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THE SMALL-BUSINESS EXEMPTION UNDER THE FAIR LABOR STANDARDS
ACT: THE "ORIGINAL" ACCUMULATION OF CAPITAL AND THE INVERSION OF
INDUSTRIAL POLICY
Marc Linder
6 J. L. & Pol'y 403 (1998)

This article examines the origins, development, legislative reality and rhetoric, and economic policy behind and consequences of the alleged small-business exemption in the Fair Labor Standards Act (FLSA). The mandatory fair labor standards regime under FLSA was originally designed to benefit workers and law-abiding employers by putting an end to wage-cutting as a competitive tool. However, over time it has perversely been refashioned to authorize and reinforce such sweatshop methods.

Today, when virtually no constitutional obstacle stands in the way of achieving universal minimum wage and overtime protection, Congress is ironically excluding more and more workers employed by small businesses from the protection of the FSLA. This exemption is dysfunctional because it is driven by the new de facto industrial policy based on a flawed theory of capital accumulation. Freeing all of the small businesses from minimum wage and overtime obligations only results in condemnation of the vast majority of the employees of the small businesses to substandard working conditions while enabling no more than a few of the small businesses to capitalize their wage- chiseling into job generation. Exposing the judicial forms in which this transmogrification of public policy has been clothed is the purpose of this article.

By focusing on the construction industry, the author shows how unfair labor standards encourages small construction employers to use their lawful exemption from the FSLA as a springboard to create a sector of outlawry. The article includes an analysis of the congressional transvaluation of small businesses, a detailed legislative history and a comprehensive analysis of the 1989 amendments.