A Brief History of United States Labor Laws

Posted by Payroll Partners on Nov 6, 2019 8:00:00 AM

While formal payroll and bookkeeping began in the 14th and 15th centuries and the push for livable wages began in France with the First Canut Revolt in 1831, it wasn't until 1894 when New Zealand became the first nation in the world to enact a minimum wage. As for the United States, labor laws were still a few years away.

The Bureau of Labor Statistics (BLS) was established in 1884, putting together its First Annual Report in 1886. BLS moved to the Labor Department in 1913 after outgoing President William Howard Taft signed the Organic Act, but not before Massachusetts becomes the first state to create a minimum wage in 1912; others would follow. In 1916, the Federal Compensation Act established Workers' Compensation Programs for employees who were injured or contracted illnesses in the workplace. Today, the Occupational Safety and Health Act guides workers' compensation programs.

In 1923, the Supreme Court ruled that minimum wages violated employers' and workers' liberty of contract, invalidating state minimum wage laws. With the context of the Great Depression, President Franklin Roosevelt convinces Congress to pass the National Industrial Recovery Act (NIRA), which worked to raise wages in 1933. Roosevelt then signed executive orders to create the National Recovery Administration (NRA—no, not that one) and the "President's Reemployment Agreement," a voluntary program which was a promise from employers to pay their workers $12 to $15 for 35 to 40 hours of work. This was essentially Roosevelt's workaround for the Supreme Court's ruling.

In 1935, however, the Supreme Court struck down much of NIRA, pushing the issue of a federal minimum wage back to the forefront of the country's collective conscious. Roosevelt continued to champion his New Deal policies in his 1936 reelection campaign, a wave he rode to a landslide victory.




1937, though, brings what is called "The Big Switch" as the Supreme Court makes a new ruling in favor of minimum wages. The next year, Congress passes the Fair Labor Standards Act (our favorite law in the payroll world) which established the first federal minimum wage at 25 cents/hour, institutes overtime pay, and made the employment of children under the age of 14 illegal. This law established that employee wages were a concern of the government.

The federal minimum wage has increased 22 times bringing it to $7.25/hour, as of this writing. Twenty-nine states plus Washington DC have higher wages, and of those, eight automatically increase their rates based on cost of living.

The Fair Labor Standards Act (FLSA) has had a number of amendments in its 82-year history including President Kennedy's Equal Pay Act, which specified that workers regardless of gender who were covered by minimum wage requirements are also entitled to equal pay for the same job. FLSA has also clarified laws about overtime pay and who is covered by the law. Today, the Department of Labor enforces more than 180 federal laws covering about 10 million employers and 125 million workers.

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Topics: Human Resources