Case: Developing a sampling plan

In 1938, Congress passed and President Roosevelt signed a wage and hour law called the Fair Labor Standards Act (FLSA). It was part of Roosevelt's 'New Deal," a program aimed at ending the Great Depression. The law applies to employees of companies that do business in more than one state and have annual sales of more than $500,000. It established a minimum wage (then $0.25 per hour; now $5.15 per hour); set a limit on the number of hours of labor per week per individual worker (then 44 hours; now 40 hours); and discouraged oppressive child labor practices. The act also requires employees to be paid for overtime - the time worked beyond the regular 40-hour work week - at a rate one and one-half times their regular hourly wage. The act is enforced by the U.S. Department of Labor (Twomey, Labor and Employment Law, 1994).

This case involves a well-known U.S. fast-food restaurant chain with 10,000 employees and restaurants in 20 midwestern and southwestern states. The chain has three levels of employees in its restaurants: crews, shift leaders, and managers. In early 1996, a group of 75 crew-level employees from 10 different Arizona restaurants charged that management frequently required them to work overtime without pay in order to be considered for promotion to shift leader. They filed suit under the Fair Labor Standards Act seeking an award of back wages, attorneys' fees, and other related costs. Top management at the restaurant chain strongly denied the charges.

As part of the investigation of this claim, a federal judge appointed an examiner to compare the average number of hours of unpaid overtime worked per week per employee for Arizona-based crew members to the corresponding average for Illinois-based crew members using independent random samples of crew members from both states. The examiner planned to use equal sample sizes and to depose (question under oath) each sampled employee concerning overtime worked "off the clock." These data would then be used to estimate the difference in the average number of hours of unpaid overtime worked per week per employee in the two states to within one-half hour with $95 \%$ confidence. [Note: Pilot samples indicated that the standard deviation for the Illinois employees was about 1.5 hours and the standard deviation for the Arizona employees was about 3.6 hours.]

Your assignment is to develop a sampling plan for the examiner in order to achieve the objective outlined by the federal judge. The plan should address each of the following: the target population(s), the parameter of interest, the desired level of confidence, the required sample sizes, and a method of obtaining the samples. Due to time constraints the examiner may only be able to depose between 60 and 80 employees, total. Develop a contingency sampling plan should this occur. What are the strengths and (potential) weaknesses of your plan(s)? Address the report of your plan to the examiner, but be aware that the judge will read it also.

Price: $12.36

Solution: The downloadable solution consists of 4 pages, 836 words.
Deliverable: Word Document