[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]

                        REVIEWING THE RULES AND
                        REGULATIONS IMPLEMENTING



                               before the


                         COMMITTEE ON EDUCATION
                           AND THE WORKFORCE

                     U.S. House of Representatives


                             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


      Available via the World Wide Web: www.gpo.gov/fdsys/browse/
            Committee address: http://edworkforce.house.gov


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                    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


                    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

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 
        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


                        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.
    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 
    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 
    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:]
    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 
    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 
    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 
    Thank you, Mr. Chair.
    [The statement of Ms. Wilson follows:]
    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.
    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.
    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 
    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.

                      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 
    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:]
    Chairman Walberg. I thank you.
    Mr. Court, we recognize you for your five minutes of 

                    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 
    [The statement of Mr. Court follows:]
    Chairman Walberg. Thank you, Mr. Court.
    Now I recognize Mr. Harris for your testimony.

                  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 
    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 
    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:]


    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 


    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 
    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 
    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 
    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 
    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 
    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:]
    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 
    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 
    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 
    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 
    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 
    Mr. Court. That is correct. By then you have signed the 
    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 
    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 
    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 
    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 
    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.
    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 
    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 
    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 
    If we were to cover 90--excuse me--65 percent of the 
workers like they were back in 1975, what would that threshold 
    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. 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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:]
    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 
    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 
    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 
    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 
    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:]
    [Whereupon, at 12:13 p.m., the subcommittee was adjourned.]