Today marks the 100th birthday of the nation’s first minimum wage law in Massachusetts. The state of Washington followed suit in 1915, although evasion of the law was commonplace. Although motivated in large part by a desire to protect women and child laborers from exploitation, minimum wage and overtime laws eventually spread to cover workers of both genders and all ages in most industries.
Despite the noble origins of minimum wage and overtime laws, they were not without controversy. In fact, the U.S. Supreme Court initially declared such laws to be an unconstitutional intrusion on the freedom to contract. Only after President Franklin D. Roosevelt threatened to “pack the Court,” did the Court reverse course and uphold laws imposing minimum wage and overtime requirements. “Change one thing, change everything,” I like to say.
Today, the working conditions that spurred minimum wage and overtime requirements have largely disappeared, at least here in America. But violations of wage and hour laws, especially those requiring payment of overtime compensation, are still common.
I believe most employers, especially small business owners, are good, hard working people. Wage and hour violations are often unintentional. But unintentional violations are still violations that deprive employees of the pay to which they are entitled. Violations can cost employers tens or even hundreds of thousands of dollars in attorney’s fees alone, not to mention the unpaid wages and overtime, plus penalties, owed to employees.
Many violations, both intentional and unintentional, result from the misclassification of employees. For example, an employer may treat an employee as an independent contractor when, in fact, the law treats the individual as an employee. Or an employer may pay a salary to an employee believing that payment of a salary eliminates the obligation to pay overtime compensation. In fact, payment of a salary is only one element of the various tests used to determine whether a particular employee is exempt from the obligation to pay overtime compensation. In addition to payment of a salary above a weekly rate specified by law, the Fair Labor Standards Act (FLSA) requires that employees also have certain primary duties before courts will consider them to be exempt and thus not entitled to overtime compensation.
In short, today’s milestone stands as a reminder that minimum wage and overtime laws exist, exist for a reason, and will be enforced when covered employers fail to satisfy the required elements of the various state and federal laws enacted to promote healthy work environments and a living wage.