Old law vs. the new economy

How New Deal-era regulations stifle flexible work arrangements

In August 1997, a certain Mr. T. Trahan of CSC Credit Service wanted to let his sales executives work out of their home offices. He was uncertain about his possible obligations under the Occupational Safety and Health Act, so he wrote to OSHA, the agency that administers the act.

The wheels of bureaucracy grind slowly: His query went unanswered for over two years, but he finally received a reply in November 1999. Those wheels also grind exceeding small, because the Occupational Safety and Health Administration finally said that, yes, a workplace is a workplace and the act applies even if it is in a home. The employer must diligently identify possible hazards to protect the employee.

OSHA’s interpretive letter went on for six pages, covering such employee dangers as the possible overload of electrical circuits, the need for material safety data sheets covering hazardous chemicals, the applicability of its then-pending rule on ergonomics, and other such intricacies.

This assertion of OSHA authority went unnoticed until the next January, when a Washington Post story about it triggered a frenzy of media and congressional objections to over-regulation and invasion of the home. OSHA withdrew the letter within 24 hours, and within three weeks its head told a Senate committee that it did not hold employers responsible for home offices, did not expect employers to inspect these, would not itself inspect, and regretted the whole misunderstanding.

But that testimony clouded the reality that the agency did not retreat an inch from its view that the act does in fact apply to home offices, and that agency forbearance is a matter of choice, not law. OSHA could at any time reverse its stance, at a cost estimated by the Employment Policy Foundation, a Washington, D.C.-based think tank that leans toward the business side of employment issues, of at least $1,000 per home office for compliance with rules on clutter, lighting, furniture, exit signs, lead paint, and so on.

The OSHA telecommuting controversy was only the most publicized recent instance of the growing conflict between the possibilities of the information-age economy and the rust-caked body of labor laws and -- equally important -- mental attitudes built over the past century.

The business community assessed the outcome of the telecommuting encounter as an armistice, not a victory. Bobbie Kilberg, president of the Northern Virginia Technology Council (NVTC), told the same Senate committee that the agency’s retreat allowed her organization to continue its pro-telecommuting policy "for the present time," but that for the long run the policy needs to be formalized by legislation, or at least rulemaking.

Kilberg noted that seven of NVTC’s 17 employees telecommute at least one day per week, and that four of these are mothers with children under 14. She could have added that the NVTC is only one example of a significant trend. A Gallup poll last autumn found 8 million full-time telecommuters in the U.S. -- a number up from zero a decade ago -- out of a total workforce of 135 million. The number of part-time telecommuters is believed to be much higher.

In a year when the soccer mom was the most lusted-after political quarry in America, the significance of Kilberg’s numbers could not have escaped the senators. Woe awaits the elected official who lets OS HA eliminate the flexibility that telecommuting offers to the professional classes.

What do women workers want?

While the telecommuting battle was going on, OSHA’s analogue in the Department of Labor, the Employment Standards Administration, was fighting its own war against the new economy. ESA handles such issues as time-and-a-half overtime pay, which is required if hourly workers put in more than eight hours in a day or 40 hours in a week. It was asked how the calculation of time-and-a-half was affected by a worker’s receipt of stock options. In February 1999, it answered with an interpretation saying that the value of the option had to be considered as part of the employee’s base pay. Then it added an elaborate and absolutely incomprehensible guideline on calculating this value. As a result, a company would have had to be insane to even consider stock options for hourly workers ever again.

This, too, sat unnoticed for a time, then hit the press big at the end of 1999. As in the telecommuting case, the political system reacted strongly. But this time, ESA did not retreat. So in May 2000 Congress changed the law, by a unanimous vote in each house, so that stock options are not considered part of an hourly employee’s basic pay.

Telecommuting and stock options have both become important issues because new social attitudes are emerging from the new economy. The stock option question reflects several beliefs -- the idea that all should participate in the economic returns from the new economy, a blurring of historic dichotomies between labor and capital, and concepts of worker participation and the "we’re all on the team" ethic.

The defense of telecommuting reflects a rising national appetite for flexible employment arrangements. The Employment Policy Foundation notes that 90 percent of employed Americans work under traditional arrangements (i.e., 40 hours a week, eight hours a day at the employer’s workplace, or some regular part-time arrangement), but some 51 percent would like looser deals, such as working from home or dropping in and out of the labor force.

The desire for flexibility is especially pronounced among parents, and two-thirds of all mothers with children under 3 are now working (compared with 42 percent in 1980). Employers have been responding. While total work time required may remain rigid, more give is creeping into starting and ending times. In 1991, 15 percent of all full-time workers had flexible schedules; by 1997 (the most recent data available from the Bureau of Labor Statistics), 28 percent did.

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