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

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  • Ronald G. Ehrenberg
  • Paul L. Schumann

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.

Suggested Citation

  • Ronald G. Ehrenberg & Paul L. Schumann, 1981. "Compliance with the Overtime Pay Provisions of the Fair Labor Standards Act," NBER Working Papers 0815, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:0815
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    References listed on IDEAS

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    1. Borjas, George J, 1978. "Discrimination in HEW: Is the Doctor Sick or Are the Patients Healthy?," Journal of Law and Economics, University of Chicago Press, vol. 21(1), pages 97-110, April.
    2. Ashenfelter, Orley & Smith, Robert S, 1979. "Compliance with the Minimum Wage Law," Journal of Political Economy, University of Chicago Press, vol. 87(2), pages 333-350, April.
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    Cited by:

    1. Paige Qin & Michael Chernew, 2013. "Compensating Wage Differentials and the Impact of Health Insurance in the Public Sector on Wages and Hours," NBER Chapters, in: State and Local Health Plans for Active and Retired Public Employees, National Bureau of Economic Research, Inc.
    2. Lucas Ronconi, 2010. "Enforcement and Compliance with Labor Regulations in Argentina," ILR Review, Cornell University, ILR School, vol. 63(4), pages 719-736, July.
    3. George Tsebelis, 1991. "The Effect of Fines on Regulated Industries," Journal of Theoretical Politics, , vol. 3(1), pages 81-101, January.
    4. Qin, Paige & Chernew, Michael, 2014. "Compensating wage differentials and the impact of health insurance in the public sector on wages and hours," Journal of Health Economics, Elsevier, vol. 38(C), pages 77-87.
    5. repec:eee:labchp:v:1:y:1986:i:c:p:3-102 is not listed on IDEAS
    6. Yang-Ming Chang, 1992. "Noncompliance Behavior of Risk-Averse Firms Under the Minimum Wage Law," Public Finance Review, , vol. 20(3), pages 390-401, July.
    7. King, Stephen P., 1997. "Oligopoly and overtime," Labour Economics, Elsevier, vol. 4(2), pages 149-165, June.

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