The restaurant host is now the "Guest Experience Leader." The front desk clerk is now the "Director of First Impressions." The coffee cart attendant is now the "Coffee Cart Manager." Across the country, corporations are giving workers in low-wage jobs fancy-sounding titles. It's part of a scheme to evade the requirements of the Fair Labor Standards Act (FLSA) and deny these workers overtime pay. And it's working. According to a new study by the National Bureau of Economic Research (NBER), these tactics are allowing corporations to avoid $4 billion in overtime payments annually.
The FLSA, enacted in 1938, is the bulwark of legal protections for American workers. Passed in response to the Great Depression, the FLSA established a national minimum wage and a 40-hour work week. Workers laboring for more than 40 hours are legally entitled to overtime pay, "a rate not less than time and one-half their regular rates of pay, except for exempt employees."
What is an "exempt employee"? Under the law, an exempt employee must pass each of these three tests:
1. The "salary basis test." An exempt employee must receive a salary and cannot be paid hourly.
2. The "salary test." Currently, an exempt employee must receive a salary of at least $35,568 annually or $684 a week. (During the time period analyzed by the NBER paper, 2010 to 2018, an exempt employee had to receive a salary of $23,660 annually of $455 per week.)
3. The "duties test." An exempt employee's work must "primarily involve...
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