Fair Labor Standards Act Summary

The Fair Labor Standards Act, which was passed in 1938, addressed three issues that were problems in the United States during the Great Depression: minimum wage, overtime pay, and child labor guidelines (Martocchio, 2013, p. 28). According to Martocchio (2013), the Fair Labor Standards Act demands that workers who labor for more than 40 hours within a seven day period are to be paid one and one-half times their regular wage (p. 29). However, Martocchio (2013) states that there are several exemptions to this rule, which include workers that fall into the categories of executives, administrative, creative professions, computer, and outside sales (p. 29). In order for an employer to properly classify employees as exempt, the employees need …show more content…
As Martochhio (2013) stated, the Fair Labor Standards Act of 1938, was implemented to protect workers from being unfairly exploited by their employers for the sake of profit (p. 28). Under the executive exemption, the store manager of Jones Department Store may be able to deny overtime pay for her shift leaders if they are classified as executives, which Martocchio (2013) defines as an individual who manages an enterprise or recognized department or subdivision (p. 29). Wages are a big chunk of an organization’s operating costs and being required to pay overtime wages would be a devastating blow to profits. It is understandable that an organization would seek ways to avoid paying overtime wages, which would negatively impact its profit margin. By classifying its shift leaders as exempt employees, Jones Department Store is able to retain its profits, that would otherwise be eroded, because it does not have to pay overtime for certain classes of employees who are exempt from the …show more content…
According to the description above, Jane Swift works an additional five to ten hours above the standard 40 hour work week. The description also mentions that Jane Swift has been in the position for about six months. According to these figures, Jane Swift has worked an additional 130 to 260 hours with no additional compensation. The organization has benefitted from her work beyond 40 hours without having to pay for it. It will continue to do so until she decides to leave. This is a huge advantage for Jones Department Store because it is stretching the productivity of its human capital without having to spend any additional money for the increased productivity. When Jane Swift, as an exempt employee, pitches in to assist with customer service coverage due to several employees leaving the organization, the organization avoids paying to bring in other employees to cover the shifts or paying to recruit and train new employees. This saves the organization money and increases its

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