[House Hearing, 114 Congress] [From the U.S. Government Publishing Office] REVIEWING THE RULES AND REGULATIONS IMPLEMENTING FEDERAL WAGE AND HOUR STANDARDS ======================================================================= HEARING before the SUBCOMMITTEE ON WORKFORCE PROTECTIONS COMMITTEE ON EDUCATION AND THE WORKFORCE U.S. House of Representatives ONE HUNDRED FOURTEENTH CONGRESS FIRST SESSION __________ HEARING HELD IN WASHINGTON, DC, JUNE 10, 2015 __________ Serial No. 114-18 __________ Printed for the use of the Committee on Education and the Workforce [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Available via the World Wide Web: www.gpo.gov/fdsys/browse/ committee.action?chamber=house&committee=education or Committee address: http://edworkforce.house.gov ______ U.S. GOVERNMENT PUBLISHING OFFICE 94-823 WASHINGTON : 2016 ----------------------------------------------------------------------- For sale by the Superintendent of Documents, U.S. Government Publishing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, Washington, DC 20402-0001 COMMITTEE ON EDUCATION AND THE WORKFORCE JOHN KLINE, Minnesota, Chairman Joe Wilson, South Carolina Robert C. ``Bobby'' Scott, Virginia Foxx, North Carolina Virginia Duncan Hunter, California Ranking Member David P. Roe, Tennessee Ruben Hinojosa, Texas Glenn Thompson, Pennsylvania Susan A. Davis, California Tim Walberg, Michigan Raul M. Grijalva, Arizona Matt Salmon, Arizona Joe Courtney, Connecticut Brett Guthrie, Kentucky Marcia L. Fudge, Ohio Todd Rokita, Indiana Jared Polis, Colorado Lou Barletta, Pennsylvania Gregorio Kilili Camacho Sablan, Joseph J. Heck, Nevada Northern Mariana Islands Luke Messer, Indiana Frederica S. Wilson, Florida Bradley Byrne, Alabama Suzanne Bonamici, Oregon David Brat, Virginia Mark Pocan, Wisconsin Buddy Carter, Georgia Mark Takano, California Michael D. Bishop, Michigan Hakeem S. Jeffries, New York Glenn Grothman, Wisconsin Katherine M. Clark, Massachusetts Steve Russell, Oklahoma Alma S. Adams, North Carolina Carlos Curbelo, Florida Mark DeSaulnier, California Elise Stefanik, New York Rick Allen, Georgia Juliane Sullivan, Staff Director Denise Forte, Minority Staff Director ------ SUBCOMMITTEE ON WORKFORCE PROTECTIONS TIM WALBERG, Michigan, Chairman Duncan Hunter, California Frederica S. Wilson, Florida, Glenn Thompson, Pennsylvania Ranking Member Todd Rokita, Indiana Mark Pocan, Wisconsin Dave Brat, Virginia Katherine M. Clark, Massachusetts Michael D. Bishop, Michigan Alma S. Adams, North Carolina Steve Russell, Oklahoma Mark DeSaulnier, California Elise Stefanik, New York Marcia L. Fudge, Ohio C O N T E N T S ---------- Page Hearing held on June 10, 2015.................................... 1 Statement of Members: Walberg, Hon. Tim, Chairman, Subcommittee on Workforce Protections................................................ 1 Prepared statement of.................................... 4 Wilson, Hon. Frederica S., Ranking Member, Subcommittee on Workforce Protections...................................... 6 Prepared statement of.................................... 8 Statement of Witnesses: Berberich, Ms. Nicole, Human Resources Director, Cincinnati Animal Referral and Emergency Center (CARE), Cincinnati, OH 12 Prepared statement of.................................... 14 Court, Mr. Leonard, Senior Partner, Crowe and Dunlevy, Oklahoma City, OK.......................................... 22 Prepared statement of.................................... 24 Harris, Hon. Seth D., Former Acting U.S. Secretary of Labor and Deputy U.S. Secretary of Labor, Distinguished Scholar, Cornell University School of Industrial and Labor Relations, Ithaca, NY...................................... 34 Prepared statement of.................................... 36 Richardson, Mr. Jamie, Vice President of Government and Shareholder Relations, White Castle System, Inc., Columbus, OH......................................................... 50 Prepared statement of.................................... 53 Additional Submissions: Takano, Hon. Mark, a Representative in Congress from the State of California: Report from the National Employment Law Project.......... 73 Walberg, Hon. Tim, Chairman, Subcommittee on Workforce Protections: Statement submitted on behalf of the National Restaurant Association............................................ 85 Letter dated June 9, 2015, from the National Association of Home Builders....................................... 93 Report from the U.S. Government Accountability Office dated December 2013, Fair Labor Standards Act, The Department of Labor should Adopt a More Systematic Approach to Developing Its Guidance.................... 95 Ms. Wilson: Letter dated April 9, 2015, from National Women's Law Center................................................. 132 REVIEWING THE RULES AND REGULATIONS IMPLEMENTING FEDERAL WAGE AND HOUR STANDARDS ---------- Wednesday, June 10, 2015 U.S. House of Representatives Subcommittee on Workforce Protections Committee on Education and the Workforce Washington, D.C. ---------- The subcommittee met, pursuant to call, at 10:02 a.m., in Room 2175, Rayburn House Office Building, Hon. Tim Walberg [Chairman of the subcommittee] presiding. Present: Representatives Walberg, Thompson, Rokita, Brat, Stefanik, Wilson, Clark, DeSaulnier, and Fudge. Also present: Representatives Kline, Scott, and Takano. Staff present: Janelle Belland, Coalitions and Members Services Coordinator; Ed Gilroy, Director of Workforce Policy; Callie Harman, Staff Assistant; Tyler Hernandez, Press Secretary; Nancy Locke, Chief Clerk; John Martin, Professional Staff Member; Brian Newell, Communications Director; Krisann Pearce, General Counsel; Molly McLaughlin Salmi, Deputy Director of Workforce Policy; Alissa Strawcutter, Deputy Clerk; Alexa Turner, Legislative Assistant; Tylease Alli, Minority Clerk/Intern and Fellow Coordinator; Austin Barbera, Minority Staff Assistant; Denise Forte, Minority Staff Director; Christine Godinez, Minority Staff Assistant; Carolyn Hughes, Minority Senior Labor Policy Advisor; Eunice Ikene, Minority Labor Policy Associate; Brian Kennedy, Minority General Counsel; Kevin McDermott, Minority Senior Labor Policy Advisor; Amy Peake, Minority Labor Policy Advisor; Kiara Pesante, Minority Communications Director; Dillon Taylor, Minority Labor Policy Fellow. Chairman Walberg. A quorum being present, the subcommittee will come to order. Good morning, and welcome, to all of our guests. I would like to thank our witnesses for joining us today to examine the rules and regulations guiding implementation of federal wage and hour standards. For more than 75 years--that is older than the Chairman, I am happy to say, and the Chairman of the full Committee, too-- -- Mr. Kline. I am happy, too. [Laughter.] Chairman Walberg [continuing]. I think all of us here at the table. The Fair Labor Standards Act has been the foundation of our nation's wage and hour protections. It establishes important rights for American workers and continues to guide employers in protecting those rights. However, the workplace looks very different today than it did in 1938 when the law was enacted, and the rules and regulations defining the law are failing to meet the needs of a twenty-first century workplace. Regulations that made sense long before the advent of smartphones and telecommuting simply don't work in the modern economy. Failing to keep up with the changing workplace, the law's regulatory structure has become more complex and burdensome. Both employees and employers have difficulty understanding their rights and their responsibilities and must constantly contend with conflicting legal interpretations of the law. Despite sincere efforts to act in the best interest of workers, many well-intentioned employers face costly legal battles because of a flawed regulatory structure, and we have evidence to back that up. A report from the nonpartisan Government Accountability Office revealed a surge in FLSA lawsuits during the past 20 years, with the number of lawsuits increasing by 514 percent since 1991. Let me repeat that. There has been a 514 percent increase in FLSA-related litigation over the last 25 years. That is a troubling increase and strong indication that something isn't working. To help address this significant problem, GAO urged the Department of Labor to--and I quote--``develop a systematic approach for identifying areas of confusion about the FLSA that contribute to possible violations and improving the guidance it provides to employers and workers in those areas.'' Simply stated, we need a system that holds bad actors accountable when they break the law, but that also helps law- abiding employers uphold their obligations. I hope some of our witnesses will shed light on whether the department is implementing GAO's recommendation and what impact it may be having on our nation's workplaces. However, even the best administrative guidance cannot make up for other shortcomings that exist and are harming those working hardest to jump-start the economy. This isn't the first time these concerns have been raised. In fact, this subcommittee has held a number of hearings in recent years looking at the very same issue. It has been a focus of our continued oversight for a simple reason: we want to ensure that regulations that underpin the Fair Labor Standards Act serve the best interests of both American workers and employers. As Chairman Kline and I noted a year ago, we are ready and willing to be a partner in a responsible effort to modernize current regulations, but I would stress that it must be a responsible effort. The American people deserve a system that is simple, clear, and can meet the demands of the modern workforce. The last thing policymakers should do, including those in the administration, is to make a bad regulatory system worse. In the coming days the department is expected to release a proposal intended to update federal wage and hour regulations. Rumors are running rampant, and we know concerns are being raised about what the proposal may entail. Thanks to an administration notorious for overreaching and governing through executive fiat, I share many of those same concerns. I expect we will continue to hear about the consequences for workers and job creators if the administration goes too far in the regulatory proposal it is expected to release. However, hope springs eternal, and it is my hope the department will heed these concerns and ultimately put forward a proposal that encourages rather than stifles productivity, personal opportunity, and economic growth. Any proposal that would inflict harm on the nation's workplaces and move the country in the wrong direction will be opposed by this Committee and, no doubt, the American people. With that, I now recognize the senior Democratic member of the subcommittee and Ranking Member, Representative Frederica Wilson, for her opening remarks. [The statement of Chairman Walberg follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Ms. Wilson. Thank you, Chairman Walberg, and thank you for holding this hearing today and giving us an opportunity to talk about the Fair Labor Standards Act. And thank you to our panelists for attending. And thank you to the audience for having a keen interest in this issue. Later this month marks 77 years, as it was stated, since this landmark law was passed. The Fair Labor Standards Act was passed in a time when workers simply were not valued. Women, children, immigrants, people of color all were exploited and made to work unreasonably long hours for starvation wages. Since its passage, the FLSA has been a powerful tool in helping workers assert their rights to fair wages and reasonable hours. Since the FLSA was passed, Congress has made the necessary updates to ensure that the law continues to protect workers. Congress must continue with this legacy and update the FLSA to reflect current economic and employment realities. The reality is that this country is facing a dire income inequality problem. In the last 40 years hourly pay for the average worker has increased 9 percent while worker productivity has increased almost 75 percent. At the same time, top earners have seen astronomical increases in pay. The looming problem of income inequality threatens to gut our middle class, create a permanent under class, and dismantle the American dream of building economic wealth and financial stability. This problem not only hurts the individual, but the American economy as a whole. When less and less money goes to low-and middle-income workers, less and less money is spent in our consumer-based economy. Less money spent on goods and services means fewer jobs. Fewer jobs mean fewer Americans working and contributing to our tax base. It is a vicious cycle that ends in economic turmoil and despair for millions of Americans. We must address the issue of income inequality, and we must do it now. We do that by strengthening the FLSA with much-needed updates. We must update the FLSA by passing the Paycheck Fairness Act to strengthen equal pay protections. We can no longer devalue the contributions our daughters, sisters, and wives make to our economy. We must update the FLSA by passing the Raise the Wage Act, to raise the minimum wage. We can no longer insist that people pull themselves up by their bootstraps when they make the poverty wages that ensure they will never be able to stay afloat, let alone get ahead. How do you pull yourself up by the bootstraps when you have no boots? We must update the FLSA by modernizing the salary thresholds for overtime workers. We can no longer pretend that workers who toil 60 or more hours a week and take home $23,660 a year are paid fair wages. We must update the FLSA by expanding overtime and minimum wage protections to home health care workers. We can no longer justify depriving these workers of these basic protections while entrusting them to care for our aging parents and disabled family members. We are almost there ourselves. Just as we must update the FLSA, we must, for the sake of income inequality, be wary of rolling back its protections. We cannot support efforts to strip workers of their overtime no matter what form it takes, no matter how good the intentions. Eroding workers' rights to overtime pay will put us back to the days where the economically vulnerable workers faced the illusionary choice between working for far less than they are worth or not working at all. Labor laws like the FLSA were passed for a reason. That reason was to protect workers. And we are the Workforce Protections Subcommittee. I look forward to hearing from the witnesses and what we can do to strengthen the FLSA and to continue to protect workers. Thank you, Mr. Chair. [The statement of Ms. Wilson follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Chairman Walberg. I thank the gentlelady. Pursuant to Committee rule 7(c), all subcommittee members will be permitted to submit written statements to be included in the permanent hearing record. And without objection, the hearing record will remain open for 14 days to allow statements, questions for the record, and other extraneous material referenced during the hearing to be submitted in the official hearing record. It is now my pleasure to introduce today's witnesses. First is Ms. Nicole Berberich, who is the human resources director for the Cincinnati Animal Referral and Emergency Center, CARE, in Cincinnati, Ohio. Ms. Berberich's specialties include HR policies and procedures, training and employee development, employee and labor relations, benefits administration, and workers' compensation. Welcome. Mr. Leonard Court is a senior partner with Crowe and Dunlevy of Oklahoma City, Oklahoma. Since 1997, Mr. Court has served as a member of the U.S. Chamber of Commerce Labor Relations Committee. In 1999, he was appointed chairman of the Wage, Hour, and Leave Subcommittee. Welcome. Mr. Seth Harris is a distinguished scholar with Cornell University School of Industrial and Labor Relations in Ithaca, New York. From May 2009 until January 2014, Mr. Harris served as Deputy Secretary of Labor at DOL, overseeing functions ranging from strategic planning and performance management to legislation and policy development and implementation. He briefly served as Acting Secretary of Labor following the resignation of Hilda Solis in January of 2013 until Secretary Perez's confirmation in July of 2013. Welcome back. Mr. Jamie Richardson is vice president of government and shareholder relations with White Castle System, Incorporated, of Columbus, Ohio. His primary responsibilities include government affairs, shareholder relations, public relations, and corporate philanthropy. He joined White Castle in 1998 and has previously served as director of marketing for the company. Welcome, and crave on. I will ask now the witnesses to stand and raise your right hand. We have the normal process of swearing in at this point. [Witnesses sworn.] Let the record reflect the witnesses answered in the affirmative. And you may take your seats. Before I recognize you to provide your testimony, let me briefly explain our lighting system. A number of you have gone through this multiple times, but just to remind, you have five minutes for your testimony. We expect that you will keep fairly close to that. When the yellow light goes on it means one minute remaining. Wrap up your statements as close to the ending time when the red light goes on as is possible. And as the Chairman of the full Committee has established, I will, as well, expect that our Committee members will keep to the five-minute time for questioning. Having said that, I now recognize Ms. Berberich for your five minutes of testimony. STATEMENT OF MS. NICOLE BERBERICH, HUMAN RESOURCES DIRECTOR, CINCINNATI ANIMAL REFERRAL AND EMERGENCY CENTER (CARE), CINCINNATI, OHIO, TESTIFYING ON BEHALF OF THE SOCIETY FOR HUMAN RESOURCE MANAGEMENT Ms. Berberich. Chairman Walberg, Ranking Member Wilson, and distinguished members of the subcommittee, my name is Nicole Berberich, and I am the human resources director at the Cincinnati Animal Referral and Emergency Center, or CARE Center, in Ohio. In my role I oversee all HR policies and procedures, including employee classifications under the Fair Labor Standards Act, the FLSA. I appear before you today on behalf of the Society for Human Resource Management, or SHRM. Thank you for the opportunity to testify today on my experience with the FLSA and implementing regulations. Mr. Chairman, the FLSA may have been appropriate in the 1930s, but it is out of step with our modern, technology-based economy, creating unnecessary regulatory burdens for our employers and hindering the ability of employers to be flexible and address contemporary employee needs. Furthermore, as the millennial generation becomes the majority of employees in the American workforce, the demand for greater use of technology and flexibility will only continue to grow. Allow me to tell you a little about my organization. CARE Center is an emergency and multi-specialty veterinary practice located in Cincinnati and Dayton, Ohio. Our team of skilled emergency and specialty staff provide 24-hour care seven days a week to the patients and clients we serve. Small businesses with a one-person HR department, like CARE Center, are likely to experience these regulatory burdens disproportionately, which will likely grow in complication with expected changes to FLSA overtime regulations later this month. I would now like to highlight challenges my organization faces when it comes to implementing flexible arrangements under the FLSA. Most notably, the law prohibits private sector employers from offering nonexempt employees paid time off or comp time instead of overtime compensation, even though public sector employees have access to this type of flexibility. At CARE Center, many hourly employees prefer the option of comp time, to have more time off to spend with their families, instead of overtime pay. The veterinary sciences sector attracts a workforce dedicated to animal health. Our employees aren't there for the money. We have to monitor our labor expenses closely and try to identify other ways to attract and retain our workforce through competitive employee benefits. Allowing for comp time would provide my organization with an additional workplace flexibility option to attract top talent. Another opportunity to provide flexibility to our workforce is through biweekly work weeks. Under the FLSA, employers are permitted to allow a nonexempt employee to work four 10-hour days Monday through Thursday for a total of 40 hours in a week and take every Friday off without the employer incurring any overtime obligations. But if our organization wanted greater flexibility, we run into challenges. For example, some of our veterinarians developed a schedule to meet the emergency care needs of our clients by working 50 hours in one week and 30 hours in the next. The CARE Center wants to structure the workplace so that our doctors work with the same technicians and assistants on cases. Working as a dedicated team builds rapport between the doctors and technical staff and cultivates a positive work environment that maximizes patient care. In the end, I was unable to allow the hourly technicians and assistants to work alongside those same veterinarians under their proposed schedule because of the overtime payments that would be incurred. Mr. Chairman, today's hearing is timely, given the fact that DOL is proposing changes to overtime regulations soon. I fully anticipate our practice will be impacted by these changes. We have internal medicine and surgery supervisors who I recently reclassified as exempt employees due to their managerial and professional responsibilities within our organization. If the salary threshold is doubled, those employees would lose their exempt status and will return to hourly, nonexempt status, which they will view as a demotion. Also, as a 24/7 organization, further changes to the primary duties test requiring additional tracking of exempt time or the elimination of the ability for managers to do both exempt and nonexempt work concurrently would greatly impact our workforce. As a small business, managers may pitch in to work at the front desk, answer phone calls, and care for patients. Our emergency surgery and internal medicine technical supervisors work on the floor as well as manage their departments. Removing the ability to perform these concurrent activities would eliminate many opportunities to homegrow our technicians that have ambitions to become supervisors. In closing, SHRM is concerned that upcoming changes to the FLSA overtime regulations will further exacerbate an already complicated set of regulations for employers and would have the unintended consequence of limiting workplace flexibility for employers and employees. Mr. Chairman, thank you again for allowing me to share my experiences and SHRM's view on the rules and regulations governing the FLSA. I welcome your questions. [The statement of Ms. Berberich follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Chairman Walberg. I thank you. Mr. Court, we recognize you for your five minutes of testimony. STATEMENT OF MR. LEONARD COURT, SENIOR PARTNER, CROWE & DUNLEVY, OKLAHOMA CITY, OKLAHOMA, TESTIFYING ON BEHALF OF THE U.S. CHAMBER OF COMMERCE Mr. Court. Thank you, Mr. Chairman, Ranking Member, and members of the Committee. On behalf of the U.S. Chamber of Commerce, I submitted a written presentation that covers two separate topics. The first is changes that are necessary to bring a statute passed in 1938 into the twenty-first century. In it are suggestions concerning, for instance, the updating of the computer expert exemption, the addition of an inside sales exemption. And I will leave my written comments and the comments of my fellow panelists to cover those, because what I want to focus on is the second part. What we are talking about today is, in part, the regulations as they will be in the paper or will be in the publications. What I want to talk to you about is how they are being enforced in the field, because we have great concern at the Chamber over the enforcement procedures that we are beginning to see over the last five to six years that we think are beyond the pale and in many respects simply abusive. In that regard, I want to focus on three topics. First, a deliberate pattern of now encouraging employers not to use legal counsel as part of an investigation. I have given you examples in my written paper, but the most recent one was too recent to even make it. This week one of my colleagues had a wage and hour investigator meet with her. The second question out of that investigator's mouth was, ``What is the employer trying to hide since they have hired an attorney?'' When my colleague indicated that the employer was going to exercise their right to have the attorney sit in for interviews with management personnel, as they often do, again, as part of the enforcement policy of the current administration, the investigator said to her, ``This investigation will be quicker, it will be easier if you do not participate.'' There seems to be a fear among wage and hour investigators of having experienced attorneys sitting in on the investigative process. The second problem deals with what I would call compelled settlements with no time to consider them. I have given you three examples in my written presentation of situations where, after taking months for an investigation, the investigator comes to the closing conference, presents the settlement, and demands an immediate signature without any time for consideration, whether that be from the individual who is involved seeking legal counsel or, as in one of the examples, a multistate corporation where the human resources director needed to run the settlement by his boss and up the chain of command. But the threat was, ``If you do not sign it today we will immediately refer it to litigation.'' The third area is the dramatic increase in the use of civil money penalties and liquidated damages. As you know, liquidated damages are essentially double damages that are meant for willful violations. The statute specifically empowers the court, not the Department of Labor, to impose those damages. But as part of the new settlement process of this administration, we are finding more and more that a demand is being made not just to give back pay, but to pay double damages and civil money penalties. Two of the examples in my paper, if you were talking about a retail establishment or a used car salesman, would be called bait and switch. Indications both from attorneys in Washington, D.C., and attorneys in Mississippi--all over the United States--where the investigators are coming in, settling claims, saying, ``You don't have to worry about liquidated damages,'' and then after the amount of settlement has been agreed to by the employer, then coming in with a second person now demanding that liquidated damages be paid or that adverse publicity would occur in the newspaper. In addition to these three areas of enforcement that I say are questionable at best, we have also seen a dramatic decrease in the amount of employer assistance in trying to comply with the wage and hour regulations. You will hear today and have heard before the fact that small employers in particular need assistance in understanding what these regulations mean. And yet, this administration has announced and deliberately discontinued the practice of issuing opinion letters where I, as an employer, can give a specific factual situation to the Department of Labor and ask how this situation should be handled and how the law would be applied. The opinion letter gave the employer a safe harbor so that when it got direction from the Department of Labor it could rely upon that in going forward with its interpretation of the law. This administration has discontinued the use of those opinion letters and in its place now has indicated that what they want to do is issue administrative interpretations. But there are two problems. First, we are getting virtually none being issued. Second, they do not appear to have that safe harbor protection for the employer so that relying upon them will give a defense. So in closing, I would simply urge you to take a look not only at what the regulations say, but the tactics that are being used by the current administration in forwarding their investigations. We at the Chamber believe that is a significant problem. [The statement of Mr. Court follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Chairman Walberg. Thank you, Mr. Court. Now I recognize Mr. Harris for your testimony. STATEMENT OF HON. SETH D. HARRIS, FORMER ACTING U.S. SECRETARY OF LABOR AND DEPUTY U.S. SECRETARY OF LABOR, DISTINGUISHED SCHOLAR, CORNELL UNIVERSITY SCHOOL OF INDUSTRIAL AND LABOR RELATIONS, ITHACA, NEW YORK Mr. Harris. Thank you very much, Mr. Chairman. Mr. Chairman, Ranking Member Wilson, Chairman Kline, Ranking Member Scott, it is good to be with both of you again, and thank you for the opportunity to testify today. Let me note that I am speaking only for myself, not the various organizations with which I am affiliated or in the past have been affiliated. America's working families are suffering through a decades- long wages crisis, but neither stagnant wages nor growing income inequality is a foregone conclusion. Public policy matters. Congress and the Obama administration must do more. Most American workers have struggled with stagnant real wages for decades. While there are several alternative measures of wages and earnings, they all tell essentially the same story. The average American worker has not received a meaningful raise since before Ronald Reagan was elected president. Real wages have begun to rise again under President Obama, yet the pace of wage growth is slow and the amount is too small to help American families recover from the decline in household incomes caused by the Great Recession. Real median household incomes in the United States remain well below their pre- recession levels. The story is different for the wealthiest Americans. Their incomes and wages have continued to grow substantially faster and more than those of the average family. Since 1979, productivity has almost doubled. Our economy has more than doubled in size. But working families are not receiving their fair share of this growth. Households in the top 10 percent of incomes used to take in one-third of our national income. Now they take in half. The ratio of the average top 1 percent household's wealth to the median American family's wealth in 2015 is more than twice the ratio in 1983. The rich are getting richer, and the richest of the rich are doing best of all. The wages crisis has hurt working families and our economy. Seventy percent of the U.S. economy is consumption--that is working-class and middle-class families, among others, buying goods and services. If working families' wages, incomes, and wealth do not rise, then the American economy will remain locked in a cycle of slow growth. We are pressing the accelerator, but we also have our foot on the brake. A few policy proposals within this subcommittee's jurisdiction would help ameliorate the wages crisis and contribute to narrowing income inequality. First, Congress must raise the minimum wage, including for tipped employees. The Raise the Wage Act would increase the federal minimum wage to $12 per hour by 2020. An increase in the minimum wage also would be extended to so-called tipped employees whose federal minimum wage rate has been stuck at $2.13 for 20 years. This Committee should approve the Raise the Wage Act immediately. Second, we must expand minimum wage and overtime coverage to low-wage workers, like home health aides. In 1975, the Labor Department effectively excluded home health aides and other similar workers from minimum wage and overtime protections. The home health care industry has changed dramatically, and the regulations must change along with it. The Labor Department's new regulations were blocked by a poorly reasoned district court decision I expect will be reversed by the U.S. Court of Appeals, and rightly so. When it is, the Labor Department should immediately implement the new regulations while ensuring that higher wages for home health aides do not result in reduced assistance to those they serve. Third, the Labor Department should expand eligibility for overtime, and Congress should not narrow eligibility. OMB is reviewing draft-proposed regulations that would update the rules defining the exemption of executive, administrative, and professional employees from FLSA coverage. I hope the Labor Department will update the salary threshold which must be reached before a worker is exempt. Also, to address employer frustration with ambiguity in the existing rules, the proposed regulation should clarify the meaning of the primary duty test by establishing a bright line--perhaps a preponderance standard. Congress must not narrow overtime eligibility. Various legislative proposals would allow employers to substitute cash overtime for comp time. While superficially appealing, these proposals are deeply flawed for several reasons that I detail in my written testimony, and the Committee should reject those proposals. Fourth, Congress should ensure all workers have access to paid leave for family and medical purposes. And finally, Congress should provide the Labor Department's Wage and Hour Division with the enforcement resources it needs to ensure fair competition among employers and protect workers from wage theft. Thank you again, Mr. Chairman, and I look forward to the subcommittee's questions. I appreciate the opportunity to be with you today. [The statement of Mr. Harris follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Chairman Walberg. Thank you, Mr. Harris, and thank you for your timeliness. You have done this before. Now I recognize Mr. Richardson for your five minutes of testimony. STATEMENT OF MR. JAMIE RICHARDSON, VICE PRESIDENT, WHITE CASTLE SYSTEMS, INC., COLUMBUS, OHIO, TESTIFYING ON BEHALF OF THE NATIONAL COUNCIL OF CHAIN RESTAURANTS Mr. Richardson. Chairman Walberg, Ranking Member Wilson, Chairman Kline, and Ranking Member Scott, and members of the subcommittee, thanks for the chance to be with you today to discuss the Fair Labor Standards Act. I am Jamie Richardson, and I serve as vice president at White Castle. I am pleased to be testifying on behalf of the National Council of Chain Restaurants, NCCR, and NCCR members around the country, including the country's most respected restaurants, representing millions of hardworking Americans dedicated to good business and great taste. NCCR is a division of the National Retail Federation, the world's largest retail trade group. White Castle is a family-owned business, and we were founded in 1921. From humble beginnings, we have had the opportunity to grow thoughtfully over the past 94 years, and today we have 390 restaurants in 12 states with 10,000 team members who are dedicated to feeding the souls of craver generations everywhere and making memorable moments every day. Our founder, Billy Ingram, had two key governing principles in growing the business: number one, happy employees make happy customers; and number two, we have no right to expect loyalty except from those to whom we are loyal. More than one in four of our 10,000 team members have been with White Castle 10 years or more. The average time one of our general managers has been at White Castle is 21 years, and turnover for this key group last year was less than 6 percent. We are recognized as an industry leader for our commitment to diversity, with 33 percent of our restaurant general managers who are African-American and 77 percent of our restaurant general managers who are female. Today, we are here to share thoughts on wage and hour protections and the Fair Labor Standards Act. White Castle was 17 years old when FLSA was enacted in 1938, and even then White Castle was pioneering a notion of enlightened management before it was popular. For example, we began offering a health insurance benefit in 1924. Our profit sharing and retirement benefits were pioneered in the late 1920s, as well as a holiday bonus initiated for all team members to make us an acknowledged employer of choice in the 1930s. And those are programs that still continue to this day. Our nation's economy and the labor force have changed significantly since the 1930s, so it comes as no surprise that a statute from 1938 and its accompanying regulations do not effectively mirror the needs of today's business and workforce. There has been a major shift in the industries that drive employment opportunities. Technology has transformed the workplace and job duties, and employees increasingly place a premium on workplace flexibility and work-life balance. In fact, nearly 80 percent of our White Castle general managers tell us the number one reason they love the Castle is the flexibility they enjoy. The FLSA's current statutory and regulatory structure is ill-equipped to cope with these realities. The result is an outdated and complex framework in which employers and employees must operate, and the need to modernize a 1930s, Depression-era law for the twenty-first century economy has never been more important. One specific example about the relevancy of today's FLSA is especially concerning to restaurants and retailers. The administration is soon expected to propose major changes to the FLSA overtime regulations, which were last updated in 2004. Rather than providing more opportunities for individuals to earn overtime pay, it appears the new regulations will only result in a more complicated law requiring outside legal advice for small businesses and more litigation. In anticipation of these regulatory changes, NCCR's parent organization, the National Retail Federation, commissioned an Oxford Economics study to analyze the impacts of an increase in the salary threshold on the retail and restaurant industries. The report demonstrates just how disruptive significant increases in the salary threshold would be on an American business model that creates jobs in every community across the country. Looking at the report's mid-range option found an increase in the overtime salary threshold to $808 per week, or $42,016 per year, would affect 1.7 million retail and restaurant workers and would cost business owners $5.2 billion per year, assuming employers do not make changes to offset the increased costs. At White Castle the estimated added cost with no changes in our business model would be $8 million to $12 million a year. In addition to the expected increase of the salary threshold, we also anticipate the U.S. Labor Department regulations will make unnecessary modifications to the duties test for restaurant managers, which would impose immense costs on chain restaurants and would stifle opportunities for career advancement for hourly associates who wish to manage our restaurants. In reality, restaurant managers' days are spent performing management tasks, and they also multitask, stepping in to help serve diners during busy times, leading and training team members by working side by side with them, motivating and teaching as they go. Enacting a duties test would curb a manager's critical ability to multitask and lead in a busy restaurant setting, undermine customer service, limit training opportunities for team members, diminish morale, and force complicated assessments of time spent managing in a restaurant setting. Mr. Chairman, the FLSA of the twenty-first century should be consistent with the purpose and values from the time in which it was enacted almost 80 years ago, but the law should be modernized to reflect the twenty-first century demographics of our workforce and the unlimited opportunities provided by our modern and dynamic economy. On behalf of White Castle and the National Council of Chain Restaurants, thanks again for the opportunity to share our views, and we would be happy to answer any questions. [The statement of Mr. Richardson follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Chairman Walberg. Thank you, Mr. Richardson. Appreciate your time, and all of the testimonies that were given and the timeliness that you did them in. I now recognize for the first five minutes of questioning the Chairman of the full Committee, Mr. Kline. Mr. Kline. Thank you, Mr. Chairman, for the courtesy. Thanks for the hearing. Thanks, to the witnesses, for your testimony. And I will just add to Chairman Walberg's comments that almost everybody stayed pretty doggone close to five minutes. So well done, Mr. Chairman. You must have really gotten after them. It is good to see you again, Secretary Harris, and all the witnesses. It was interesting sitting here listening to Secretary Harris' testimony, and I was thinking that once again, you know, I--that is very fine testimony and I disagree with almost everything you said. So some things don't change. I do agree that after some six years the incredibly anemic economy for the last six years or so has worked out fairly well for the very, very wealthy, but for the rest of America, not so well. Mr. Court, I was interested to hear your focus on implementation procedures and tactics that you were talking about under the administration. One of the things that you talked about was this immediate settlement without consultation. I want to give you some more time here to elaborate on that, how that works, and what is the problem that results---- Mr. Court. Thank---- Mr. Kline [continuing]. Because of that action? Mr. Court. Certainly. If you are unfamiliar with the process, essentially, after the investigation is concluded the wage and hour investigator will then come in with his or her findings. The bottom-line figure is what we are talking about. They may say you owe $30,000 or $130,000, whatever that figure is. What is occurring is that the wage and hour investigator is making the individual who is sitting in the closing conference make an immediate decision--we will or we will not accept this proposal--otherwise the threat is it will go to immediate litigation on behalf---- Mr. Kline. If I may, who is in the room when this happens? Mr. Court. More often than not it is a human resources director of the local facility. For instance, one of the examples that is in my paper is a multistate employer with a facility that was in Lawton, Oklahoma. They were not represented by counsel up through the closing conference. This tactic occurred. They happened to pick up the cell phone and call me. I indicated to the investigator, no, they are entitled to have time so that their legal counsel can look at it and, as importantly, so that their home office in Phoenix, Arizona can see if the analysis is proper or something that they want to contest. And it appears what the Department of Labor is attempting to do is cut out the ability of the employer to either respond or analyze the job that has been done by the local investigator. If the investigators were always right that wouldn't be a problem, but they aren't. I have had numerous occasions where the initial figure would be a six-figure settlement requirement, and after analysis and discussion the figure may drop as low as $10,000. So it is cutting out the analytical ability of the company and cutting out the ability to deal with higher-ups in the company, in terms of this immediate settlement approach that now seems to be---- Mr. Kline. But in this immediate settlement approach, if further analysis shows that it should have been, to--$35,000 instead of $100,000, it is too bad. You are still stuck with $100,000-- Mr. Court. That is correct. By then you have signed the settlement. Mr. Kline. Yes. Thank you. Mr. Richardson, it is nice to see you again. Glad that you are here. I am interested in--because we have had conversations--in fact, you and I have had conversations, and conversations with how your manager, your store manager, your restaurant manager who is sort of the captain of the ship--he has got his crew there and he is trying to move through and he is stepping up to--or she is stepping up to serve customers during peak times, doing training, leading lower-level employees, and doing those things that were in your testimony. If this narrow interpretation of the overtime revisions were to hit, you said this is going to have a bad impact. So one of the things that I have always been interested in is the sort of upward mobility here through the stores. And if this were to hit, can you talk about what that would do to the--not just to the customers and to the function of the store, but what that does to the individual? Mr. Richardson. Thank you, Mr. Chairman. For our team at White Castle we are proud to say that of our 450 top restaurant operations team members--the general managers, the district supervisors, and the regional directors--445 of those individuals started behind the counter at an hourly rate. So our promote-from-within culture is critical to that. Those general managers are the captains of the ship, as you indicate. Their hope is to be able to become a multi-unit manager, and their effort and their energy is so entrepreneurial about coaching, guiding, being involved in community. Oftentimes they want to go to the Boys and Girls Club and be part of that. They are the face of White Castle and ambassadors of good will, and they take great pride in the fact that they have achieved this status as a salaried team member and helping lead the charge for that restaurant. Mr. Kline. Thank you. I see my time is expired, Mr. Chairman. Chairman Walberg. I thank the gentleman. And now I recognize the Ranking Member, gentlelady from Florida, Ms. Wilson. Ms. Wilson. Thank you, Mr. Chair. My question is for Mr. Harris. Please tell me and tell this body why the Fair Labor Standards Act is so important to millions of American workers, what has been its role in the past, and what it will mean for workers going forward. Can you speak to its role in income inequality? And while you are doing that, in your written testimony you spoke of a woman from Florida and how she struggled to make ends meet on low wages. Tell us about her and other instances you might have to make this real, so we will know we are talking about real people. Thank you. Mr. Harris. Well, let me start with that story. Thank you very much for the question. While I was Acting Secretary I had the privilege of traveling around the country and meeting with small groups of minimum-wage and low-wage workers to give them an opportunity to tell me about their experience of living at $7.25, $8 an hour in the American economy. And I met this wonderful woman in central Florida who had a daughter with a disability, and she had to make the really excruciating choice of giving up hours worked and wages, which she would never get back, in order to attend a meeting with school administrators about her daughter's individual education plan. So she went to the meeting. She and her daughter were driving home. Her daughter was hungry, so they stopped for dinner but she had almost no money. So she bought one hamburger, one order of French fries, and got two cups of water. And her daughter ate the meat and the French fries and the mother ate the hamburger bun and drank the water. And that was just one of dozens of poignant stories I heard all around the country, people in low wages making excruciating choices. Am I going to buy food or am I going to buy clothes for my kids? Am I going to fix the car or am I going to fix the heater? Am I going to have to split my prescriptions in half because I can't afford a refill? I heard dozens and dozens of these stories. The Fair Labor Standards Act is supposed to help fix that. It is supposed to establish a fair floor on wages so that workers can't be exploited and have their wages driven down if they don't have the bargaining power to protect themselves in dealings with employers. It is supposed to avoid exploitative long hours not by putting a hard ceiling on hours, but by requiring that employers pay a little bit more. And of course, it protects against exploitative child labor, very important, which I don't expect we will be talking about a lot today. It is critical, how the Fair Labor Standards Act is structured and how the regulations under it are written, is critical to the question of wage stagnation and income inequality. The minimum wage has been stuck for some seven years now. It is well below its historical value. Overtime regulations, the current salary threshold that we are all talking about here for exempt employees is at half of the average hourly wage for nonproduction employees in the American economy--half. So I agree with those who say that some of these regulations are outdated. They should be updated so that we are pushing wages up, particularly for the lowest workers in our economy. Ms. Wilson. In your testimony you outline some of the reasons why comp time for private employees is problematic. Can you walk us through an example of how workers might be worse off if their employers were allowed to offer comp time in lieu of overtime pay? Mr. Harris. Certainly. Let me give you the example of an employee who works overtime in January, February, and March of a year in order to accumulate enough time so that in August she will be able to take time off because her grandmother is going to have some kind of a medical procedure and she wants to be able to take four weeks off in order to be able to care for her grandmother during August, okay? Let's say her grandmother is 80 years old, just to pick a date. Under the comp time proposals that I have read there are two ways in which the employer controls the comp time, not the employee. So one possibility is that the employer could say, ``I am going to cash out your comp time.'' Under the Senate bill, the employer can cash out all of the comp time, meaning give them money, give the employee money in return for the comp time and the employee no longer has time off. Under the House bill they can take, in this example, half of it--two weeks of it--and leave 80 hours. Also, the employer could say, ``Well, no, I am sorry, you can't take any time off in August because that will unduly disrupt my operations.'' And the employer unilaterally decides that. So comp time is not like cash wages. If you pay somebody cash overtime they control how it is spent--the worker controls how it is spent. But with comp time the employer gets to decide, in a lot of circumstances, whether or not the employee gets the time off. So this tradeoff of cash for time is really an illusion in an unfortunate number of cases. Ms. Wilson. Oh, boy. Chairman Walberg. The gentlelady's time is expired. Appreciate the exchange there. I now recognize myself for my five minutes of questioning. Ms. Berberich, in your testimony you also highlight the ability of employees to rise through the ranks, like we have heard in other testimony, in part to their ability to perform concurrent duties. For example, you note that your emergency surgery and internal medicine technical supervisors work on the floor as well as manage their individual departments. You argue that concurrent duties allow employees to develop a variety of skill set opportunities for advancement. Can you talk a little bit more about how important that structure is to the overall functioning of a business? Ms. Berberich. Absolutely. The employees originally go to school for this technical position, and so they are originally hired to be a registered veterinary technician. At a point in time in their career they express an interest in moving into a more supervisory, managerial role. However, they don't want to let go of those technical duties, as well. So we offer that flexibility where you can still keep up your technical skill set, and yet also get that management development and that training and be able to have more of a place in the management meetings and be able to be a part of the policies and the procedures that go on in the hospital. We like to offer our employees the flexibility of them determining the where and the when that they can get their job done. If they have to be completely on the floor and they don't have any flexibility outside of the CARE Center then they don't have that ability to work on performance reviews, phone interviews, things like that, that further strengthen their bench strength of workforce on the floor. Chairman Walberg. And this is their choice? It is all voluntary? Ms. Berberich. Yes. This is their choice. Chairman Walberg. This is what they want to do. Ms. Berberich. Yes. Chairman Walberg. For their own personal reasons. Ms. Berberich. Yes. Chairman Walberg. Okay. Mr. Richardson, you mentioned the fact of some statistics that the tenure of your general managers, I believe you said, was 21 years on average? Mr. Richardson. Yes, that is correct. Chairman Walberg. Talk to us a little bit about what the potential overtime rules--the changes that would go on there-- talk about what that would do to employees' advancement and job security. Mr. Richardson. Thank you, Mr. Chairman. There are two primary effects. The first that we are worried about is the salary threshold. The second is the duties test. That duties test element is so important because the general manager--he or she invests their time in helping build that restaurant, and they are engaged and leading the charge every day. What we know is without any changes, that would increase our investment in that area $12 million to $18 million a year. That is the same money we are currently using to provide a great health care benefit. That is the same money we are using now for our really robust retirement program, and holiday bonuses, and profit-sharing. So when we look at it, unfortunately, as a family-owned business we can't budget like Washington, D.C., does, so we don't have the same ability---- Chairman Walberg. Don't get personal, please. [Laughter.] Mr. Richardson. So we don't have that opportunity to be able to find those dollars. We are already investing as much as we can in our people because that is our number one priority. Food and people are our two biggest investments, and at the top of the list are our people. So for us, we think that would limit their ability to continue to grow and take on more responsibility-- Chairman Walberg. Is an assistant manager position a significant position? Mr. Richardson. An assistant manager position is a good position. That is an hourly position for us, and an opportunity to learn on the job and grow. And then there is a management and training program that allows those individuals to grow into a general manager position. But you are king or queen of the castle once you become a general manager---- Chairman Walberg. General manager. Mr. Richardson [continuing]. It is a fun position. Chairman Walberg. And committed to it. Okay. Mr. Court, you discussed in your testimony how wage and hour investigators discourage use of legal counsel. Why? What have you determined? Mr. Court. I am concerned that they want--that the focus has shifted from doing the investigation right to seeing how much money they can collect. You all are very used to having agencies come to you and tell you as part of their search for appropriations that we have collected X number of dollars for, in this case, wage and hour violations. And I am concerned that the emphasis has been placed more, in terms of even their evaluations, not on whether the investigation is done correctly, but how much money they can collect. Chairman Walberg. So this is intimidation for---- Mr. Court. I--it-- Chairman Walberg [continuing]. Fundraising purposes? Mr. Court. I think that is part of exactly what is going on. The question I always have is--the question was asked of my colleague, you know, ``What is the employer afraid of? Why are they hiring legal counsel?'' And my response is, ``What is the investigator afraid of when legal counsel is there simply to exercise the rights of the employer?'' Chairman Walberg. Thank you. My time is expired. I now recognize Mr. Scott, Ranking Member of the full Committee, for his five minutes of questioning. Mr. Scott. Thank you, Mr. Chairman. Secretary Harris, you recognize the policy that we have that 40 hours is the work week and over that you should get time-and-a-half unless you are exempt. Now, the rulemaking is going to suggest a higher number than the $23,000. Now, the exact amount of that will be subject to rulemaking with interested parties given an opportunity to comment, but if we just increased for inflation since 1975, the wage threshold, do you know what it would be today? Mr. Harris. I do. Currently we have a little bit north of 21 million people who are exempt under the existing threshold, and raising the threshold to around $51,000, which would be an inflation adjustment since 1975, would newly cover 6.1 million workers. Mr. Scott. But the number would be about $51,000 just with inflation. And the old rate covered about 65 percent of the workers as being exempt; now about 11 or 12 percent are covered. If we were to cover 90--excuse me--65 percent of the workers like they were back in 1975, what would that threshold be? Mr. Harris. That would cut the number of exempt in half, so it would newly cover about 10.4 million workers. Mr. Scott. And how much--where would the threshold be-- dollar amount? Mr. Harris. To get to that level it would have to be $69,000--a little north of $69,000 a year. Mr. Scott. Okay. But we don't know what the number is going to be, but that gives you an idea of if we just adjusted for inflation and what the situation was in 1975, kind of what the numbers might look like. Now, you mentioned wage inequality. The Chairman mentioned that the wealthy have been doing well, everybody else not so hot. What federal policy has contributed to that? Mr. Harris. There is no federal policy under President Obama that has contributed to that. I am sorry the Chairman left because I wanted to have an opportunity to respond. This is not a phenomenon of the last six years; it is the phenomenon of the last four decades. We have seen rising wage inequality and income inequality in the United States really since the 1970s, and there are a number of factors and federal policies that contribute to that. Failure to raise the minimum wage is very important. Failure to raise the overtime threshold is another part of it. Failure to provide paid leave. We are one of the--we are one of two countries out of 185 surveyed by the OECD that don't provide paid maternity leave as a matter of law. We obviously have the Family and Medical Leave Act, but that is unpaid leave for workers. Obviously, the declining union density has a very important effect. Our failure over the last 10 years to invest sufficiently in creating middle-wage, middle-skill jobs in infrastructure and other industries. So there are a number of policies that we can change. But most important, there are policies within the jurisdiction of this subcommittee that I think we can act on. Raising the minimum wage would be the first on my list. Mr. Scott. Now, what effect would the Paycheck Fairness Act have on addressing discrimination? Mr. Harris. Yes. I think the Paycheck Fairness Act would have to be included on that list because of the terrible wage gap between the average working woman and the average working man, yes. Mr. Scott. And can you say a word about what increasing the minimum wage--what effect that would have on the economy? Mr. Harris. I think it would help our economy to grow. As I said, 70 percent of the American economy is built on consumption. Working people spend the money that they get, and they spend it almost right away. So it ricochets throughout the economy, and so it increases GDP. You give more money to a billionaire, they put it in savings. They don't spend it, and so it is less effective at helping to grow GDP. So you put more money in the pockets of 30 million, 35 million, 38 million Americans by raising the minimum wage, we are going to see that ricochet, particularly in the communities that need that growth the most, the communities that are suffering the most. Mr. Scott. Now, one proposal that you have commented on, the so-called comp time legislation--how much choice does the employee have in terms of--I mean, does the employer or the employee--does the employer get to choose whether or not the employee can get comp time or take overtime? Mr. Harris. Well, the way the bills are written, the employee is not supposed to be subjected to coercion or intimidation in the decision whether or not to use--to select comp time. But, you know, we are talking about the Wage and Hour Division. I know it is appealing to treat it as though it is this monolithic law enforcement juggernaut. They have 1,800 employees protecting 135 million workers in 7.3 million workplaces, and these bills would add yet another responsibility, which is protecting workers from exploitation with respect to comp time. Where are the extra resources going to come from to do that? I don't think that Congress is going to provide them, unfortunately, when they pass this bill. And I have read the bills. I don't see any authorization for additional resources in those bills. Mr. Scott. Thank you, Mr. Chairman. Chairman Walberg. I thank the gentleman. Now I recognize the gentleman from Pennsylvania, Mr. Thompson. Mr. Thompson. Chairman, thank you so much. Thank you to the panelists who are here. My first question actually is for Ms. Berberich. As a governing body we consistently encourage use of modern technology in our schools, our research facilities, and government agencies. It is concerning to hear that by failing to update the FLSA we are essentially doing the opposite for businesses in the twenty-first century. And by the way, I hope your patient, Carmen, is doing well--the boxer. That is just a great story. Can you elaborate on how technology is escalating the risk of FLSA noncompliance and how employers are coping? Ms. Berberich. Absolutely. And thank you for the question. Our workforce needs the flexibility to be able to work when and where they can get the job done. If we have nonexempt employees that have to have all of their time tracked it becomes cost-prohibitive to use electronic devices that are not on the premises to conduct work and to have that time tracked and then calculated in for payroll purposes. Mr. Thompson. Very good. Well, as someone who is really-- has championed, and successfully, telemedicine language--and I know veterinarian services it obviously applies, but, I mean, we are just--this really poses a real barrier to what is truly accessible health care if we don't do that. Mr. Richardson, I really support that, you know, we all want greater opportunity for everyone. I want greater wages. I see a different pathway than the former secretary does. I see that that is achievable through training. I am proud to co- chair the Career and Technical Education Caucus, very strong bipartisan caucus here in Congress. I think that we achieve that through career ladder advancement, specific training, career and technical education training. In your testimony you mentioned--and you talked about this briefly in a different concept or perspective--that modifications to the duties test would stifle opportunities for career advancement for hourly associates. Now, I assume that is, you know, that is really going to prevent them from getting access to the type of on-the-job training that would set them up for that advancement. Can you elaborate? Mr. Richardson. Yes. Thank you, Congressman. One of the things we encounter is with our team members they want to grow and they want to learn. They love the flexibility that is part of the workplace. For our general managers specifically, we understand that this is, for some of them, where they want to be for the rest of their career; for others, they want to advance and take on more. We have what we call a White Castle University. Good example. We bring our general managers in from all over the country. They congregate in Ohio, in Columbus, at our home office, and they spend time together. For them it is a very unifying experience. They feel energized. We have general manager conferences. Those are the types of things that under a new regulatory regime we would have to make tough decisions about because we simply can't print our own Castle dollars and have the dollars affordable to be able to invest in that. Mr. Thompson. Very good. Mr. Court, as--I am also--I serve on the Agriculture Committee, one of the subcommittee chairs there, so part of your testimony caught my eye in terms of commodities. During this recession time we have been blessed that the agriculture industry has really remained pretty resilient. It has really saved us--that and our domestic energy production. But there are some issues related to export, and we have great opportunities in export. So my question kind of centers back on part of your testimony and questions about there have been concerns with the Wage and Hour Division's use of the hot cargo provisions of FLSA to clear settlements. As you point out in your testimony, growers shipping products will--that will quickly spoil have been coerced into signing a consent judgment to get their products moving even though the growers strongly disagreed with the division's allegations. How should the division use the hot cargo provision, and are there alternatives to stopping shipments of goods that are perishable? Mr. Court. First, I would say that the hot cargo provision should be used sparingly. It is probably better suited for nonperishable goods--the garment industry, for instance. The specific case that I reference in my written testimony was the circumstance in which the threat--not actually threat, but actual use of the hot cargo provision caused growers in California to literally lose in excess of $200,000 worth of product. It forced them to sign a consent decree, which they did. Ultimately, they went to court to undo the consent decree and a federal judge found coercion by the Department of Labor, which is the very thing that I am complaining about, in terms of the investigative tactics. As an alternative--quite frankly, I have not thought through what an alternative to the use of the hot cargo would be in the perishable good industry, other than typical enforcement procedures that are used in every other industry, which is to do the investigation, do it right, and see if we can get compliance by way of agreement, and then if not, through litigation. Mr. Thompson. Thank you, Mr. Chairman. Chairman Walberg. I thank the gentleman. Now I recognize the gentlelady from Ohio, where I enjoyed my weekend just south of your district very much. And for a Michigander to say that about Ohio, that is pretty special. Ms. Fudge. I thank you very much, Mr. Chairman. Come any time. Thank you. I thank you all for your testimony today. Clearly there is one thing we agree on, and that is that the Fair Labor Standards Act is outdated and is in need of updating. I also agree that we need to look at what the purpose of the bill is, and that is to be sure that we don't leave behind the very people the law was intended to protect, which are the American worker. Now, Mr. Court, I just want to be clear on something that you said. You indicated that oftentimes when the investigation is completed they come and give you kind of a ``take it or leave it right now.'' Now, if, in fact, that is the case, I am with you. I don't agree that that is appropriate. But I do want to be clear on this: The investigator does not determine whether an employer has legal counsel or not, do they? Mr. Court. The investigator does not determine in the strictest sense. What they are doing is encouraging-- Ms. Fudge. Well, no, no. That is not my question. Mr. Court. Okay. Ms. Fudge. The question is, they don't determine it, the employer determines whether they have legal counsel or not. Mr. Court. That is correct. The employer determines whether they have legal counsel. Ms. Fudge. Okay. Thank you. Mr. Richardson, I will have to admit that I have eaten many too many of those when I was in college at Ohio State-- Mr. Richardson. We appreciate your patronage. Thank you. Ms. Fudge. I spent a lot of time in Ohio. Let me say that first. But let me ask this question: What is the average salary of your managers and how many hours do they work, on average? Mr. Richardson. For our general managers they work on average about 40 hours. We think it is important to have work- life balance-- Ms. Fudge. Not general manager, the level below that one. Mr. Richardson. Oh, the level below that? Ms. Fudge. Yes. Mr. Richardson. For those team members who have been with us a bit longer they are working somewhere between 35 and 40 hours, for the most part. We have, with new hires they start out as part-time, so that is below 30 hours now. And so with those who are below 30 their hope is to be able to be available and be able to get the---- Ms. Fudge. What is the salary? My question is, what is the salary, and on average, how many hours do they work? Mr. Richardson. Oh, sure. Okay. So you are talking about not our general managers but our hourly team members? Ms. Fudge. Correct. Mr. Richardson. The average hourly team member at White Castle makes close to $10 per hour. Ms. Fudge. Is that ``close to'' like $8, or is it---- Mr. Richardson. No, no, no, no; $9.78, somewhere in there. Ms. Fudge. Okay. Mr. Richardson. It is about 38 percent ahead of the federal minimum wage. Ms. Fudge. Okay. Now, tell me at what level do you not think it appropriate that they should receive overtime. Mr. Richardson. When you are talking about the general managers or---- Ms. Fudge. Anybody. Just pick anybody. Mr. Richardson. Well, for our team members it is about work-life balance, so our focus, as a people-focused business and happy employees making happy customers, is to really meet them where they are. The biggest---- Ms. Fudge. I am happy too, but I need the answer. Mr. Richardson. Sure. Let me just share one part that shapes it, because each person's choices are different and we offer a lot of flexibility, that can shape that pretty dramatically. Ms. Fudge. Thank you so much. Mr. Harris, let's go back to the comp time proposal. I am a former mayor so I worked in the public sector. I understand comp time very, very well. Please explain again for me why you think it is not appropriate for the change that the House is talking about to be in law. Please explain that for me again. Mr. Harris. I will do it really quickly, because there is a long discussion, I think. The first is the myth that the FLSA is perfectly inflexible is just that. It is a myth. There is a great deal of flexibility. The difference between the comp time proposals and the FLSA is that with the flexibility workers get paid less under the comp time proposals and more under the FLSA. So if you are concerned about wage stagnation, if you are concerned about income inequality, the comp time proposals are the wrong way to go. The second is workers don't need time or money, they need time and money. And I think that the premise of the bill that they should have to buy overtime from--buy time off from their employers by sacrificing their overtime pay, in addition to being morally dubious, is really problematic as an economic matter and as a matter of where we are in our country. And then finally, I would say I--as I said before in response to the Ranking Member's question, I don't think the workers get the deal that they are being promised because employers still control the comp time in large part. Ms. Fudge. Thank you very much. Just let me say lastly, I understand that there are some issues with the investigation. I am going to look into that to see what is happening with that. But I do know this one thing: you wouldn't have an investigation if you didn't break the law. Thank you very much. I yield back, Mr. Chairman. Chairman Walberg. I thank the gentlelady, and I do disagree that you have had too many White Castles. That is impossible, in my position. I now recognize the ranking millennial on this Committee, the gentlelady from New York, Ms. Stefanik. Ms. Stefanik. Thank you, Mr. Chairman. And that is very fitting because my question was related to millennials in the workplace, and my question is for Ms. Berberich. As a fellow millennial I just wanted to lay down the context. Last month millennials surpassed Generation Xers as the largest generation in the U.S. labor force. More than one in three American workers today are millennials, and by 2020 nearly half of the U.S. workforce will be comprised of millennials. So your point about how the FLSA and the fact that it has not modernized to keep pace with the technologically driven workplace is very meaningful. It will have significant impacts on our broader economic growth. I know that I am an--typical millennial, an avid user of my smartphone, and I know that my constituents at home expect me to be in contact at all hours to make sure that I am serving them. And I believe that in small businesses and in the private sector it is also important to have that flexibility to promote greater productivity and to help grow our businesses. So can you talk about specifically how employers have been advised to ensure compliance with current rules is stifling flexibility and productivity, from your experience? Ms. Berberich. Thank you for your question. I would say that employers are being stifled in their flexibility under the current regulations due to not having the resources for tracking this possible compensable time. In an organization such as CARE Center I am a one-person HR department. If we have to have additional tracking outside of our in-house systems, that would be additional expense, and I can say that for CARE Center and for many small businesses, we simply don't have the resources for it. Ms. Stefanik. And, Mr. Richardson, you spoke a lot about your company's commitment to flexibility in the workplace. Do you have any thoughts, as you are seeing millennials join your business, and do you have any reflections to share? Mr. Richardson. One of the things that is really interesting as we attract more millennials is to see that their priorities are different. And not surprisingly, our general managers who are 40 and over are a bit more focused on retirement benefit and what comes next in that degree. With our younger workers it is absolutely about what can I learn, and a different notion of how long is a good time to stay somewhere. So to them it is about learning the skills, the portability, having that chance to get the first job in a workplace. And I will tell you what is really tough, in a lot of our cities that youth unemployment rate is catastrophically high-- over 50 percent in Chicago; over 38 percent in Detroit; near 27 percent in New York. And that is why we fear if there are other wage adjustments those are the first folks who don't get that chance to have that first step on the ladder to progress and opportunity. So that is where we have real inequality. It is about inequality of opportunity that we are seeing in that landscape where we need to have more jobs. Ms. Stefanik. Mr. Court, do you have anything to add? Mr. Court. Let me just respond to the last, I guess, comment that if you weren't doing something wrong there wouldn't be an investigation. I couldn't disagree more. An investigation can be started by a disgruntled employee. It can be started by a business competitor. The Department of Labor recognizes those investigations, and I have cited in my paper at least one example from my neighboring state of Arkansas of an investigation that went on for months, ran six- figure legal fees, and ultimately there was a finding that nothing was wrong. Ms. Stefanik. Thank you very much. I think in order to encourage economic growth for Millennials we ought to be promoting policies that promote flexibility and productivity. So thank you very much, and I yield back. Chairman Walberg. I thank the gentlelady. And now I recognize the distinguished representative from California, Mr. DeSaulnier. Mr. DeSaulnier. Thank you, Mr. Chairman. Let me first say that as somebody who has owned and managed restaurants--independent restaurants--very different, Mr. Richardson, from your product--I feel some sympathy in the last comment by Mr. Court on regulations that don't seem to really be efficient, and it might be because of the resources we put into them, in terms of their stated goals. Having said that, coming from Northern California, where we have a very high-cost area but the restaurant business does very well in spite of--and having managed--and I own restaurants in San Francisco, where you have got a very high minimum wage, you don't have a tipped minimum wage. It is sort of shocking to see that the federal tipped minimum wage is only $2.13, and my staff made a lot of money in tips. So all of that said in the context that California regulations are much more difficult than the federal, which I look at as sort of a minimum. When our managers scheduled they had to pay extra for split shifts. A lot of my employees didn't--they had to commute a long way. They didn't like doing a split shift. But on the other hand, I had to pay them time-and-a-half. So I understand all that, but in the long run, the biggest problem, to Mr. Harris' comments--and I have--first question is your example of the steel mill was really wonderful, but in the service industry you say--the food service industry--trying to get that kind of technological improvement, particularly in fine dining, is fairly limited, and you still need a well- educated workforce. Do you have any responses to productivity when it comes to nonmanufacturing fields, and how do we get more productive employees and still have particularly small businesses thrive? Now, that was actually Mr. Harris. Mr. Harris. Oh. Well, thank you very much. That is a very big question. So there are industries where technology is not going to be able to make dramatic change, but you see in restaurants--fast casual restaurants and other kinds--the use of technology for ordering, so the order is conveyed directly from the customer back to the kitchen. The servers are essentially just delivering the food, they are not taking the orders. You are able to pay at your table. That is an innovation of one of the fast casual restaurants. So that will be an example of--in those small--those businesses that use those kinds of technologies will see a decline in the number of employees, but I don't think we will see the kind of dramatic impact, for example, that we have seen in manufacturing. The example I gave in my testimony was a 75 percent cut in the number of workers. Mr. DeSaulnier. The reason I asked, other than the fact I want to avail myself of your wisdom, is so in those fields in order to become--get a greater return on investment it seems like you almost have to get concessions on the wage side and benefit side. But that is a Henry Ford rule. If I didn't pay my employees enough to be able to come into my restaurant it really had a problem to the larger question that you posed about an economy that is 70 percent driven by consumer purchases, and that we have this huge disparity in capital and labor. So your comment about tightening the labor markets by creating millions of jobs, particularly in middle-wage, middle- skill jobs with smart investments in transportation and communication infrastructure, alternative energy, these are all things we have done in California and it spurred the economy. So I wonder if you could comment on that. I guess what I am getting at, for the individual business owner they are in a very retail environment. But we have got a larger, more complex issue that you are very well versed in that if we could get the wages up it would benefit--obviously benefit the economy and the small business owner. Mr. Harris. I think that is precisely right, is that if we are able to raise wages across the board, particularly for low- wage and middle-skill workers, we are simply going to have more people spending more money. Those workers will spend every dollar that they get, sometimes more than every dollar that they get, and that spurs economic growth. It helps White Castle. People are spending more money in their restaurants. It helps those restaurants you are talking about in California. People are spending more money there. It allows them to hire more people. It allows them to expand. It allows them to open a new restaurant. As demand goes up, good things happen with respect to supply and production. We have a trend in our economy--it is a long-term trend, really since the 1970s--where technology has replaced workers in a lot of places. It has also allowed for off-shoring of jobs. So you have a lot of middle-wage, middle-skill workers who are dropping into low-wage, low-skill jobs simply because the middle-wage, middle-skill jobs are gone. Think of ATMs and bank tellers. Think of robots and manufacturing jobs. That has put downward pressure on wages both in the middle-wage, middle-skill market and in the low- wage, low-skill market. So we both, and I agree with the comment before. We need to skill workers up so that they can compete for those high-wage, high-skill jobs, but that is difficult for a lot of workers. We also have to raise the bottom as much as we can by raising the minimum wage, raising overtime standards, making sure that we are protecting workers through tough enforcement. Mr. DeSaulnier. And I appreciate that, but it is a leap of faith for the individual business owner to do that. I have found in my experience that when you took that leap of faith as a regional economy it benefited you in the long run. Thank you, Mr. Chairman. Chairman Walberg. I thank the gentleman. Now I continue with the California questioning by recognizing the gentleman from California, Mr. Takano. Mr. Takano. Thank you, Mr. Chairman. I am particularly interested this morning in this morning's testimony on the forthcoming Department of Labor proposed rule to update the Fair Labor Standards Act white-collar exemption for overtime pay. We have heard from witnesses today that the FLSA is outdated and hasn't been updated to reflect the modern workplace. I would argue that is one of the very reasons an update to the overtime exemption is badly needed. The intent of the white collar exemption to overtime pay was to exempt those with sufficient power in the labor market who are able to advocate for better wages and hours for themselves. This is clearly not the case anymore. In 1975, 65 percent of salaried workers were eligible for overtime pay. Now only 11 percent of workers are eligible. As we have heard this morning, Americans are working longer hours and are more productive, yet their wages are largely flat. Updating the overtime exemption will help millions of workers make ends meet and give an added boost to our economy. Well, Mr. Harris, what is your response to those who will say that this will hurt the workers we want to help? If employers don't want to pay the extra overtime, won't they logically increase the hours of those working part-time and hire more workers? Mr. Harris. Well, let me just say, if the biggest problem that workers have is that they will have too much money to spend, I think that is a problem that we can live with, and that is what is going to happen, is that workers who are currently exempted who are earning $27,000, $28,000, $29,000 a year and are working 50, 60, 70 hours a week, they are going to see their pay go up. Either because the employer genuinely believes that they should be exempt--they should have the status of an exempt employee and they raise their pay in order to get them over the threshold, or because they are going to have to be paid hourly and they are going to get more money because they are working in excess of 40 hours in a week and they are going to get time-and-a-half. So those workers' wages are going to go up. But I think you are right. We are going to see some substitution where workers who are currently working part time in fast-food restaurants and other kinds of establishments are going to see their hours increase, particularly if the Labor Department focuses on this primary duties test. If we say, ``You know what? You can't work 99 percent of your time doing nonexempt work and still be an exempt employee,'' and we say that work has to be done by somebody else, I do expect that we are going to see more part-time employees getting more hours, as you predicted. Mr. Takano. Thank you. Mr. Harris, in your testimony you briefly talked about the types of workers who will benefit from raising the income threshold for overtime pay. Can you tell us more about the characteristics of these workers? Mr. Harris. Right. So, as I said earlier in response to Ranking Member Scott's question, we have about 21 million, almost 22 million workers who are currently exempt with the threshold--or can be exempt at the current threshold of $455. If we raise the threshold, that is largely going to benefit--not exclusively, but largely going to benefit women workers, because we have a lot of women in the low-wage ranks, particularly in industries like retail and fast-food and others. It will disproportionately benefit workers of color because, again, they tend to be over-represented in low-wage, low-skill jobs, unfortunately. And it is going to help not the youngest workers, because that is not who are the assistant managers or the general managers; it is going to help workers who are in their 30s and 40s, not the millennials, who are going to--who are--who have gotten along in their career and have moved up a little bit in their career but are still not getting sufficient wages. So the groups that have been left behind in our economy are the folks who are going to benefit the most from an increase in the overtime threshold. Mr. Takano. Thank you. And to add to Mr. Harris' remarks, I would like to ask unanimous consent to insert into the record a report from the National Employment Law Project. This report has stories of workers who would benefit. [The information follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Chairman Walberg. Without objection. Hearing none, it will be submitted. Mr. Takano. Some would argue that changes to white collar exemption will result in more confusion for employees. It would seem to me that the current duties test is responsible for much of the confusion regarding exempt versus nonexempt employees. Won't a clearer definition of executive, administrative, or professional work help employers properly categorize employees? And as a follow up, won't raising the income threshold make more employees eligible and mean employers will be less reliant on the duties test to determine if a worker is exempt or nonexempt? Mr. Harris. With respect to the latter point, absolutely, yes. You are going to have many--if the threshold goes up, particularly if it goes up substantially, you will have many fewer employees to whom you have to apply the duties test because they will simply be covered by overtime because they are below the threshold. With respect to the duties test itself, you know, I think employers are trying to make a choice now: Do they want the devil they know or do they want the devil they don't know that is coming in the regulations? My view is let's wait and see what the regulations say. We have talked a lot about the regulations here. None of us know what are in these proposed regulations except we think that the salary threshold is going to go up. Let's see them. Let's see whether or not they simplify the rules for employers. One of the things I have said is that if we make a clear, bright line on the primary duties test to support some of the things that my colleagues on the panel have said, that will make it a lot easier for employers. Clear lines are better for people who are regulated so they can conform their behavior to the standards. So I am hoping that they are going to do that in this regulation, and I expect they will. Chairman Walberg. Thank the gentleman. Time is expired. Now I recognize the gentleman from Indiana, a great state with businesses and challenges, and now competition coming from the north finally, and look forward to your questioning. Mr. Rokita. We welcome the competition, and it is a good thing, Mr. Chairman. This hearing is also a good thing. I appreciate you holding it. My apologies for not being able to be here for everyone's testimony, but we had a late vote series last night, so before that vote series I was able to look into some of your remarks and get acquainted with them. When you are trapped in the office you might as well work, right? My first question, then, would go to, at this point I think, Mr. Court. In your testimony you testify to a substantial increase in FLSA lawsuits. And in fact, the GAO accounts for a 514 percent increase in lawsuits since 1991. And Mr. Harris stated in his testimony that--he said the overwhelming majority--I am paraphrasing here, but correct me if I am wrong--the overwhelming majority of U.S. companies want to comply with the law and, in fact, do comply with the law. That is nice. But then you also say--you at least admit the existing rules are too complex. So, Mr. Court, in your opinion has confusion about FLSA rules contributed to the increase in FLSA litigation? Is there a correlation or a causation there? Mr. Court. I don't believe that the current test of primary duties is the source of this increase in litigation. Quite frankly, with all due deference to the congressman from California, the California bright line test of the 51 percent is indication of how litigation will occur, because California leads the country in wage and hour class action lawsuits. They use a bright line test in California. Who is really going to get rich off of a bright line test is the attorneys, because it is simply going to increase the litigation. Two years ago I spoke to the Oklahoma State Human Resources Conference, and I asked this very question, sort of the one that Mr. Harris indicated: Would you prefer a bright line test, which I think is the myth that is being spread by proponents of it, or do you prefer the current primary duties test? I asked for a raise of hands from an audience of over 150, ``How many of you want a bright line test, a percentage test?'' Not a single person in the room raised their hands. Mr. Rokita. This was an audience of who? Mr. Court. Human resource directors. And then I was part of a delegation to meet with the secretary of labor and his staff over the proposed regulations, as they were doing their meetings with various contingency groups, and I told this story and a prominent member of that department said to me, ``Leonard, that is what I am hearing from human resource directors all across the country.'' Businesses do not want the bright line test, contrary to what-- the propaganda that is being spread. Mr. Rokita. Thank you for that, Mr. Court. Let me ask you this: Is it pretty much understood by let's say the folks in that audience, or even you, that the--there has been a reduction in the administration's compliance assistance in the agency, and actually the elimination of the issuance of opinion letters? Correct, right? Mr. Court. That is correct. Mr. Rokita. Right. Mr. Court. That is one of many. Mr. Rokita. Can that be attributed to this increase in lawsuits? Mr. Court. I think the---- Mr. Rokita. Hold on, Mr. Harris. And let the record reflect Mr. Harris is nodding his head. But you just said---- Mr. Harris [continuing]. I was shaking my head---- Mr. Rokita [continuing]. Shaking, excuse me, shaking your head. But you just testified earlier that, you know, apparently people like detailed, specific rules if they are going to be regulated. Well, the administration eliminating opinion letters seems to go against that testimony. Mr. Court. Mr. Court. I would agree with that observation. Another thing the Department of Labor has essentially ceased doing for literally decades, if I as an employer found that I had a violation, and I wanted to correct it, I have to get approval from the Department of Labor to get an effective release. That is one of the methodologies. And historically what we would do is go to the Department of Labor, say, ``All right, we found this problem; we want to fix it,'' and get their assistance. Today, employers are not doing that because the Department of Labor has quit helping and quit giving the assurance that if I voluntarily come forward that won't result in a massive investigation which now could result in the liquidated damages and civil money penalties. Mr. Rokita. Yes. Seems to me this leads to an adversarial relationship when they could--the agency could just as easily spend its time and resources to help with compliance. Mr. Court. It does that, and quite frankly, it seems to me it is counterproductive to the very goal that we are sort of all talking about here, which is to quickly get the wages to the employees, because to the extent it encourages litigation, that delays the decision-making process. Mr. Rokita. Thank you, Chairman. I yield back. I yield. Chairman Walberg. Let me just ask one question in following up with your train that was going there. Ms. Berberich, what does ``human resources'' connote to you? Ms. Berberich. I am sorry, can you repeat that question? Chairman Walberg. What does ``human resources'' connote to you? What does it mean to you when you hear the term ``human resources?'' And I am coming from a time when you used to be called ``personnel department.'' Ms. Berberich. Thank you, Mr. Chairman. Chairman Walberg. Could you quickly answer that? Ms. Berberich. Human resources to me is servant leadership. The idea of human resources is to be there for your employees, interpret the laws, help management to make the correct decisions. We want to have those good-faith efforts in properly interpreting the law and making the decisions that are in the best interest of both the business and the employees. Chairman Walberg. Thank you. I yield back. The gentleman's time is expired. I was just caught there as I was listening with that flashback as Mr. Court was speaking that we are in a different time--and I think it is a good time--that we are talking not simply about personnel department, ``personnel'' meaning fairly sterile--people hired to do a job--to the issue of human resources, as we look at it, I think, in most general cases, across the board. We look at it as a cooperative relationship. Well, I appreciate the testimony today. I appreciate the answers the witnesses have given from both sides of the ledger and in between and all around. And I appreciate the attention that the subcommittee members have given to this issue. So now I would ask the Ranking Member for her closing statement. Ms. Wilson. Mr. Chairman, I want to thank you again for holding this hearing and giving us an opportunity to discuss the Fair Labor Standards Act. I want to thank all of the witnesses for being here today. Today we have heard lots of statistics about how many Americans would benefit from strengthening the FLSA. We have heard stories about the people who would benefit from much- needed updates to the law. But I want to remind my colleagues that these statistics and stories represent real people. These are our constituents. These are people who truly know what it means to struggle with low, stagnant, or unfair wages--millions of Americans who know what it means to work long hours and never get ahead. These statistics and stories represent the 130 million Americans protected by FLSA. Thirty-eight million Americans would benefit from a raise to the minimum wage. These are the people who wake up every morning and go to their jobs knowing that at the end of the day, no matter how hard they have worked, they will not make enough to make ends meet. They are why we must pass the Raise the Wage Act. The statistics and stories represent the millions of women who would benefit from the strengthening of the equal pay protection. These are the women, no matter how hard they work, may be denied the security of equal pay for equal work. It is unconscionable that women on average make $10,000 less a year than men. We must pass the Paycheck Fairness Act. The stories we have heard today represent the millions of workers who work 60, 70, even 80 hours a week and make less than $24,000 a year with no additional pay for overtime. It is absurd that we think that these constituents and this scenario constitute fair wages. We must support an increased salary threshold for overtime pay. All of these necessary updates--raising the minimum wage, equal pay guarantees, overtime adjustment--reflect the spirit that was enshrined in the FLSA 77 years ago. Congress came together to memorialize and venerate the rights we know all workers are entitled to. These rights are predicated on a simple yet wholly undeniable fact: American workers deserve to work with dignity. Forty years of wage stagnation have chipped away that dignity. It has forced far too many Americans to work for far less than what they are worth. As hard as Americans work to try to make a decent living, to provide food for their families, to pay their bills, to put their children through college, we cannot in good conscience take steps to erode where protections are in place. I stand with my colleagues on this Committee--I don't care what side they are on, what party, but if they stand with me on this committee--who remain dedicated to ensuring we restore and uphold the dignity of work. I hope that our colleagues who don't will join us in our endeavor. I appreciate this opportunity to talk about FLSA, and I urge this subcommittee to do more. Hold a hearing on decreasing the gender wage gap. Hold a hearing on raising the minimum wage. Hold a hearing that finally puts the rights of American workers first. Hold a hearing on overtime versus comp time versus compensation. Hold a hearing and finally agree that this country is facing a serious income inequality problem. We know this, and we must respect this, and we must respect the workers. I yield back the balance of my time. Chairman Walberg. I thank the gentlelady, and I certainly would concur with the fact that the FLSA has served its purpose in many cases over many years in a very positive way. And the grand old lady or gentleman that we want to call it, whatever gender we give to that legislation, it does need some updating. It needs to get into the real world of today. And yes, I am glad that today we had stories of American workers told. But I am also glad we had stories of employers-- American employers who provide opportunity for the American dream. And I think those two stories need to be told, but they need to coincide together in a way that is a continuity of that American dream that goes on. We will have tension. We always will. It is part of America. That is why we are the greatest country in the world and have provided the greatest opportunity for all men and women, all colors, creeds, et cetera, in the world. And we want that to continue. But we need to do it in the proper way, and we will have more hearings. We will look to more issues to, indeed, from my perspective, get government out of the way as much as possible to let the genius that is America and its people function. I would say that we have an agenda, we have priorities, but I maybe ought to hold back. But I am not; 2009, 2010 was a time when the majority party of those two years, the 111th Congress, if these were important issues, as important as they are being perceived today and spoken of today--minimum wage, income equality and all the rest, overtime hours--why weren't they dealt with during that time in Congress, when the minority party of today controlled both houses and the White House? If it was that important then, and it is that important now, why wasn't it taken care of then with proposals? And yet, we brought about legislation that mandated 30-hour full time that has caused significant problem to industries even seated at this table; 50-employee-level mandate for requirement of health care, which has caused extreme problems to our small businesses of today and a frustration of our economy moving forward. We don't want that to continue. Just two weeks ago I had the privilege, along with the Chairman and several members of the full Committee, in visiting Skype in Estonia--Tallinn, Estonia. I realized I was not a millennial at that time or anything younger than that. But a creative environment where they had a 24-hour food service--hot food service there, cafeteria available for their employees; where they had beanbags, if they wanted to take a nap they could do that. They had a sauna. For those of you that aren't Scandinavian, that is a sauna. They had a playroom. They had work stations without walls. And I felt very old there. And yet, Microsoft and Skype are doing creative things there that allows for flexibility, creativity, authenticity of the workforce in doing things to move the common agenda forward for that company--Google and others like that. But it is not just those companies. It is, as we heard, the food industry, the health care industry of both humans and animals, the brick and mortar manufacturing, sales forces, with the resources we have today that make it possible for you to do your work away from the workplace and do it well and still meet needs of the family concerns, of the individual concerns. And that is something we want to get right when we look at FLSA, to make sure it is not just good for now but it is good for a number of--maybe not 75 years, with the rapid increase that we have. So I think that is, again, why flexibility has to be there, so we will keep looking at it. I hope that Department of Labor has been listening today. I hope that they have heard real-world stories that have gone on. I hope they understand the creative tension that was even at the witness table today so that we don't do things that ultimately frustrate the movement forward not just for this country but for each individual in this country--the employee and the employer--so we can remain the standard for the world. Let me just point out finally in conclusion, a lot of statements were made about the Working Families Flexibility Act, H.R. 1406, specifically. Let me make it very clear: The decision to receive comp time is completely voluntary. Workers can withdraw from a comp time agreement whenever they choose. No worker can be intimidated, coerced, or forced to accept comp time instead of cash wages. All existing enforcement remedies, including action by the U.S. Department of Labor, are available to workers. Just make sure the facts of the legislation are clear. Having no more issues to come before the Committee at this time, I declare it adjourned. [Additional submissions by Chairman Walberg follow:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] [Whereupon, at 12:13 p.m., the subcommittee was adjourned.] [all]