Flsa and Cobra

The FLSA and COBRA laws have been somewhat effective since they were passed. Consequently, with a change in labor workforce these laws need to be updated and revised to meet the current needs of our labor force. The Fair Labor Standards Act was imposed to get a handle on unemployment and help improve the standard of living for low paid employees. COBRA’s intent was to provide a health insurance coverage program which offers a means for workers and their families to continue to be covered by a temporary health insurance policy when a qualifying event happens in relation to their employment. Both the FLSA and COBRA laws are in need of reform.

The FLSA had many objectives. Congress theorized that the FLSA would create an economic incentive for employers to increase the size of their work force, thereby reducing the unemployment rate (Schor, 1991). Congress believed that requiring employers to pay overtime whenever an employee worked over forty hours in a work week would motivate employers to hire additional workers rather than pay overtime. Another goal of the FLSA was to mandate a fixed, fair minimum wage and a reasonable work week for industries where workers did not have sufficient bargaining power to attain fair working conditions and collective agreements. The FLSA was basically targeted at the unprotected and lowest paid working population in the United States. Since the FLSA has come into law it has created a web of laws, regulations, opinion letters and interpretative manuals that makes it act to follow.

Today’s labor force is much different than it was in 1938 when the FLSA came into law. There has been great difficulty in determining who is entitled to receive overtime pay under the FLSA. In addition to that there is a huge problem with who is entitled and who is not. For example, low paid farm workers are exempt from overtime payments, whereas, high-paid technical workers and even high-paid executives and administrative employees are entitled to overtime if they are not paid on a salary basis. This is definitely contradictory to the intent of the FLSA to protect the worker. Overtime pay was intended to ensure that employees were paid fairly, not overworked and to decrease the unemployment levels. This has yet to be fully accomplished. The FLSA’s intent in 1938 does not apply to today’s complex workforce.

The FLSA overtime pay provisions have failed in my opinion. The FLSA is too complicated for employees and employers to fully understand their rights and obligations. Since many employees are not well versed on this complicated law, they seldom question their exempt classification when they are told by their employer that they are not entitled to overtime pay. This is a problem for employers as well. Employers are often not sure whether their employees should be classified as exempt or non-exempt from overtime pay requirements. Reform is definitely something that needs to happen and a better understand of the law.

COBRA is a health insurance coverage program which provides a means for unemployed workers and their families to continue to be covered by a temporary health insurance policy. This coverage is limited. Under COBRA, these individuals can elect to continue their group health benefits under their group health plan for a certain period of time if they fall within specific categories. The rationale behind this plan is to cover individuals who previously had group health insurance plans. Since COBRA has come into law, it has had its share of problems. Although the intent of COBRA is good, it is often not an option for those who cannot afford the premiums. The cost of coverage is high for both the employer and employee. In a 2004 survey, more employers felt that it was expensive.

My recommendations for COBRA would be to make it the responsibility of the government instead of the employers. This alternative would clearly increase the role of government in the area of health insurance, which is something they need to get a handle on. The government should offer time-limited health insurance under basically the same guidelines as COBRA at a rate equal to the average cost of health insurance for employees across the board.

Another more realistic approach would be for businesses