Mind the Gap: A Legal and Economic Analysis of Stockbroker Overtime Eligibility Under the Fair Labor Standards Act

As the United States focuses on maintaining a strong middle class, determining which employees receive overtime pay under the Fair Labor Standards Act constitutes a task with substantial implications. Although the concept of a stockbroker receiving overtime pay may initially appear unusual, such an idea is no longer an absurd notion. In response to the changing notion of overtime pay, stockbrokers have recently brought class action lawsuits against the brokerage firms that employ them. This Note examines whether the letter of the law, as well as sensible policy, supports the conclusion that stockbrokers qualify for overtime pay under the Fair Labor Standards Act. The author begins by discussing the overarching purpose of the Fair La-bor Standards Act and its newly promulgated regulations, as well as the criteria of the “administrative exception” for overtime pay. The author outlines how the courts and the Department of Labor have addressed the issue of overtime pay under the Fair Labor Standards Act. To determine the validity of stockbroker wage-and-hour claims, the author explores the benefits and pitfalls of various Fair Labor Standards Act interpretations and focuses on how each interpretation affects stockbrokers and broker-age firms. To remedy the differing interpretations and promote sound economic policy, the author recommends that under the current regula-tions, the Fair Labor Standards Act excludes stockbrokers from its ad-ministrative exception. In addition, the author suggests alternative pay structures for brokerage firms to curtail future litigation. Finally, the author offers a number of possible solutions for the Department of Labor, including an amendment to the current regulations.

The full text of this Note is available to download as a PDF.