Compliance with the Overtime Pay Provisions of the Fair Labor Standards Act
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Ehrenberg, Ronald G.; Schumann, Paul L.
[Excerpt] The evidence presented in this paper strongly suggests that non-compliance with the overtime pay provisions of the FLSA is a nontrivial problem. Our analyses of the May 1978 CPS data indicated that at least 9.6 percent of individuals who worked more than forty-one hours in the survey week and who we believe were subject to the FLSA's overtime provisions with certainty failed to receive any premium pay for overtime hours. Moreover, from our analyses of the partial coverage CPS sample, we inferred that over 20 percent of the people working overtime who were subject to the overtime pay provisions in those industries in which size-class exemptions existed failed to receive any premium. Finally, our analyses of the 1977 Michigan QES data indicated that almost 16 percent of the individuals who worked overtime and who we believe with certainty were covered by the overtime provisions failed to receive a premium of time and a half. Together, these analyses strongly suggest that 10 percent would be a highly conservative estimate of the noncompliance rate with the overtime pay provisions of the FLSA. Such a non-compliance rate would substantially moderate the positive employment effects generated by any future increase in the overtime premium.
Fair Labor Standards Act; FLSA; overtime pay; compliance
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