage has been frozen since 1991 despite inflation, and tipped workers are more than twice as likely to fall under the federal poverty line as the average worker.
In recognition of the inadequacy of minimum wage rates, legislators in seven states plus the District of Columbia have enacted increases between January and May 2014. Localities have also raised minimum wage rates, and in response, the corporate-backed American Legislative Exchange Council (ALEC) created model legislation that 11 states have now passed, which preempts local governments from establishing minimum wage rates above the state or federal rate.
What is overtime and who is eligible for it?
The FLSA also sets overtime protections, requiring that eligible employees are paid at least the federal minimum wage for 40 hours worked in a week, plus time-and-a-half pay for every additional hour worked that week. Many employees, however, are exempt from overtime protections, including executives, administrators, professionals and salespeople. Employers are not required to pay workers overtime if they are salaried, paid at least $23,600 per year or $455 per week, and perform job duties consistent with that of exempt workers under the FLSA. Four states – Alaska, California, New York and Nevada – have more expansive overtime protections that allow a broader group of employees to earn overtime pay.
The Obama administration has charged the Department of Labor with reforming overtime pay regulations to ensure that workers are earning a fair wage for their labor. The Economic Policy Institute estimates that millions more workers would be eligible for overtime if the administration set the threshold at $50,000 per year, which is the inflation-adjusted threshold from 1975.
Are there any laws requiring employers to provide a minimum number of work hours to employees?
While an increasing number of jobs fail to provide employees with sufficient wages and hours to make ends meet, the FLSA does not contain provisions that guarantee workers a minimum number of hours scheduled by their employer, either on a weekly basis, or within a given shift.
Does the FLSA set protections around employee scheduling?
There are no federal protections for employees around predictable scheduling. In the service sector, employers aim to cut labor costs and benefit obligations by hiring more part-time workers, keeping their schedules erratic, and not paying them when they are on call and do not end up getting called in to work. “Just-in-time” scheduling has become a growing practice in retail, where managers will often wait to post schedules until a day or mere hours before an employee is scheduled. This practice makes it difficult for workers to make child-care arrangements, schedule important appointments or work a second job. In the restaurant industry, employers may only inform staff of when they need to report to work and not when their shifts will end. Often restaurant employees are relieved of their duties once their manager determines they are no longer needed.
The lack of state and federal protections regarding scheduling means that workers have little recourse against volatile schedules and earnings. Given the advent of “just-in-time” practices, it’s no surprise that the rate of involuntary part-time work continues to be a problem even after the economy recovers from the Great Recession. A recent Federal Reserve analysis of involuntary part-time employment (those who would work full-time if they could) argues that the higher rate of involuntary part-time workers in the service sector compared to the goods-producing sector could indicate that the problem of involuntary part-time work won’t go away when the economy fully recovers, as it is predicted to do elsewhere in the economy.
Are there any initiatives to address problems with scheduling and hours?
At the local level, the city of Seatac, Washington, has encouraged that employers first offer more hours to part-time employees before hiring additional workers through one provision of its recent law raising the minimum wage to $15 an hour. At the federal level, several notable economists have also argued that by reforming overtime rules to cover a greater number of low-wage workers, employers could be compelled to hire more workers at straight-time pay, rather than overtime pay. This reform could expand jobs and hours in the service sector, where involuntary part-time work persists.
Workers are also demanding and securing scheduling improvements. Last summer, members of the Retail Action Project in New York City successfully pressured the Manhattan flagship Victoria’s Secret store to create full-time positions for non-managerial employees.1 Recently, OUR Walmart, the association of Walmart retail employees, reports that because of its collective actions and protests, the company is finally implementing a more transparent scheduling system that allows workers to sign up for more hours where shifts are available.
Are employers required to provide paid sick or vacation days?
There are no federal laws requiring employers to grant their employees paid sick or vacation days. Thirty-eight percent of all private sector workers are not offered paid sick leave, despite research that shows that people who are not afforded paid sick leave are 1.5 times more likely to come to work sick than those who have paid sick days. Men and women without paid sick time off are also more likely to delay critical preventative medical care, resulting in future missed work and increased health-care costs.
The only federal law granting employees the right to take unpaid medical leave without losing their jobs is the Family Medical Leave Act (FMLA). Under the FMLA, eligible employees can take up to 12 weeks of unpaid leave in the event of serious illness, childbirth, adoption or an emergency involving an active-duty family member in the military. The FMLA requires employers to provide health benefits during the leave, and employees are also entitled to return to their same or an equivalent job at the end of their leave. However, many workers cannot afford to take unpaid leave. Additionally, 40 percent of workers are not even eligible for FMLA, either because their employer is too small or they have not reached the minimum number of hours worked (1,250 in the prior 12 months) to qualify. In 2002, California became the first state to offer paid family leave, and New Jersey followed suit in 2008. Legislative and campaign efforts to give more men and women access to paid sick days are currently taking place in 23 states and five cities.
How do workers’ unions address wages, hours and paid leave?
Federal and state laws only establish the minimum requirements for wages and overtime, but workers can achieve higher pay and stronger overtime protections through collective bargaining with their employers. Union contracts also address core issues like scheduling. Retail contracts can require employers to give employees their schedules four weeks in advance. Unions can also bargain for terms that stabilize schedules, such as minimum numbers of hours, elimination of mandatory overtime and notice of overtime needed. Similarly, the “just-in-time” scheduling that has become pervasive in the retail sector could be addressed if more retail workers were free to collectively address work standards without fear of retaliation by their employer. In 2013, only 4.6 percent of retail workers were union members. Though companies like Walmart and Victoria’s Secret are beginning to respond to scheduling reform demands by their employees, without having these demands written into collective bargaining agreements, employers are free to go back on their commitments.
Union members are also more likely to have paid leave. According to a report by the Labor Project for Working Families, in a comparison among hourly employees, 46 percent of union members had access to paid family leave compared with only 29 percent of non-unionized employees.
Thanks to Jobs With Justice intern Alyssa Tufano for her research assistance.
>> Download the PDF: Wages and Hours 101
1 – Hammad, Sasha (2014). Personal interview with Erin Johansson, 4 March.
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Source: Wages and Hours 101
