Compliance with the Overtime Pay Provisions of the Fair Labor Standards Act

Ronald Ehrenberg and Paul L. Schumann

No 815, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Our paper presents a methodology that can be used to estimate the extent of noncompliance with the overtime pay provisions of the Fair Labor Standards Act (FLSA). The methodology is applied to data from the May 1978 Current Population Survey and the 1977 Michigan Quality of Employment Survey. These data suggest that the fraction of covered workers working overtime who fail to receive a premium of at least time and a half, as called for by the legislation, is in the range of 25 percent. They also suggest that the extent of noncompliance is greater in those industries in which size class exemptions to the legislation exist (retail trade and selected service industries). Finally, probit analyses of the determinants of noncompliance suggest that decisions about whether to comply with the overtime provisions of the FLSA are at least partially based on the associated benefits and costs.

Date: 1981-12
Note: LS
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Published as Ehrenberg, Ronald G. and Schumann, Paul L. Compliance with the Overtime Pay Provisions of the Fair Labor Standards Act." Journal of Law and Economics, Vol. 25, No. l (April 1982) pp. 159-181.

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