Update or More Enforcement? Fair Labor Act Debated 80 Years In

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By Jon Steingart

Does the rise of today’s gig economy call into question whether an 80-year-old federal wage law is still relevant? Some updates may be warranted, but making significant changes to the Depression-era Fair Labor Standards Act won’t be easy, worker advocates and management-side attorneys told Bloomberg Law.

Going to work used to mean leaving one’s home and physically traveling to a workplace. Today, it’s as simple as signing into a smartphone app.

“I think there’s a tendency for people to think we need new rules because of the gig economy,” Ruben Garcia, a professor at William S. Boyd School of Law and co-director of the University of Nevada Las Vegas workplace law program, told Bloomberg Law March 28. “Old rules, I think, work pretty well when they’re enforced,” he said.

The U.S. was reeling from the Great Depression in 1938 when President Franklin Delano Roosevelt signed the Fair Labor Standards Act, a piece of New Deal legislation that established work requirements such as a minimum wage, pay for overtime, and a ban on child labor.

One of the old rules Garcia referred to is that the FLSA applies to employees but not to independent contractors. Lawsuits against gig economy companies such as Lyft and Postmates have ended in settlement or were dismissed when courts concluded workers weren’t entitled to minimum wage, overtime, or expense reimbursement because they’re independent contractors.

Garcia spoke at a symposium the American Constitution Society and the National Consumers League held March 28 at Georgetown University Law Center in Washington to mark the 80th anniversary of the FLSA. The ACS is an organization of progressive lawyers. The NCL is a workers and consumer advocacy organization.

Multi-Million Dollar Settlements

The settlements can include eye-popping amounts, such as the $27 million figure Lyft and drivers jointly told a federal judge March 27 is proceeding on schedule, and the $100 million Uber settlement that a judge rejected as too small.

A judge ruled in February that Raef Lawson, a former delivery driver for food ordering service Grubhub, was correctly classified as an independent contractor rather than as an employee. Lawson’s misclassification case was the first to reach trial and was seen as a bellwether because the San Francisco-based U.S. District Court for the Northern District of California, in the heart of the gig economy, is where many similar cases are filed.

The FLSA should be updated for the times, Caroline Fredrickson, ACS president, told Bloomberg Law March 28. “The FLSA has to be recognized as a historic breakthrough for workers in America,” she said. “It’s time to look at it going forward to see where there are the gaps, the flaws, and where we can make the fixes.”

Making broad changes to the FLSA is difficult because nobody wants to see their rights diminished, said Paul DeCamp, who served as administrator of the Labor Department’s Wage and Hour Division during the George W. Bush administration. The agency administers and enforces the FLSA.

“There have been some instances where there are some changes to the FLSA” that have happened in the eight decades the law has been on the books, Decamp told Bloomberg Law March 27. “What we have not seen is large scale top-to-bottom revision of the statute,” Decamp said. “I think it’s warranted but it’s also very unlikely that as a society we can have a go-back-to-first principles discussion,” he said.

It becomes a “line in the sand” if the discussion is perceived as taking away rights, such as workers’ access to overtime, or increasing an obligation, such as employers’ record-keeping requirement or more pay for similar work, DeCamp said. “Then it becomes a reversion to that notion that it’s a zero sum game,” he said.

DeCamp is now in private practice, representing employers and trade associations as co-chair of Epstein Becker & Green P.C.'s national wage and hour practice group and a member of the firm’s Washington office. He’s also contributed to a Bloomberg Law treatise on the FLSA.

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