The Origins of Minimum Wage and Overtime Rights

The Origins of Minimum Wage and Overtime Rights

Currently, federal and state laws establish minimum wage and overtime protections for employees. The most prominent example of such a statute is the federal Fair Labor Standards Act (FLSA), which sets minimum wage and overtime protections forcovered employees. But the FLSA and similar state statues are only the most recent developments in the long historical process of determining whether and how federal and state governments should regulate wages and hours. This blog post provides some historical background and context for the legal protection of the wages and work hours of America's workers.

Wage regulation existed in America before the Revolution. But unlike today, early wage regulations were not floors but ceilings--maximum amounts payable for labor. This was because labor shortage in colonial America caused the demand for labor to exceed the supply. Thus workers had a strong bargaining position in wage negotiations, one that employers and others sought to modify through government intervention.

The dynamics of the American labor market shifted drastically over time as the labor pool expanded. Along with other factors, this expansion led to a labor supply greater than demand. As workers began competing for employment, employers found themselves in a much better position to negotiate wages and hours. The result for workers was long hours at low wages. Because longer hours enabled employers to maintain a smaller workforce, unemployment was also a problem.

An early response to worsening working conditions was to limit the maximum hours an employee could work in a day or a week. Early hour limits were not applied across the board. Instead they limited the hours workable by women and children, and by men in dangerous occupations. During the nineteenth century, labor unions fought to expand the scope of the limits on work hours. Beginning in the late nineteenth century, hour limits were a focal point of the class antagonisms of the Progressive Era.

One highly visible result was the landmark 1905 case Lochner v. New York, in which the U.S. Supreme Court struck down a New York law that set an hour limit for bakers. The law limited them to no more than ten hours per day or sixty hours per week. A divided Court determined that the hour limit was a violation of the liberty of contract. The decision inaugurated the period of "Lochnerism," during which the Court took an expansive view of constitutional protections of industry, even where this meant limiting the power of states to protect the heath and welfare of their citizens.

Wage and hour protections were reinvigorated during the Great Depression. With large numbers of Americans out of work, regulation of working conditions became an increasingly urgent national priority. Franklin D. Roosevelt undertook aggressive intervention in the flagging national economy. Roosevelt put pressure on the judiciary to uphold new legislation enacted in support of his agenda. The Supreme Court adopted a more accepting view of government regulation of working conditions. In 1937, in West Coast Hotel Co. v. Parrish, the Court upheld a state minimum wage law, effectively ending the period of Lochnerism. Subsequently, the Court held that the federal legislature could also enact wage and hour protections, on the basis of it power to regulate interstate commerce. In 1938, the FLSA was enacted, marking the beginning of contemporary federal wage and hour protections.

The overtime provisions of the FLSA, which require non-exempt employees to be paid one and one-half times their regular rate for all work hours over 40 hours in a workweek, were originally passed not to reward workers for extra work, but rather as a tax on employers who hoarded work among a smaller group of employees. For example, if an employer has 60 hours of work available in a week, the employer could use one employee to perform all sixty hours of work, but under the FLSA, would have to pay a premium wage rate to that employee for hours 41 through 60. To avoid paying that premium wage rate, the employer could spread the 60 hours among two employees, giving them each 30 hours. In that scenario, the employer would not owe the premium wage rate for the hours over 40. Therefore, under the FLSA, employers are incentivized to spread the work across a larger group of employees, rather than overwork a small group of employees. The end result is to lower the unemployment rate by providing jobs to a greater number of people, which was a problem during the Great Depression (and is also a problem in our current economy).

Despite these legal protections, some employers in the current economy attempt to avoid paying the overtime wage premium required by the FLSA by engaging in one or more common violations of the FLSA. And despite the fact that today's workers generally enjoy many more rights and protections than workers during the Great Depression, wage theft and violations by employers continue to be a systematic and widespread problem.

If you believe your employer has violated your rights to minimum wage or overtime pay, or if you'd like to learn more about your rights, you should contact a Missouri overtime attorney.