The Fair Labor Standards Act

Worker Misclassification and the Hours and Earnings Effects of Expanded Coverage

Susann Rohwedder, Jeffrey B. Wenger

Published Aug 28, 2015

Using data from the RAND American Life Panel we quantify the frequency that employers violate the U.S. Fair Labor Standards Act's overtime rules. Among employees paid by the hour who work over 40 hours in a week, 19.0 percent were paid less than the "time-and-a half" standard for overtime. Among salaried workers, those purportedly earning above a specified threshold and having professional-level duties that together exempt them from overtime compensation rules, 11.5 percent did not actually meet the exemption criteria. Using data from the Census Bureau's 2013 Current Population Survey; we estimate the effects of increasing the salary threshold for exemption. At the population mean for hours worked, we find no statistically significant effects on hours or earnings. However, workers above the 72nd percentile of the hours distribution would lose between 5 and 10 overtime hours per week.

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Document Details

  • Copyright: RAND Corporation
  • Availability: Web-Only
  • Year: 2015
  • Pages: 47
  • Document Number: WR-1114

Citation

RAND Style Manual
Rohwedder, Susann and Jeffrey B. Wenger, The Fair Labor Standards Act: Worker Misclassification and the Hours and Earnings Effects of Expanded Coverage, RAND Corporation, WR-1114, 2015. As of September 11, 2024: https://www.rand.org/pubs/working_papers/WR1114.html
Chicago Manual of Style
Rohwedder, Susann and Jeffrey B. Wenger, The Fair Labor Standards Act: Worker Misclassification and the Hours and Earnings Effects of Expanded Coverage. Santa Monica, CA: RAND Corporation, 2015. https://www.rand.org/pubs/working_papers/WR1114.html.
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