Kevin Taylor: 'Wild west' still rules workplace

COMMENT


Getting a law passed in the United States is easier than changing one.

That is partly because Americans consider "rights" of great importance and rhetoric about attempts to remove them - exaggerated or not - resonate.

Nowhere was this better demonstrated than on Capitol Hill last year when the Bush Administration tried to modernise outdated overtime regulations.

Despite Republican majorities in both the Senate and House, an initial attempt to change the regulations faltered in early October after a union-backed campaign claimed millions of workers would be done out of overtime.

Unlike New Zealand, where change in employment (or any) law occurs at speed, glacial change is the order of the day in the US. And that has left legislation dating from the 1930s governing 21st century workplaces.

Two major examples are the Fair Labor Standards Act of 1938 and the National Labor Relations Act of 1935.

The former governs minimum employment standards and the latter union-employer relationships.

The FLSA is one of the most complex workplace laws.

It mandates the minimum federal wage, restricts child labour and sets requirements for workers to get time-and-a-half pay for overtime - unless they fit certain exemptions.

But those exemptions - mainly in executive, professional and administrative occupations - have increasingly been the subject of legal fights.

The powerful US Chamber of Commerce and the union movement lobbied furiously for and against the proposed law reforms. In early October the House voted 221-203 to block the changes in a non-binding move.

It was seen as a sharp rebuff to the Administration (21 Republicans joined 199 Democrats in opposing it) and a significant victory for Democrats and labour leaders - although President George W. Bush has threatened a veto.

Randel Johnson, the chamber's vice-president of labour, immigration and employee benefits, is grudgingly respectful of the union's lobbying effort.

"The unions have just told their membership the Republicans are attacking your right to overtime pay so call your Congressman, so the union grassroots has been tremendous on this. Hats off to 'em."

Democrats and unions claimed that millions of workers would lose entitlement to overtime under new definitions of jobs that would be exempt from extra pay.

The Labor Department put the figure at 644,000.

Figuring out which employees are covered under the overtime exemptions has become a "particularly byzantine area of labour law" the Washington Post noted in an editorial after the vote.

But the editorial added that the proposed changes leaned too far in the employers' direction.

Johnson says the issue shows the difficulty of changing US employment law when it has been on the books a long time. They become what the unions call settled rights - so changes are portrayed, with the media's help, as attacking a worker's rights.

In addition the business community, rightly or wrongly, has become accustomed to the status quo.

Johnson says the FLSA is being used not just as a shield to protect low-waged workers but as a sword by highly paid employees to exploit its vagueness.

Last December a federal judge approved a US$4.1 million ($6 million) settlement of an FLSA collective action that includes payment of overtime wages to a former corporate lawyer, director of human resources and vice-president.

"Thirty seven years after the act was passed there's lots of litigation about who's exempt and who's not, and lately we've seen an increase - this is actually the fastest growing class action area in the US in the employment area."

But John Schmitt, senior research associate at the left-leaning Centre for Economic and Policy Research in Washington, DC, says that while workplace law is old the question is what direction changes take and who benefits.

"We have these old labour laws, but the economy's kind of moulded itself around them. It makes it very difficult - you can't just pull one stick away without the whole thing crumbling down."

Like Johnson, he says change in US laws is politically difficult because of claims that worker rights are being removed.

But he adds: "That has a lot of resonance in the United States because we have so few rights, compared to European labour law."

Schmitt likens US employment law to the "wild west".

An economist at the free-market-promoting Cato Institute, Peter VanDoren, agrees a lot of employment law is obsolete.

"Think of something else from the 30s that affects our lives now."

Politics is always going to lag behind a market-oriented society that is dynamic and changing, he says.

VanDoren says policies eventually get changed when an event or scandal makes them look ridiculous.

An example he gives is last year's blackout in the US northeast - although he concedes even that event may not bring about changes to outdated 1930s-style energy regulation. "Maybe we need a nationwide blackout."

* Kevin Taylor visited the US to study employment law after jointly winning the 2002 Business Roundtable Douglas Myers media scholarship.