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News | Sep 14, 2012

THE PURPOSE BEHIND OUR OVERTIME LAW

Many of you know that our federal overtime law – the Fair Labor Standards Act (“FLSA”) – was enacted during the Great Depression and that the law ensures that employees are fairly compensated for working long hours.  This, however, is not the only purpose behind the FLSA.

In these times of high unemployment, it’s especially important to remember that the FLSA’s primary purpose was to spur employment by making it expensive for companies to pay employees for working over 40 hours per week.  In a fair world (one in which employers don’t skirt the overtime laws) the costs to the company of paying all that extra overtime often will tilt the scales in favor of hiring additional employees and spreading work among more employees.

A few years ago, our firm came out on the losing end of a split-decision in Parker v. NutriSystem, Inc., 620 F.3d 274 (3d Cir. 2010).  While the Court of Appeals’ decision was very disappointing, it did contain an excellent summary of the purpose behind the FLSA.

The legislative history of the overtime compensation provisions of the FLSA reveal a threefold purpose underlying them: (1) to prevent workers who, perhaps out of desperation, are willing to work abnormally long hours from taking jobs away from workers who prefer shorter hours, including union members; (2) to spread available work among a larger number of workers and thereby reduce unemployment; and (3) to compensate overtime workers for the increased risk of workplace accidents they might face from exhaustion or overexertion.

Id. at 279 (citing Mechmet v. Four Seasons Hotels, Ltd., 825 F.2d 1173, 1175-76 (7th Cir. 1987)).

In sum, the FLSA’s important role in fighting unemployment is more important than ever.  So next time you hear someone whining about the supposed proliferation of overtime rights lawsuits, try to remind them of the FLSA’s important role in fighting unemployment.

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