Paul DeCamp, Member of the Firm in the Employment, Labor & Workforce Management practice, in the firm’s Washington, DC office, was quoted in Law360 Employment Authority, in “Yes, Inflation Affects Wage and Hour Law, Too,” by Jon Steingart. (Read the full version – subscription required.)
Following is an excerpt:
As the economy recovers from the pandemic recession, inflation is front of mind for many working people and the companies that hire them.
The U.S. Department of Commerce reported Jan. 28 that an increase in personal spending on goods and services in December drove inflation up 5.8% from a year earlier, its fastest climb in nearly four decades.
High inflation means that a worker whose income doesn't change will be able to do less with the same amount of money. In December, a Gallup poll showed that nearly half, or 45%, of U.S. adults said that rising prices have caused a financial hardship for their families.
At its core, wage and hour law is about how much money workers are paid for their time. Here, Law360 explores how it intersects with inflation.
Effect Is Salient in Minimum Wage, Overtime Rules
Paul DeCamp, co-chair of the wage and hour practice group at management-side firm Epstein Becker Green, said inflation becomes salient in discussions of whether, when and how policymakers update the laws and regulations that affect the most common wage and hour claims: those pertaining to minimum wage and overtime.
In general, employers may feel squeezed when Congress amends the Fair Labor Standards Act to raise the minimum wage, he said. On the other hand, employees who wait for years for an update will see "a pretty significant erosion" of their earnings if their earnings don't outpace inflation, he said.
"Historically, oftentimes the minimum wage would remain frozen for a number of years and then it would reset, sometimes by a significant margin," DeCamp said. "If you look at the real value of the minimum wage over the last 80 years, you see it goes up and down."
A similar shock occurs when the U.S. Department of Labor retools overtime eligibility criteria and expands the number of workers who are entitled to time and a half pay, he added.
"I think that there's, broadly speaking, a recognition that salary levels put in place several years ago don't necessarily keep pace with the real value of those dollars and the higher the inflation is and the more time that passes since the last increase," he said.
Every minimum wage increase requires an act of Congress, the most recent of which passed in 2007 and took effect two years later. But the FLSA lets the DOL issue rules to shape overtime eligibility criteria for some types of workers. …
DeCamp said automatic updates on a regular schedule could help avoid the headaches that sporadic changes bring, but Congress would have to amend the FLSA to call for them. The DOL doesn't have authority to adopt recurring increases without congressional authorization, he said.
"If there were a mechanism in the statute for automatic updates on an agreed method for doing that, I think that would solve a lot of the issue," he said.
People
Member of the Firm
