[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]


                   FEDERAL WAGE AND HOUR POLICIES IN
                    THE TWENTY	FIRST CENTURY ECONOMY

=======================================================================

                                 HEARING

                               BEFORE THE

                 SUBCOMMITTEE ON WORKFORCE PROTECTIONS

                         COMMITTEE ON EDUCATION
                           AND THE WORKFORCE

                     U.S. House of Representatives

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

           HEARING HELD IN WASHINGTON, DC, FEBRUARY 16, 2017
           
                   
                               __________

                            Serial No. 115-6

                               __________

  Printed for the use of the Committee on Education and the Workforce
  
  
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                COMMITTEE ON EDUCATION AND THE WORKFORCE

               VIRGINIA FOXX, North Carolina, Chairwoman

Joe Wilson, South Carolina           Robert C. ``Bobby'' Scott, 
Duncan Hunter, California                Virginia
David P. Roe, Tennessee              Ranking Member
Glenn ``GT'' Thompson, Pennsylvania  Susan A. Davis, California
Tim Walberg, Michigan                Raul M. Grijalva, Arizona
Brett Guthrie, Kentucky              Joe Courtney, Connecticut
Todd Rokita, Indiana                 Marcia L. Fudge, Ohio
Lou Barletta, Pennsylvania           Jared Polis, Colorado
Luke Messer, Indiana                 Gregorio Kilili Camacho Sablan,
Bradley Byrne, Alabama                 Northern Mariana Islands
David Brat, Virginia                 Frederica S. Wilson, Florida
Glenn Grothman, Wisconsin            Suzanne Bonamici, Oregon
Steve Russell, Oklahoma              Mark Takano, California
Elise Stefanik, New York             Alma S. Adams, North Carolina
Rick W. Allen, Georgia               Mark DeSaulnier, California
Jason Lewis, Minnesota               Donald Norcross, New Jersey
Francis Rooney, Florida              Lisa Blunt Rochester, Delaware
Paul Mitchell, Michigan              Raja Krishnamoorthi, Illinois
Tom Garrett, Jr., Virginia           Carol Shea-Porter, New Hampshire
Lloyd K. Smucker, Pennsylvania       Adriano Espaillat, New York
A. Drew Ferguson, IV, Georgia

                      Brandon Renz, Staff Director
                 Denise Forte, Minority Staff Director
                                 ------                                

                 SUBCOMMITTEE ON WORKFORCE PROTECTIONS

                    BRADLEY BYRNE, Alabama, Chairman

Joe Wilson, South Carolina           Mark Takano, California,
Duncan Hunter, California              Ranking Member
David Brat, Virginia                 Raul M. Grijalva, Arizona
Glenn Grothman, Wisconsin            Alma S. Adams, North Carolina
Elise Stefanik, New York             Mark DeSaulnier, California
Francis Rooney, Florida              Donald Norcross, New Jersey
A. Drew Ferguson, IV, Georgia        Raja Krishnamoorthi, Illinois
                                     Carol Shea-Porter, New Hampshire
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on February 16, 2017................................     1

Statement of Members:
    Byrne, Hon. Bradley, Chairman, Subcommittee on Workforce 
      Protections................................................     1
        Prepared statement of....................................     4
    Takano, Hon. Mark, Ranking Member, Subcommittee on Workforce 
      Protections................................................     5
        Prepared statement of....................................     7

Statement of Witnesses:
    Brantley, Mr. Andy, President and CEO, College and University 
      Professional Association for Human Resources, Knoxville, TN    31
        Prepared statement of....................................    33
    Riner, Ms. Rhea L., President, Rhea Lana's Franchise Systems, 
      Inc., Conway, AR...........................................     9
        Prepared statement of....................................    12
    Stettner, Mr. Andrew, Senior Fellow, The Century Foundation..    19
        Prepared statement of....................................    21
    Walters, Ms. Christine, Sole Proprietor, Fivel Company, 
      Westminster, MD............................................    42
        Prepared statement of....................................    44

Additional Submissions:
    Adams, Hon. Alma S., a Representative in Congress from the 
      State of North Carolina:
        Letter dated February 16, 2017, from National Women's Law 
          Center.................................................    57
    Chairman Byrne:
        Letter dated February 15, 2017, from Associated Builders 
          and Contractors, Inc. (ABC)............................    94
        Prepared statement of the National Association of 
          Convenience Stores and the Society of Independent 
          Gasoline Marketers of America..........................    96
    DeSaulnier, Hon. Mark, a Representative in Congress from the 
      State of California:
        Letter dated February 14, 2017, from Business for a Fair 
          Minimum Wage...........................................    78
    Ms. Riner:
        Plaintiffs' Opposition to Defendant's Motion for Summary 
          Judgment and Cross-motion for Summary Judgment.........   129
    Shea-Porter, Hon. Carol, a Representative in Congress from 
      the State of New Hampshire:
        Letter dated February 16, 2017, from National Employment 
          Law Project............................................    64
    Mr. Takano:
        Letter dated February 13, 2017, from the American 
          Sustainable Business Council...........................    92
        Letter dated February 14, 2017, from Jobs With Justice...    83
        Letter dated February 15, 2017, from the National 
          Partnership for Women and Families.....................    89
        Letter dated February 16, 2017, from the Economic Policy 
          Institute..............................................    86

 
                   FEDERAL WAGE AND HOUR POLICIES IN
                    THE TWENTY-FIRST CENTURY ECONOMY
                    
                                ----------                              


                      Thursday, February 16, 2017

                     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 10:01 a.m., in 
room 2175, Rayburn House Office Building, Hon. Bradley Byrne 
[Chairman of the subcommittee] presiding.
    Present: Representatives Byrne, Grothman, Stefanik, Rooney, 
Takano, Adams, DeSaulnier, Norcross, Krishnamoorthi, and Shea-
Porter.
    Also present: Chairwoman Foxx and Ranking Member Scott.
    Staff Present: Bethany Aronhalt, Press Secretary; Courtney 
Butcher, Director of Member Services and Coalitions; Ed Gilroy, 
Director of Workforce Policy, Jessica Goodman, Legislative 
Assistant; Callie Harman, Legislative Assistant; Nancy Locke, 
Chief Clerk; John Martin, Professional Staff Member; Dominique 
McKay, Deputy Press Secretary; James Mullen, Director of 
Information Technology; Krisann Pearce, General Counsel; 
Brandon Renz, Staff Director; Molly McLaughlin Salmi, Deputy 
Director of Workforce Policy; Alissa Strawcutter, Deputy Clerk; 
Olivia Voslow, Staff Assistant; Joseph Wheeler, Professional 
Staff Member; Tylease Alli, Minority Clerk/Intern and Fellow 
Coordinator; Austin Barbera, Minority Press Assistant; Michael 
DeMale, Minority Labor Detailee; Nicole Fries, Minority Labor 
Policy Associate; Christine Godinez, Minority Staff Assistant; 
Eunice Ikene, Labor Policy Advisor; Kevin McDermott, Minority 
Senior Labor Policy Advisor; Richard Miller, Minority Senior 
Labor Policy Advisor; Udochi Onwubiko, Minority Labor Policy 
Counsel; Veronique Pluviose, Minority Civil Rights Counsel; and 
Elizabeth Watson, Minority Director of Labor Policy.
    Chairman Byrne. The subcommittee will come to order.
    Everybody will take their seats. A quorum is present. The 
subcommittee is in order.
    Good morning. Welcome to the first hearing of the Workforce 
Protections Subcommittee in the 115th Congress.
    Now, it says ``workforce protections.'' Let's make sure we 
know exactly what we're talking about. We are talking about the 
good, hardworking people of the United States of America. And 
so all of us on this Committee, that's our focus. And we 
appreciate everyone who's come to be with us today, and we 
appreciate the fine members of the subcommittee.
    I'd like to begin by introducing my Republican colleagues 
on the subcommittee for this Congress. Not all of them are here 
yet, but let me go ahead and introduce them.
    Representative Joe Wilson from South Carolina's Second 
District. Joe has served on the Committee for 16 years. He's 
also served in the Army Reserves and the South Carolina Army 
National Guard. I'm pleased to also serve with him on the House 
Armed Services Committee.
    Representative Duncan Hunter represents East and Northern 
County San Diego. Duncan, who I also serve with on Armed 
Services, served our country in the United States Marine Corps 
and has since been an advocate for national security here in 
the United States Congress.
    Representative Dave Brat from Virginia's Seventh District. 
Dave served as chairman of the economics department at 
Randolph-Macon College before joining us here in Congress.
    Representative Mike Bishop from Michigan's Eighth District. 
Mike previously served as Michigan's Senate majority leader and 
as a practicing lawyer.
    Representative Glenn Grothman from Wisconsin's Sixth 
District. Glenn previously served in the Wisconsin State Senate 
and has been an advocate for effective government oversight in 
Congress.
    Representative Elise Stefanik represents the North Country 
of New York. Elise and I work together on many priorities, 
given the fact that we share service on Armed Services 
together. She has been a very effective member of that body and 
of this body.
    One of our new members, Representative Francis Rooney, who 
I know is here, from Florida's 19th District. Francis served as 
U.S. Ambassador to the Holy See under President George W. Bush, 
and has worked in the construction industry, creating jobs, 
since 1984, including creating a few jobs in my district, which 
I appreciate.
    Representative Drew Ferguson from Georgia's Third District. 
Drew established a family dental practice before coming to 
Congress and is the former mayor of West Point, Georgia.
    Now, not on anybody's list but perhaps very importantly to 
all of us, we have with us the chair of our full Committee, Dr. 
Virginia Foxx. Dr. Foxx has been in Congress for a number of 
years. She and I served together on the Rules Committee. If you 
want to really get to know somebody, serve on the Rules 
Committee, because we spend a lot of time together. And she's 
been a very effective member of this Committee and has done a 
great job for us as Chairwoman of the Committee.
    I would also like to congratulate the Ranking Member, Mark 
Takano, on his selection to serve as the subcommittee senior 
Democrat. He and I have traveled before on CODELs. We've worked 
together on a number of things. And we had a little meeting the 
other day, but I want to reiterate that I am looking forward to 
working with you.
    There are important issues under this subcommittee's 
jurisdiction, and I know that we won't always agree on how to 
tackle those issues, but as I said after our meeting the other 
day with Mr. Takano, I want to emphasize my commitment to 
working together, finding common ground, and advancing the 
positive solutions that the American people deserve.
    In recent years, working families and small businesses have 
faced significant challenges as they struggle through the 
slowest economic recovery since the Great Depression. Since 
2009, the economy grew at an average annual pace of just 1-1/2 
percent. The net result is limited opportunity for hardworking 
men and women.
    In fact, the labor force participation rate has dropped to 
62.9 percent, nearly the lowest level in decades. Wage growth 
remains largely stagnant, as the average hourly earnings for 
today's worker is roughly the same as in 2009. Meanwhile, 7.6 
million Americans are searching for work, and nearly six 
million individuals are working part-time hours when what they 
really need are full-time jobs. We cannot accept this as the 
new normal.
    The American people have clearly spoken, and they expect 
their leaders in Washington to put the country on a better path 
and finally get our economy moving again, which means more and 
better paying jobs. That's why Republicans are committed to 
advancing a bold agenda that will remove barriers to job 
creation and empower more Americans to reach their full 
potential.
    As part of that effort, this subcommittee will examine the 
policies impacting the American workforce so we can assure that 
those policies support rather than hinder the ability of 
workers to succeed and employers to grow and hire. A key part 
of this effort will be robust oversight of the policies under 
our jurisdiction, and as Chairwoman Foxx has made clear, a 
commitment to holding the administration accountable for how it 
enforces the law.
    There is too much at stake for families and small 
businesses to leave any stone unturned, whether it's examining 
policies that are intended to promote safety and health in the 
workplace, holding Federal contractors accountable, or assuring 
wage determinations under the Davis-Bacon Act are done 
accurately and fairly.
    We have a lot of ground to cover in the coming months and, 
of course, an important part of our agenda, and the reason for 
today's hearing, will be taking a close look at a law that 
affects practically every workplace and every worker in this 
country: The Fair Labor Standards Act. The law was signed over 
80 years ago to address the challenges that existed during the 
Great Depression. It established important protections for 
workers, and it has served as the foundation of our Nation's 
wage and hour policies ever since.
    A lot has changed over those 80 years. For starters, things 
that are part of our daily life didn't even exist back then, 
smartphones, iPads, and the internet, just to name a few. 
Advancements in technology have led to virtual workplaces, 
entire new industries, and flexible, innovative work 
arrangements. Most recently, we've seen the rapid rise in the 
so-called ``sharing'' economy.
    The point is the American workforce has transformed 
dramatically, and the challenges facing workers and employers 
today are different than they were in the 1930s. However, our 
labor policies have failed to adapt. The rules and regulations 
surrounding the Fair Labor Standards Act are simply outdated. 
At the same time, small business owners are getting tied up in 
a complex regulatory maze that forces them to confront costly 
litigation and limits their ability to expand. It's clear our 
Nation's wage and hour rules were designed for another era and 
no longer reflect the realities of the twenty-first century 
workforce.
    That's why it is so disappointing that the previous 
administration missed an opportunity to streamline and 
modernize these important worker protections. Instead, the 
Obama administration spent its time and resources advancing an 
extreme and partisan overtime rule that would stifle workplace 
flexibility and limit opportunities for career advancement.
    I can tell you that small businesses in my district are 
breathing a sigh of relief that this fundamentally flawed rule 
was blocked by a Federal judge. Countless small business owners 
were worried that they would have to cut their employees' hours 
or even lay people off. Colleges, universities, and nonprofits 
were bracing for an especially devastating impact. As an 
example for my home State, the rule would have cost the 
University of Alabama System $17 million in just the first 
year, costs that would have likely been passed on to students 
in the form of higher tuition and fees, a topic that is very 
important to our full Committee.
    Fortunately, we have a new administration that understands 
how misguided regulations often hurt the very individuals 
they're intended to help. We also have a new Congress that's 
working to advance an agenda that will foster economic growth 
and deliver results for the American people. Bringing our 
Nation's wage and hour rules into the twenty-first century will 
be an important part of that conversation.
    I look forward to hearing from our witnesses, who can speak 
more to the challenges resulting from an outdated law and the 
need for positive reforms that will improve the lives of 
hardworking Americans.
    With that, I will now yield to the Ranking Member for his 
opening remarks.
    [The statement of Chairman Byrne follows:]

  Prepared Statement of Hon. Bradley Byrne, Chairman, Subcommittee on 
                         Workforce Protections

    In recent years, working families and small businesses have faced 
significant challenges as they've struggled through the slowest 
economic recovery since the Great Depression. Since 2009, the economy 
grew at an average annual pace of just 1.5 percent. The net result is 
limited opportunity for hardworking men and women.
    In fact, the labor force participation rate has dropped to 62.9 
percent--nearly the lowest level in decades. Wage growth remains 
largely stagnant, as the average hourly earnings for today's worker is 
roughly the same as in 2009. Meanwhile, 7.6 million Americans are 
searching for work, and nearly six million individuals are working 
part-time hours when what they really need are full-time jobs.
    We cannot accept this as the new normal. The American people have 
clearly spoken, and they expect their leaders in Washington to put the 
country on a better path and finally get the economy moving again, 
which means more and better paying jobs.
    That's why Republicans are committed to advancing a bold agenda 
that will remove barriers to job creation and empower more Americans to 
reach their full potential. As part of that effort, this subcommittee 
will examine the policies impacting America's workforce, and ensure 
those policies support, rather than hinder, the ability of workers to 
succeed and employers to grow and hire.
    A key part of this effort will be robust oversight of the policies 
under our jurisdiction, and as Chairwoman Foxx has made clear, a 
commitment to holding the administration accountable for how it 
enforces the law. There is too much at stake for families and small 
businesses to leave any stone unturned, whether it's examining policies 
that are intended to promote safe and healthy workplaces, holding 
federal contractors accountable, or ensuring wage determinations under 
the Davis-Bacon Act are done accurately and fairly.
    We have a lot of ground to cover in the coming months. And of 
course, an important part of our agenda--and the reason for today's 
hearing--will be taking a close look at a law that affects practically 
every workplace in the country: the Fair Labor Standards Act. The law 
was signed over eighty years ago to address the challenges that existed 
during the Great Depression. It established important protections for 
workers, and has served as the foundation of our nation's wage and hour 
policies ever since.
    A lot has changed in those eighty years. For starters, things that 
are part of our daily life didn't even exist back then--smartphones, 
iPads, and the internet, just to name a few. Advancements in technology 
have led to virtual workplaces, entire new industries, and
    flexible, innovative work arrangements. Most recently, we've seen 
the rapid rise in the so-called ``sharing'' economy.
    The point is the American workforce has transformed dramatically, 
and the challenges facing workers and employers today are different 
than they were in the 1930s. However, our labor policies have failed to 
adapt. The rules and regulations surrounding the Fair Labor Standards 
Act are simply outdated. At the same time, small business owners are 
getting tied up in a complex regulatory maze that forces them to 
confront costly litigation and limits their ability to expand.
    It is clear our nation's wage and hour rules were designed for 
another era and no longer reflect the realities of the 21st century 
workforce. That's why it's so disappointing that the previous 
administration missed an opportunity to streamline and modernize these 
important worker protections. Instead, the Obama administration spent 
its time and resources advancing an extreme and partisan overtime rule 
that would stifle workplace flexibility and limit opportunities for 
career advancement.
    I can tell you that small businesses in my district are breathing a 
sigh of relief that this fundamentally flawed rule was blocked by a 
federal judge. Countless small business owners were worried that they 
would have to cut their employees' hours or even lay people off. 
Colleges, universities, and non-profits were bracing for an especially 
devastating impact. As an example for my home state, the rule would 
have cost the University of Alabama System 17 million dollars in just 
the first year, costs that would have likely been passed on to students 
in the form of higher tuition and fees.
    Fortunately, we have a new administration that understands how 
misguided regulations often hurt the very individuals they're intended 
to help. We also have a new Congress that is working to advance an 
agenda that will foster economic growth and deliver results for the 
American people.
    Bringing our nation's wage and hour rules into the 21st century 
will be an important part of the conversation. I look forward to 
hearing from our witnesses who can speak more to the challenges 
resulting from an outdated law and the need for positive reforms that 
will improve the lives of hardworking Americans.
                                 ______
                                 
    Mr. Takano. Thank you, Chairman Byrne, and congratulations 
to you on your new position as chairman of this subcommittee. 
And I too want to express my full intention to work with you on 
areas where we can agree. Where there's common ground, we 
certainly should work together. But on areas where we disagree, 
we'll have to stand our ground. But let it be known that there 
is a spirit of comity between us, and look forward to--you are 
definitely indeed a gentleman of the south and a gentleman at 
that. So thank you.
    I would like to introduce the members of the--the 
Democratic members of the subcommittee, not all of whom are 
here.
    Raul Grijalva represents the Third District of Arizona. 
From 1974 to 1986, Mr. Grijalva served on the Tucson Unified 
School District Board--Tucson Unified School District Governing 
Board, including six years as chairman. In 1988, he was elected 
to the Pima County Board of Supervisors, where he served for 
the next 15 years.
    Alma Adams represents North Carolina's 12th District. She 
got her start serving on the Greensboro City Council as well 
as--excuse me. She started on the Greensboro City School Board 
as well as the Greensboro City Council. Before coming to 
Congress, she served a decade in the North Carolina House of 
Representatives, State House of Representatives.
    Mark DeSaulnier represents California's 11th District and 
is a veteran of California politics. He served on the Concord 
City Council from 1991 to 2006 and as mayor of Concord in 1993. 
He also served in the California State Assembly and State 
Senate.
    Donald Norcross, who is present with us, represents New 
Jersey's First District. His background as a member of the 
International Brotherhood of Electrical Workers, former 
president of the Southern New Jersey Building Trades Council, 
and president of the Southern New Jersey AFL-CIO Central Labor 
Council accords him a wealth of experience and knowledge that 
he can bring to the subcommittee. He served in both the New 
Jersey State Senate and Assembly before becoming a member of 
Congress.
    Raja Krishnamoorthi represents Illinois' Eighth District. 
He has previously held the positions both of Deputy State 
Treasurer and Special Assistant Attorney General for the State 
of Illinois.
    Carol Shea-Porter represents New Hampshire's First District 
and is returning to our Committee for her second tour of duty. 
During college, she worked in a factory. She also worked 
previously both as a social worker and community college 
professor.
    We look forward to working with our majority members on 
this subcommittee to find areas of common ground that allow us 
to move our Nation forward.
    And now, Mr. Chairman, I'll move on with my opening 
statement.
    I want to thank you again, Mr. Chairman. I do look forward 
to working with you to address the challenges facing America's 
workers. It is my hope that the work we do together in this 
subcommittee will ensure that the rules of our economy help 
American workers and businesses prosper together.
    Today's hearing is on wage and hour policy in the twenty-
first century workplace. In the past three Congresses, the 
majority has called eight hearings on wage and hour policies, 
but in those hearings we have not considered a single policy to 
raise the pay for millions of hardworking Americans who are 
struggling to make ends meet.
    If past is prologue, I expect we are going to hear from our 
friends in the majority today about the Fair Labor Standards 
Act and how it is stifling America's job creators. But before 
we launch into that discussion, I'd like to take a moment to 
step back and look at the facts.
    Over the past four decades, worker productivity has grown 
by more than 70 percent. You might think a rising tide would 
lift all boats, but it hasn't happened. Since 1979, wages for 
the top one percent have grown by 138 percent, while wages for 
the bottom 90 percent have grown by only 15 percent. Now, 
workers are more productive than ever, but it's been a long 
time since most Americans have gotten a raise. So tell me, who 
is being stifled?
    I wholeheartedly agree with the title of this hearing. We 
do need to update wage and hour policy for the twenty-first 
century. That should mean strengthening our wage and hour 
policies to ensure that hardworking Americans get a fair day's 
pay for a fair day's work.
    Too many Americans today can't afford to buy a home, send 
their children to college, or save for retirement. It should 
not be this way. American workers' productivity has led to 
tremendous economic growth; but, unfortunately, the rules are 
written so that the economy delivers only for those at the very 
top. Here in Congress, we have the power and the responsibility 
to fix that. However, despite our requests, last Congress, the 
majority did not hold a single hearing on what we can do to 
ensure that Americans in the middle and the bottom rungs of the 
economic ladder get a fair shake.
    They refused to raise the minimum wage and fought against 
the update to the overtime threshold, which would have put more 
pay in the pockets of millions of hardworking Americans. And 
the majority refused to bring the twenty-first century 
workplace in line with the needs of the twenty-first century 
workforce by adopting sensible solutions to prevent 
predictable--not prevent, to provide--to provide predictable 
schedules, paid sick days, and paid family leave, and finally 
guarantee equal pay for equal work, which are long overdue.
    These are the updates to our wage and hour policy that 
would make a real difference to hardworking Americans. There is 
simply no need to make the false choice between employer 
innovation and rules that make our economy fair for everyone. 
We can have both.
    There are plenty of examples of businesses that do very 
well while playing by the rules. In fact, treating workers 
fairly has been shown again and again to promote employee 
retention and productivity. I hope our witnesses today will 
help us explore the future of work that is both innovative and 
fairly rewards all hardworking Americans.
    Thank you, Mr. Chairman. I yield back the remainder of my 
time.
    [The statement of Mr. Takano follows:]

Prepared Statement of Hon. Mark Takano, Ranking Member, Subcommittee on 
                         Workforce Protections

    Thank you, Chairman Byrne. I look forward to working with you to 
address the challenges facing American workers. It is my hope that the 
work we do together in this subcommittee will ensure that the rules of 
our economy help American workers and businesses prosper together.
    Today's hearing is on wage and hour policy in the 21st century 
workplace. In the past three Congresses, the Majority has called eight 
hearing on wage and hour policies--but in those hearings we have not 
considered a single policy to raise the pay for millions of hardworking 
Americans who are struggling to make ends meet.
    If past is prologue, I expect we are going to hear from our friends 
in the Majority today that the Fair Labor Standards Act is stifling 
America's job creators.
    But before we launch into that discussion, I'd like to take a 
moment to step back and look at the facts. Over the past four decades 
worker productivity has grown by more than 70 percent.
    You might think a rising tide would lift all boats, but that hasn't 
happened. Since 1979, wages for the top 1 percent have grown by 138 
percent, while wages for the bottom 90 percent have grown by only 15 
percent.
    Workers are more productive than ever, but it's been a long time 
since most Americans have gotten a raise.
    So tell me, who is being stifled?
    I wholeheartedly agree with the title of this hearing - we need to 
update wage and hour policy for the 21st century. That should mean 
strengthening our wage and hour policies to ensure that hardworking 
Americans get a fair day's pay for a fair day's work.
    Too many Americans today can't afford to buy a home, send their 
children to college, or save for retirement. It should not be this way. 
American workers' productivity has led to tremendous economic growth. 
But unfortunately, the rules are written so that the economy delivers 
only for those at the very top. Here in Congress, we have the power - 
and a responsibility - to fix that.
    However, despite our requests, last Congress, the Majority did not 
hold a single hearing on what we can do to ensure that Americans in the 
middle and the bottom rungs of the economic ladder get a fair shake.
    They refused to raise the minimum wage and fought against the 
update to the overtime threshold - which would have put more pay into 
the pockets of millions of hardworking Americans. And the Majority 
refused to bring the 21st century workplace in line with the needs of 
the 21st century workforce by adopting sensible solutions to provide 
predictable schedules, paid sick days and paid family leave, and 
finally guarantee equal pay for equal work, which are long overdue.
    These are the updates to our wage and hour policy that would make a 
real difference to hardworking Americans.
    There is simply no need to make the false choice between employer 
innovation and rules that make our economy fair for everyone. We can 
have both. There are plenty of examples of businesses that do very well 
while playing by the rules. In fact, treating workers fairly has been 
shown again and again to promote employee retention and productivity.
    I hope our witnesses today will help us explore a future of work 
that is both innovative and fairly rewards all hardworking Americans.
    Thank you, Mr. Chairman. I yield back the remainder of my time.
                                 ______
                                 
    Chairman Byrne. Thank you, Mr. Takano.
    And we welcome all of the Democratic members to the 
subcommittee. Many of them I've worked with in the past.
    Mr. Krishnamoorthi, I know you're new to Congress, but 
you've already made quite an impact and we appreciate having 
you here.
    Mr. Krishnamoorthi. Thank you.
    Chairman Byrne. 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.
    And now, it's my pleasure to introduce today's witnesses.
    Ms. Rhea Lana Riner is president of Rhea Lana's Franchise 
Systems, Inc. She will testify on behalf of the International 
Franchise Association. Mr. Andrew Stettner is a senior fellow 
with The Century Foundation. Mr. Andy Brantley is president and 
chief executive officer of the College and University 
Professional Association for Human Resources. Ms. Christine 
Walters is an independent human resources and employment law 
consultant and sole proprietor of the FiveL Company. She will 
testify on behalf of the Society for Human Resource Management 
that years ago I used to be a member of. So welcome.
    I will now ask our witnesses to raise your right hand.
    Do you solemnly swear or affirm that the testimony you are 
about to give will be the truth, the whole truth, and nothing 
but the truth?
    Let the record reflect the witnesses answered in the 
affirmative.
    Okay. Before I recognize you, I need to go through the 
lighting system so you understand how it works. And I apologize 
for having to do this, but it helps things go if we do this.
    You each will have five minutes to present your testimony. 
When you begin, the light in front of you will turn green. When 
one minute is left, the light will turn yellow. When your time 
has expired, the light will turn red. At that point, I will ask 
you to wrap up your remarks as best you are able. After you 
have testified, members will each have five minutes to ask 
questions.
    Now, I don't intend to be heavy with the gavel, by the way. 
If you're getting close, I'm going to try to let you finish up, 
and try to do the best you can, because we really want to hear 
your testimony. And I certainly want to let the members have 
their full five minutes. And if we go over a little bit, that's 
okay, but let's try to stay within that.
    Okay. We're going to start with Ms. Riner. You're 
recognized for five minutes. Welcome.

TESTIMONY OF RHEA LANA RINER, PRESIDENT, RHEA LANA'S FRANCHISE 
    SYSTEMS, INC., CONWAY, AR, TESTIFYING ON BEHALF OF THE 
              INTERNATIONAL FRANCHISE ASSOCIATION

    Ms. Riner. Good morning, Chairman Byrne--and happy 
birthday, by the way--Ranking Member Takano. Congratulations to 
both of you on your first subcommittee hearings.
    And distinguished members of the subcommittee, my name is 
Rhea Lana Riner and I'm the CEO and founder of Rhea Lana, Inc., 
and Rhea Lana's Franchise Systems. Thank you for taking an 
interest in my story and my struggle to protect the rights of 
small business owners and moms like myself across the Nation. 
It is my privilege to testify on behalf of the International 
Franchise Association today.
    In 1997, I began my small business as a young mom after my 
husband changed careers. Like many people, I had a passion for 
fashion, but on a limited budget. We simply could not afford to 
dress our children as I hoped. I also knew many other moms who 
experienced the same challenge, so I came up with an idea that 
would help all of us.
    I invited a few friends to a small event in my living room 
to buy and sell our children's used clothing. From that humble 
beginning of moms working together, Rhea Lana's was born and 
grew. From the positive feedback, we quickly realized that 
there was an eager market among families of all kinds for 
gently used children's clothing. My heart went out to families 
with budget struggles, trying to provide high-quality items for 
their kids.
    The moms, grandmoms, and husbands who join together to host 
Rhea Lana's consignment events create a marketplace in which 
their families can participate, with Rhea Lana's acting as the 
facilitator. In so doing, we play a small role in helping these 
families succeed. Today, we have 80 franchises operating in 23 
States, and we look forward to continued growth.
    Unfortunately, after many years of running our consignment 
events, our business model is in peril because we have been 
drawn into an extended legal battle that is now in its sixth 
year. In the spring of 2011, Arkansas Department of Labor 
officials began investigating Rhea Lana's to determine if we 
were violating any laws by inviting moms to volunteer at our 
events. We cooperated fully and spent a ton of money in legal 
fees, but we received a favorable response from the State of 
Arkansas and thought the story was over.
    But then in January of 2013, we were contacted by the U.S. 
Department of Labor informing us that it was opening its own 
investigation into whether our volunteers were, in fact, 
employees. Our initial meeting with the DOL was held in Little 
Rock on February 28, 2013. Once again, we fully cooperated and 
we provided the DOL with contact information for ten moms who 
had participated as consigner volunteers. We assumed that once 
DOL spoke with these women and recognized that they were 
participating on a very limited basis for their own benefit, 
DOL would naturally determine that they should not be 
considered employees.
    Unfortunately, the question was not so easily settled. 
Instead, DOL officials requested all of our payroll records 
going back two years, submitted formal questions that required 
more legal assistance to respond, and they showed up at one of 
our events to conduct interviews. Every consigner volunteer 
interviewed assured them they voluntarily chose to participate 
in order to help their families and they expected no 
compensation for doing so.
    In spite of this, DOL determined that the moms should be 
considered employees. Incredibly, DOL even sent letters to our 
consigner volunteers suggesting they had the right to sue Rhea 
Lana's for backpay. None of our volunteers took such action 
against us, despite DOL's encouragement to sue us. But DOL 
officials would not be deterred. Without a formal hearing or 
other procedural safeguards, the DOL arbitrarily determined 
that Rhea Lana's had violated the Fair Labor Standards Act.
    In August 2013, the DOL sent us a determination letter 
citing legal provisions that our attorney estimated penalties 
could reach $3.6 million. Receiving this letter was terrifying. 
It was then I decided I had to fight back and we challenged the 
DOL in court. The DOL initially won in district court, arguing 
that we could not challenge the agency's determination because 
it was not a final agency action. However, in a ruling last 
June, the D.C. Circuit Court reversed and held that DOL's 
action could be challenged in court. The D.C. Circuit's ruling 
was the first positive step in 4-1/2 years of fighting to 
protect the future of my small business.
    So we're continuing to fight for a mother's right to use 
her personal time as she sees fit to help her family. And if we 
lose, Rhea Lana's will no longer be able to provide its 
valuable service to families in need.
    Meanwhile, the Department of Labor has also aggressively 
been trying to apply broader joint employment liability to all 
small businesses. Some have minimized the joint employment 
concerns of franchise business owners, but expanded joint 
employment liability means more operating costs, more legal 
costs, decreased value of business, less compliance assistance, 
and less growth for locally owned franchise businesses.
    Mr. Chairman, no one can assure any franchise business 
owner that their business may not unintentionally violate a 
broad liability standard that is based on indirect and even 
unexercised control. We need the new DOL to rescind the January 
2016 interpretation and return to the preexisting joint 
employment test. But we also need Congress to clarify a 
definition of employer that thinks better of the motivations of 
franchise business owners.
    Mr. Chairman, I never intended to be a businessperson, but 
I have been sincerely thankful for the opportunity to build and 
grow a business that helps so many families have what they 
otherwise could not afford, but we need Congress' help to 
achieve fairness in our ever-evolving economy.
    Thank you for your leadership on behalf of all small 
businesses, and I would be happy to answer any questions.
    [The statement of Ms. Riner follows:]
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    Chairman Byrne. Thank you, Ms. Riner.
    The chair now recognizes Mr. Stettner for five minutes.

   TESTIMONY OF ANDREW STETTNER, SENIOR FELLOW, THE CENTURY 
                  FOUNDATION, WASHINGTON, D.C.

    Mr. Stettner. Good morning, Chairman Byrne, Ranking Member 
Takano, and other members of the committee.
    I'm a senior fellow at The Century Foundation, an 
independent nonpartisan think tank with offices here in 
Washington and in New York City. Thank you for the opportunity 
to speak today to the Committee about the changing nature of 
the economy and the need to modernize our wage and hour laws.
    For decades, Americans have been afflicted by stagnating 
wages and a rise in low-wage work. Since 1976, as Mr. Takano 
said, workers have increased their productivity by 73.4 
percent, but hourly paychecks have only gone up by 11 percent.
    Next slide, please.
    The manufacturing sector has shrunk dramatically. In its 
place, working Americans have turned to what I call fast-
growing RASHH sectors of the economy. These RASHH jobs--retail, 
administrative, social assistance, hospitality, and health 
care--pay less than $15 per hour and offer less than 30 hours 
per week. The Fair Labor Standards Act could be a powerful 
lever against this crisis of wage stagnation.
    In the 1960s, the minimum wage was equivalent to half of 
the average weekly wage. Today, it is just a third. An increase 
in the minimum wage to $12 an hour, phased in by 2020, would 
provide raises of $2,300 per worker to 35 million working 
Americans. This increase too can eliminate the discriminatory 
subminimum wage for tip workers.
    Meanwhile, the number of workers guaranteed overtime rights 
with a salary threshold plummeted from 12.6 million protected 
in 1979 to 3.5 million by 2014. The rule promulgated by the 
Labor Department to restore the salary threshold would deliver 
raises of $1.2 billion and cement overtime protections for 13.1 
million workers. The rules would have had the added benefit of 
providing a bright-line test that distinguishes those salary 
workers eligible for overtime.
    Now, the Department of Labor only has 1,000 investigators 
to enforce the law at 7.3 million establishments. Targeted 
enforcement focuses on industries where research has surfaced 
high levels of violations where the changing economy makes 
certain groups more vulnerable. This is the only way for the 
Department of Labor to use its resources to recover significant 
amounts of unpaid wages while moving industry practices. Using 
these targeted methods, the Department of Labor increased the 
amount recovered per investigation from $785 per worker in 2009 
to $1,000 in 2016. But more must be done.
    The twentieth century economy was dominated by large firms 
who used traditional employment relationships to control every 
aspect of production. Now, the twenty-first century management 
model increasingly entails the main firm retaining only the 
most essential aspect of its identity and outsourcing all other 
functions. These fissured arrangements have allowed firms to 
absolve themselves of their employment law responsibilities. 
The rise in subcontracting, use of third-party administrators, 
franchising, and staffing firms leaves workers' heads spinning 
when they try to find out who is ultimately responsible for 
their pay.
    The Department of Labor's Administrator's Interpretation on 
joint employment went a long way to clarifying what courts have 
said repeatedly. Those joint employers who have economic 
control over employees must ensure that wage and hour laws are 
followed. This is already causing welcome change. For example, 
the Department of Labor and Subway agreed to a voluntary 
program of compliance education and software-based flagging of 
possible violations at their locations.
    Now, as many as 30 percent of all workers are misclassified 
as independent contractors, forfeiting their wage and hour 
rights. The reality is that employers have moved millions of 
Americans into 1099 status who should not, by law, be paid that 
way. Too often, workers are misclassified as independent 
contractors based on one element, such as owning their own 
tools, even though they are not in business for themselves. The 
Department of Labor's recent AI on worker misclassification was 
put in place to give employers numerous examples of such cases 
to avoid.
    Now, there is much talk about the need for workplace 
flexibility. I assert that the Fair Labor Standards Act is a 
very flexible piece of law already that can be adapted to 
innovations in business, including telecommuting and, yes, the 
gig economy, without sacrificing workers' rights.
    Now, in this context of the need for strengthened wage and 
hour enforcement, the nomination of Mr. Andrew Puzder for 
Secretary of Labor raised deep concerns about the future 
ability of the Department of Labor to implement much-needed 
wage and hour reform. Every past Republican nominee for 
Secretary of Labor pledged to Congress that they would uphold 
the unique mission of the Department of Labor to enforce the 
Fair Labor Standards Act, as well as 180 other laws entrusted 
to the Department. Whoever Mr. Trump picks to replace Mr. 
Puzder should share that same commitment to fundamental 
employment laws and the rights of all workers, regardless of 
race, gender, or immigration status.
    In conclusion, in order for tens of millions of additional 
workers across the country to share in our Nation's economic 
prosperity, Federal wage and hour laws need to be strengthened 
and vigorously enforced.
    Thank you for your attention.
    [The statement of Mr. Stettner follows:]
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    Chairman Byrne. Thank you, Mr. Stettner.
    Mr. Brantley, you are recognized for five minutes.

  TESTIMONY OF ANDY BRANTLEY, PRESIDENT AND CEO, COLLEGE AND 
   UNIVERSITY PROFESSIONAL ASSOCIATION FOR HUMAN RESOURCES, 
                         KNOXVILLE, TN

    Mr. Brantley. Good morning, Chairman Byrne, Ranking Member 
Takano, and distinguished members of the subcommittee. Thank 
you for holding the hearing today and for the opportunity to 
testify.
    CUPA-HR serves as the voice of higher education human 
resources, representing more than 22,000 human resources and 
other professionals on campus and almost 2,000 colleges and 
universities across the country. Higher ed employs over 3.9 
million employees with colleges and universities in all 50 
States.
    My testimony today will focus on higher ed's concerns with 
the Department of Labor's recent revisions to the FLSA, the 
overtime pay requirements, and our suggestions for moving 
forward. To say that these changes have been top of mind for 
higher education and higher education institutions would be an 
understatement. Before I explain why the overtime changes have 
garnered so much attention from higher ed, let me say that 
CUPA-HR and other higher education associations that advocated 
on this issue believe that an increase in the minimum salary 
threshold is due and that the DOL must update salary levels and 
regulations from time to time to ensure compliance and that the 
exemptions are not abused.
    The current salary threshold of $23,660 is overdue for a 
much-needed increase, but more than doubling the threshold to 
$47,476, as was proposed by President Obama's Department of 
Labor, would have had a tremendous negative impact for 
employers and employees across the country.
    As we outlined for the DOL, professionals in thousands of 
higher education positions that clearly met the duties test for 
exemption are paid less than $47,476. Positions that require 
bachelor's degrees and master's degrees, such as residence hall 
managers, academic advisors, mental health counselors, 
admissions counselors, financial aid counselors, student life 
professionals, alumni development professionals, and many 
athletics positions typically pay early and mid-career and 
sometimes even later career professionals annual salaries of 
less than $47,000 per year, particularly at smaller 
institutions in more rural parts of the country.
    Increasing the threshold by over 100 percent will increase 
annual expenses and lead to the reduction in services and 
positions. A quick sample from just 35 CUPA-HR member 
institutions estimated a cost of nearly $115 million to 
implement the rule in the first year alone. These institutions 
also shared with us that such an increase in expenses would 
trigger tuition hikes and reductions in services.
    When DOL issued the final rule, employers were just given 
six months to comply. Participation in our webinars that we 
held on this issue regarding the new regulations far surpassed 
any participation in CUPA-HR history. Also remarkable were the 
number of comments. For example, in just one webinar, over 400 
content questions on things that you would think most human 
resource professionals would know, but to add to the complexity 
of things like tracking time, salary calculations, comp time, 
part-time employees, and more.
    Although proponents of the rule argue that these changes 
could be made with the flip of a switch, the increased interest 
in our webinars, the extraordinary use of our resources that we 
created and the feedback that we received from across the 
country is evidence to the contrary.
    So what is a reasonable salary threshold? In a July 2015 
survey we conducted, the majority response shows a salary 
survey level of either $29,172, which, by the way, is the 
current level, adjusted for inflation, or $30,004, the salary 
level if the DOL applied the same formula used to update the 
salary threshold in 2004. Eighty-eight percent of the 
respondents indicated that a threshold over $40,352, which is 
the median of all wage and salary workers combined, would be 
too high. These salary levels were not picked randomly, but 
according to the notice of proposed rulemaking, the DOL 
actually considered these as part of their proposed update.
    Finally, while we are pleased with the court's injunction, 
the temporary injunction, it was issued just a few days before 
the December 1 implementation date. In an early December survey 
of our members, 28 percent had already implemented changes, 
while 71 percent either implemented some changes or delayed 
others or delayed all changes.
    As an example, one large public institution spent over a 
million dollars changing services, holding positions vacant, 
just to adjust their payroll cycle to move formerly exempt 
employees to nonexempt status. This institution is now facing 
significant challenges on working hours and services performed 
for those employees impacted.
    We need your help to create and implement a more reasonable 
salary threshold as quickly as possible.
    Mr. Chairman, thank you again for the opportunity to 
testify and offer CUPA-HR support for the Committee's focus on 
modernizing Federal wage and hour policies. I'll be happy to 
answer any questions from you or other members of the 
Committee. Thank you.
    [The statement of Mr. Brantley follows:] 
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    Chairman Byrne. Thank you, Mr. Brantley.
    Ms. Walters, you are recognized for five minutes.

TESTIMONY OF CHRISTINE WALTERS, SOLE PROPRIETOR, FIVEL COMPANY, 
WESTMINSTER, MD, TESTIFYING ON BEHALF OF THE SOCIETY FOR HUMAN 
                      RESOURCE MANAGEMENT

    Ms. Walters. Thank you.
    Good morning, Mr. Chairman, Ranking Member Takano, and 
Committee members. I am Christine Walters, sole proprietor of 
FiveL Company in Westminster, Maryland, where I serve as an 
independent human resources and employment law consultant. I'm 
appearing before you today on behalf of the Society for Human 
Resource Management, or SHRM, where I've been a member for 18 
years.
    I thank you for holding this hearing to examine Federal 
wage and hour policies under the FLSA. While this statute is a 
cornerstone of employment law, it is out of step with our 
modern technology-based economy, creating unnecessary 
regulatory burdens and hindering the ability of employers to be 
flexible and address contemporary employee needs. And let me 
explain just some of those challenges.
    Employers of all sizes work to classify employees correctly 
and remain in compliance with the FLSA. However, classification 
decisions for positions can be particularly challenging, 
because the statute includes both objective and subjective 
criteria. Therefore, an employer acting in good faith could 
mistakenly misclassify employees as exempt who, in reality, 
could be nonexempt or vice versa. Moreover, administrator's 
interpretations, or AIs, on both joint employment and employee 
versus independent contractor classification under the FLSA 
have contributed to this complexity.
    The AIs rely on a broad economic realities test, which is 
open to various interpretations and gives employers no 
objective criteria on which to rely. In order to provide more 
clarity, SHRM believes these AIs should be withdrawn and the 
Department of Labor should reinstate Department opinion letters 
as well as provide examples in regulatory text. Opinion letters 
and examples enable employers to understand the Department's 
view on how regulations might apply to their own actual and 
practical workplace situations.
    The stakes in improperly classifying employees are high. If 
an employer is determined to have misclassified employees, then 
the organization is required to award up to three years' 
backpay for overtime to those employees, plus attorneys' fees. 
That's why employers do work hard to ensure that employee 
classifications are in compliance with the FLSA. Many of the 
small businesses and nonprofits with whom I work have limited 
budgets and very tight margins, and so it's imperative that 
these organizations avoid lawsuits.
    Simply put, the FLSA has not kept pace with the realities 
of the twenty-first century workplace or its workforce. Today's 
modern technology allows many employers to perform job duties 
when and where they choose. And frankly, Mr. Chairman and 
Committee members, a growing number of employees have come to 
expect and enjoy that flexibility. For example, it's not 
uncommon for nonexempt employees to want to access online work 
platforms remotely after work hours. But because nonexempt 
employees must be paid for all hours worked, those hours must 
be closely tracked in order to remain in compliance with the 
FLSA. As a result, employers may implement policies to restrict 
the employees' ability to work from home because of the 
challenges associated with tracking.
    Additionally, the FLSA makes it very difficult for 
employers to offer nonexempt employees the flexibility of a 
biweekly workweek. Because employers are required to pay 
overtime for hours worked over 40 in a workweek, an employer's 
ability to offer employees the flexibility of, say, working 45 
hours in the first week of a pay period and then 35 hours in 
the second week, for a total of 80 hours in that pay period, is 
not an option without incurring overtime liability.
    Private sector employers are also prohibited under current 
law from offering nonexempt employees the option of paid time 
off or comp time in lieu of overtime pay for hours worked over 
40 in a workweek, even though public sector employees have 
enjoyed that flexibility for more than the last 30 years.
    Finally, let me turn to FLSA overtime regulations that were 
finalized in May of last year. SHRM continues to have serious 
concerns with the final overtime rule that, as we heard, more 
than doubled the salary threshold to over $47,000 and included 
automatic increases every three years. Throughout the 
rulemaking process, SHRM noted that a salary update was 
warranted, but a more than 100 percent increase was simply too 
much too fast and would curtail the workplace flexibility to 
which many employees have grown accustomed.
    Thankfully, the November 22 preliminary injunction brought 
relief to many employers who were inundated with questions and 
complaints from exempt employees about how the conversion would 
impact them. Going forward, SHRM believes the Trump 
administration should reexamine the overtime rule and utilize 
previous methodologies in a new rulemaking to determine a more 
reasonable salary threshold.
    In conclusion, Mr. Chairman and Committee members, because 
the FLSA was crafted for a different time, it must be 
reevaluated to ensure it still encourages employers to hire, 
grow, and better meet the needs of employees in this twenty-
first century workplace.
    So I thank you again for allowing me to participate in this 
important discussion, and I also welcome any questions. Thank 
you.
    [The statement of Ms. Walters follows:]
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    Chairman Byrne. Thank you, Ms. Walters. And I thank all of 
you. Those were great statements.
    We're now going to go to the question part of this 
proceeding, and we will start with a question from our 
distinguished Chairwoman, Ms. Foxx.
    Ms. Foxx. Thank you, Mr. Chairman.
    And I want to thank all of our witnesses here today. You've 
made some wonderful comments and shared very useful information 
with us, and I want you to know I appreciate your being here.
    Mr. Brantley, I'd like to know a little bit more about the 
kinds of employees at institutions of higher education who 
would be affected by implementation of the overtime rule. 
Actually, I think I know something about it, having worked in 
an institution of higher--several institutions of higher 
education, but some others may not.
    You mentioned resident directors in your written testimony 
as particularly unsuited to classification as hourly workers. 
Would you elaborate a little bit on that, and how would the 
services they provide to the students be negatively affected?
    Mr. Brantley. Thank you, Chairwoman Foxx. So most of us in 
this room have spent some time on a college campus, and as all 
of us know, the students don't exactly work on an 8 to 5 
schedule. So as we think about the services that are provided 
to these students 24/7/365, no position is more impacted than a 
position like a resident director, who typically has a master's 
degree, may supervise a number of graduate assistants, a number 
of resident assistants, maintenance staff, office staff, et 
cetera. This person typically has an apartment or some other 
residence that's with the students, the idea being that this 
person has that integral connection to the students outside of 
the classroom.
    If we implement the new regulations with a salary threshold 
of $47,476, the majority of our resident directors are paid a 
salary below that. One of the challenges with the current 
regulation is it doesn't include room and board, so all of that 
cannot be included as part of the compensation for our resident 
directors.
    Also, as we encourage these individuals to have to track 
hours, is a casual conversation in the hallway with a student 
working hours? Is having a meal with students in the residence 
hall or in the dining room, is that working hours? The 
complexity is there. Asking these individuals to track their 
hours is all but impossible.
    Ms. Foxx. Thank you very much.
    Ms. Riner, as you've testified, entrepreneurs like yourself 
are being impacted by costly regulatory requirements. Time and 
resources have gone into ensuring compliance with regulatory 
requirements instead of growing businesses and creating jobs. 
Would you reflect on that a little bit more for us and for the 
folks listening?
    Ms. Riner. Yes, Chairwoman Foxx. My own personal journey 
has been very discouraging, quite honestly. I have been trying 
to protect my business from the Department of Labor's 
regulations that they have applied to me. We believe it's 
been--they used the wrong standards in the Fair Labor Standards 
Act. And they actually used the independent contractor test, 
which, actually, they should have used the precedent set forth 
in the Supreme Court, which says that you look at the economic 
reality of the situation and we use our common sense to look at 
the whole work activity.
    So it has been very discouraging for me personally. It has 
hurt our ability to create business opportunities for our 
franchise owners. It's been a big distraction. It's cost us a 
lot of time and money. I'm a small business owner. I have three 
full-time employees in my office, also some part time. And so 
it's been quite a burden to bear to continue to operate our 
business and continue to grow.
    Ms. Foxx. We understand that your attorney has estimated 
the penalties for repeated or willful violations could reach 
$3.6 million for your small business. Is that correct?
    Ms. Riner. Yes, ma'am, that is correct. And it was a 
terrifying number to receive, quite actually. It would put us 
out of business. And so it has been worth fighting for, though, 
not only for my business, but for moms who I represent. I 
represent thousands of families, not only in Arkansas but 
across the country, who love our consignment events. It saves 
families a lot of money. And also, just small business owners. 
Honestly, I hear a lot of stories of small business owners that 
are experiencing this overregulation to the point of being put 
out of business, because a lot of them can't fight back.
    Ms. Foxx. Well, bless you for exercising your civic 
responsibility in doing what you have done. And let's hope we 
can see some changes so that small business people like you 
will not be harassed by bureaucrats with too much time on their 
hands. Thank you very much.
    I yield back.
    Chairman Byrne. Thank you, Chairwoman Foxx. She yields 
back.
    Mr. Takano, you're recognized for five minutes.
    Mr. Takano. Thank you, Mr. Chairman.
    It's curious to me that several witnesses and some of my 
Republican colleagues have said that the Fair Labor Standards 
Act is an outdated law from the 1930s that needs to be updated 
to reflect the modern workforce.
    To me, it's no surprise, Mr. Stettner, that--well, I 
strongly supported the administration's updated overtime rule, 
but I want to make sure the Committee has an understanding of 
why an update to the salary threshold was long overdue.
    What was the original purpose of the maximum hour provision 
in the Fair Labor Standards Act? Can you just review that for 
us?
    Mr. Stettner. First, to create more jobs. When you limit to 
40 hours, rather than having so much overtime, you can create 
more jobs. Second, to allow for the balance between work and 
family. And third, to protect the workers' health.
    Mr. Takano. So basically, when someone has to be paid 
overtime at time and a half or whatever, the employer has a 
choice: Do I pay this person overtime or do I hire another 
person to do that job?
    Mr. Stettner. That's correct.
    Mr. Takano. That was the intent behind the law, was that, 
you know, you legally mandate that they get paid more for 
overtime, and then the employer has to decide whether that 
employee is--you know, it's worth it to that employer to keep 
that employee on the job longer or hire someone else. 
Obviously, it will create more jobs if we have a standard.
    Mr. Stettner. That's correct. And I think it was during the 
Great Depression when there was a need for more employment. So 
let's put this into place. And I think that was the same hoped 
effect of the overtime--the new overtime rule was to, you know, 
inspire more employment.
    Mr. Takano. So, you know, it's fair to say that, you know--
so it's my understanding that the threshold used to be updated 
quite frequently, once every two to nine years between 1938 and 
1975. But it's only been updated twice since 1975. Do you think 
that Congress envisioned only two updates to that threshold in 
40 years?
    Mr. Stettner. No. The idea was for it to keep pace with 
only those employees to be exempted that are truly bona fide 
executive, administrative, and professional employees. To date, 
having a salary threshold of just $23,000, by any means and 
common sense, does not include individuals that are bona fide 
administratives and executives.
    Mr. Takano. So administrators and executives, we have kind 
of tests to figure out and determine who those folks are, truly 
people who are managers, not people who are called managers who 
are actually doing, you know, work, so that we can tell the 
difference between somebody who's a manager and someone who's a 
line worker.
    What effect, in your opinion, has that long delay had on 
the threshold's ability to accomplish the purpose of the FLSA?
    Mr. Stettner. I think the effect has been that many 
workers, particularly our young workers, aren't even familiar 
with the concept that they have a right to be paid time and a 
half. It's been so eroded that the overtime protections really 
have lost their value in the economy.
    Mr. Takano. You mean to tell me, Mr. Stettner, that there's 
a whole generation of Americans out there, millennials, who 
don't know that they have a right to overtime pay?
    Mr. Stettner. Often they're told in their very first job, 
you're on a salary, you're being paid $28,000 per year, and 
you're not eligible for overtime. So it's just not a reality. 
The salary designation is used to avoid people's right to 
overtime, and it's created a generation of overworked 
Americans.
    Mr. Takano. My God, if I were a millennial or part of this 
whole group of people that wasn't aware of this, because the 
law was not updated and I never felt the benefit of this 
updated threshold, I would begin to think that the economy was 
rigged against me. That the rules not being enforced meant that 
I as a little worker, that the rules somehow not being 
enforced, I mean, now that I'm awakened and know that, hey, 
this law has not--the threshold hasn't been updated, that the 
Obama administration was really trying to unrig this rigged 
economy that's rigged against the wage earner or, actually, in 
this case a salaried worker who, you know, doesn't meet that 
threshold anymore.
    So, to me, enforcing the FLSA and regularly updating the 
law would have meant that many, many people, workers would have 
felt the benefit of being protected by these overtime 
protections.
    The last update to the salary came in 2004. Do you believe, 
Mr. Stettner, that the 2004 update brought the salary threshold 
back to its intended level?
    Mr. Stettner. It was far below what had been in 1979, the 
last time it had been significantly updated. So that the update 
that was promulgated and is now enjoined really is getting 
towards the previous purchasing power of that update. It's by 
no means the maximum. The level has actually been much higher 
in the past. And really importantly, one of the policies that 
we really can do to help those middle income earners who are 
having the hardest struggle.
    Mr. Takano. Well, thank you, Mr. Stettner. My time has run 
out, and I appreciate your responses. Thank you.
    Chairman Byrne. Thank you, Mr. Takano.
    I now recognize myself for five minutes.
    I'm going to give you a test like you had in college. It's 
going to be a one-word response and it's one of two words, 
agree or disagree. Okay. Listen to the statement and tell me if 
you agree or disagree with this.
    Many of us have argued over the years that the rules and 
regulations implementing Federal wage and hour protections are 
outdated and overly complex and, as a result, undermine the 
strength and competitiveness of the American workforce.
    Ms. Riner, agree or disagree?
    Ms. Riner. Agree.
    Chairman Byrne. Mr. Stettner, agree or disagree?
    Mr. Stettner. Disagree.
    Chairman Byrne. Okay. Mr. Brantley, agree or disagree?
    Mr. Brantley. Agree.
    Chairman Byrne. Ms. Walters?
    Ms. Walters. Agree.
    Chairman Byrne. Okay. See, you all did well. You did well 
in college.
    Ms. Riner, I understand legislation was introduced last 
week in the House and Senate to amend the Fair Labor Standards 
Act to clarify that volunteers of certain children's 
consignment events are not employees under the law. Do you 
believe legislation is necessary to provide your business with 
the certainty it needs to operate without the threat of 
litigation going forward?
    Ms. Riner. I do, Chairman. We're very thankful to Senator 
Boozman, Senator Cotton, and Congressman Hill for reintroducing 
the Children's Consignment Event Recognition Act for us. And 
we're very grateful for it.
    We do have a case going on in court right now that we're 
battling, but we feel that for long term, we really do need the 
protection for the industry. It's been growing. This industry 
has been around, actually, for 30 years, and it's serving 
thousands of families. And we feel that in order to protect 
what we do and what families love, that we do need this 
legislation in place.
    Chairman Byrne. When you had your meetings with the people 
with the Wage and Hour Division, did you tell them, this is 
going to put me out of business?
    Ms. Riner. Well, no. Well, I did say that I felt like it 
was unfair.
    Chairman Byrne. What did they say when you said it's 
unfair?
    Ms. Riner. That I needed a lobbying group.
    Chairman Byrne. A lobbying group?
    Ms. Riner. They asked me if I had one, actually.
    Chairman Byrne. So let me get this straight. A Federal 
agency recommended that you get a lobbyist?
    Ms. Riner. Well, they just asked if I had support. And at 
the time, it was myself. And so I realized that if I wanted to 
protect my business and protect the industry, that I really had 
no choice but to fight.
    Chairman Byrne. Ms. Walters, can you talk more about the 
burdens that small businesses face in trying to ensure that 
they have properly classified their workers?
    Ms. Walters. I think I can, Mr. Chairman. How many minutes 
do I have?
    Chairman Byrne. A minute and a half.
    Ms. Walters. Gosh, burdens come from a variety of 
perspectives. First is, as some folks have mentioned here 
today, just getting the initial classification of whether 
someone is an independent contractor versus an employee is 
tantamount and preliminary. We have IRS guidance, Department of 
Labor's Administrative Interpretation. And many States--I hale 
from Maryland. Our Department of Labor, Licensing, and 
Regulation doesn't follow either of those. They use their own 
test.
    Then next, trying to, again, properly classify as exempt or 
nonexempt. We have at least 14 States today, I believe, that 
have their own white-collar or EAP regulations. So you have to 
do that analysis under Federal as well as State analyses. And 
hopefully, if you get that right, then there are myriad, under 
the FLSA, challenges of compliance with regard to travel time, 
idle time, training time. Then we have State laws of sick pay 
and just a whole lot of compliance issues when it comes to 
properly classifying in the first place and paying in the 
second place.
    Chairman Byrne. And most of these small businesses don't 
have a designated single person that just does human resources 
for them. They can't afford to have that. Is that your 
experience?
    Ms. Walters. That's what I find, yes, sir. It's sort of the 
office manager, payroll clerk, HR administrator, and perhaps 
several other hats.
    Chairman Byrne. So that person has to pull away from their 
other duties--first of all, understand this ever-changing law 
that gets more complex by the day, and then figure out, all 
right, how do I apply that in my workplace setting? That's got 
to detract from productivity at that company and their ability 
to grow.
    Ms. Walters. It likely does not enhance it, yes, sir.
    Chairman Byrne. Mr. Brantley, very quickly, the 
Department's overtime rule has a provision that indexes the 
salary threshold for exempt employers, which will likely 
increase the threshold every three years. In your judgment, 
does the Department of Labor have the statutory authority to 
index the threshold, and what practical problems would 
automatic updates cause for colleges and universities?
    Mr. Brantley. Our opinion is that they do not have the 
authority to index and make changes every three years. As we 
think about the changes that are going on in not just the 
economy but for employers overall, we really strongly believe 
that any change to the threshold should be vetted and that we 
should be given the opportunity to provide comment and feedback 
as to what that impact might be for not just colleges and 
universities but employers overall.
    Chairman Byrne. Very quickly, because we're actually out of 
time, but give me just real quick, what would be the effect on 
colleges and universities if we continue to do that?
    Mr. Brantley. The effect on colleges and universities with 
tight budgets and decreasing funding from public institutions, 
et cetera, could mean additional funds that are just not 
available to dedicate to a salary threshold that really is not 
applicable in most circumstances.
    Chairman Byrne. Thank you.
    I now would turn over for five minutes to the distinguished 
lady from North Carolina and my cochair of the HBCU Caucus, Ms. 
Adams.
    Ms. Adams. Thank you, Chairman Byrne and Ranking Member 
Takano.
    And thanks to our witnesses for--thank you for your 
testimony today.
    Women make up half of the country's workforce, yet the 
Census Bureau reported that the gender wage gap between full-
time year-round working men and women, women make only 80 
percent of the median wage men earn. While working women may 
have had great strides since 1967, when they earned only 58 
percent of what men earned for full-time year-round work, 
there's still a long way to go before true pay equity is 
achieved.
    Mr. Chair, I'd like to enter into the record a letter from 
the nonpartisan National Women's Law Council, which details the 
challenges that women face in the workplace.
    Chairman Byrne. Without objection, so ordered.
    [The information follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Ms. Adams. Thank you.
    According to a study by the National Women's Law Center, 
African-American women typically are paid only 63 percent, 
Native American women only 58 percent, and Latinas only 54 
percent of the wages typically paid to white non-Hispanic men 
for full-time year-round work. Researchers cite conscious and 
unconscious stereotypes about working women and the 
overrepresentation of women in low-wage jobs, including minimum 
wage and subminimum wage positions, and underrepresentation in 
high-wage ones. Nearly two-thirds of minimum wage workers and 
tipped workers in the United States are women.
    Congress should introduce and pass the Paycheck Fairness 
Act, a commonsense solution that would help employees to 
uncover and challenge pay discrimination, prohibit retaliation 
against employees who discuss their salaries, improve remedies 
for employees who have been discriminated against, ensure 
employees are provided with effective incentives to comply with 
the law, and to ensure equal pay.
    Ms. Adams. In addition to an increase in minimum wage, 
legislators should prevent prospective employers from asking 
applicants to disclose their prior salary on a job application, 
as it often perpetuates prior discrimination and it compounds 
gender and racial wage gaps.
    Mr. Stettner, as more and more women participate in the 
workforce as either primary breadwinners or supplements to 
their family's income, what are the income impacts of 
systematically low wages for women? And what are some 
initiatives that Congress should support to reduce or eliminate 
pay disparities among women and individuals of color?
    Mr. Stettner. Women and people of color are 
disproportionately impacted by the growth in the low-wage 
service sector and would be more likely--are the predominant 
beneficiaries of an increase in the minimum wage.
    As the Congresswoman mentioned, strengthening the ability 
of women to be able to assert the right to equal pay, having 
the same rights around discrimination that there are in race-
based cases, and the nondisclosure of salaries--these are all 
steps that can be taken to decrease the gender and racial pay 
gap.
    Ms. Adams. Thank you.
    So do you support protections for workers who choose to 
disclose and discuss their salaries with coworkers? And if so, 
can you explain why?
    Mr. Stettner. In order to defend your right to equal pay, 
you need to know what your colleagues are working. And many 
firms have kept that data away from other employees, and this 
makes it impossible for women workers to assert their rights.
    Ms. Adams. Thank you very much for your responses.
    And, Mr. Chairman, I yield my time back. Thank you.
    Chairman Byrne. Thank you.
    And the chair now recognizes for five minutes Ambassador 
Rooney.
    Mr. Rooney. Thank you, Mr. Chairman.
    Ms. Riner, your heart-moving story of bureaucratic abuse 
reminds me of something President Ford said years ago, where he 
said a government that's big enough to give you everything you 
want is big enough to take away everything you have. And it 
sounds like the Department of Labor has tried assiduously to do 
that to you.
    I'm moved by that, and I wonder if you could just give a 
quick comment on what that out-of-control, abusive bureaucracy 
says about America right now and whether the word 
``opportunity'' still exists for us average Americans trying to 
build up a great country.
    Ms. Riner. Well, you know, I grew up the daughter of an 
infantry Army officer. I love our government, I love our 
country. And so I was very surprised as this process rolled out 
with me. We were very cooperative with the Department of Labor. 
And so I will tell you that it has been very disheartening and 
discouraging, personally, to me and to my family, to my 
franchise owners. A franchising system is really like a family, 
and so, as they have watched me walk through this and try to 
protect our company, it has been very disappointing and 
discouraging.
    And, you know, also, as we have the issue of joint 
employer, that's a whole other battle that we're fighting that 
we're discouraged about. It really creates confusion and, 
again, discouragement, because it creates this confusing 
liability for a franchisor, as we potentially could be 
responsible for all of the employees of our franchisees--in my 
case, even my consignor volunteers.
    So it has been discouraging, but it also, in some ways, has 
been encouraging. As I have fought, so many people have come 
along beside us and encouraged us and supported us. Still no 
one has ever complained against our company. Thousands and 
thousands of families love our business model. Many moms and 
grandmoms and dads love what we do.
    Mr. Rooney. Thank you very much.
    Ms. Walters, we have 20,000 unfilled computer programming 
jobs in the State of Florida right now. This law, the FLSA, was 
passed in 1938 in an era of surplus labor, manufacturing and 
farm economy where people didn't move. And now we have, in 
2016, scarcity of labor, rapidly mobile employment base, and a 
service economy.
    So I'd like you to elaborate just a tad bit on that last 
comment you made about how obsolete and backward-looking the 
FLSA is relative to the conditions that we face now and that 
our young people are going to face in the future.
    Ms. Walters. Well, thank you for the question.
    I think an example that comes to mind is we have a lot of 
employees that, again, enjoy the flexibility that they have 
today to work from home, telecommuters--great example--and how 
do we track the time that they are or are not working. We need 
to track it. They need to be paid. I think we all agree with 
that. If you provide work for us, we need to pay you for that 
time. The question is how do we capture that information.
    In real life, an employer has a large percentage of their 
employee population work from home. Other employees coming into 
work every day is a more traditional model. And research shows 
employee engagement increases productivity. We've talked about 
increased productivity. Face-to-face interaction with our 
employees is very important.
    So the employer asked the telecommuters, ``Would you come 
into the office once a week so we can have a team meeting and 
stay in touch?'' Those employees said they want to be paid for 
the time that they traveled from their home office to the 
regular office. The other employees said, ``Well, that's not 
fair. We don't get paid for that time. Portal-to-Portal Pay 
Act. We get paid only after we arrive at the first office.'' 
And so the regulations currently are not clear whether that 
time should be paid or should not be paid.
    So there's a lot of dialogue I think we can have, should 
have, and need to have to figure out how to strike a really, 
really good balance on this.
    Mr. Rooney. Thank you.
    I yield back my time.
    Chairman Byrne. Thank you, Ambassador.
    Ms. Shea-Porter, welcome to the subcommittee. And you are 
recognized for five minutes.
    Ms. Shea-Porter. Thank you very much. It's an honor to be 
back.
    And I thank all the witnesses today.
    Enforcement in industries with high rates of violations is 
an efficient use of the Department's resources and ensures that 
workers who do not have the resources to bring a claim are 
protected.
    Mr. Chair, I'd like to enter into the record a letter from 
the nonpartisan National Employment Law Project.
    Chairman Byrne. Without objection, so ordered.
    Ms. Shea-Porter. Thank you.
    [The information follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Ms. Shea-Porter. As this letter explains, during the Obama 
administration, Department of Labor directed its Wage and Hour 
enforcement investigations towards industries with vulnerable 
workers. These industries include hotel and motel work, 
agriculture, janitorial services, garment manufacturing, and 
the restaurant industry.
    And I'd like to stop for a second and say that I worked in 
many, many restaurants through high school and college, and I 
can assure you that we did not receive proper wages in so many 
of those places, and we didn't get our breaks either. So this 
does happen, and that's why we need to be vigilant. I recognize 
that sometimes, you know, there's overstepping, but we do have 
a problem, and there are a large number of people in this 
country who suffer because of this.
    This is especially critical for workers who may be afraid 
to come forward or may not know. The Department of Labor 
successfully rescued over $1.5 billion in back wages for 17 
million workers between 2009 and 2015. In fiscal year 2015 
alone, the Wage and Hour Division investigations resulted in 
more than $246 million in back wages and helped over 240,000 
workers. And we're talking about workers who really must have 
this income to take care of themselves and their families.
    Under the Obama administration, the average back-wage 
recovery per worker increased from $785 in fiscal year 2009 to 
$1,000 per worker in fiscal year 2015. And over 51 percent of 
those rescued wages were returned to 16,902 working families in 
the retail fast-food industry. Yet these recoveries are only a 
fraction of the estimated $3 billion lost annually by workers 
due to wage theft.
    Since the New Deal, the Department of Labor has challenged 
itself to foster, promote, and develop the welfare of the wage 
earners, job seekers, and retirees of United States, improve 
working conditions, advance opportunities for profitable 
employment, and ensure work-related benefits and gains.
    So, Mr. Stettner, my questions are for you. What does 
strategic enforcement by the Department of Labor mean to 
workers?
    Mr. Stettner. Thank you, Ms. Porter.
    What it means is that we're focusing not just on the 
minuscule number of workers that the Department can reach but 
really trying to change those industry practices. In fact, 
there's research that documents it works. If there's one 
investigation against a fast-food restaurant in a ZIP code, 
compliance increases at all the neighboring restaurants.
    So that's the idea, to shift industry practices and make 
sure that all Americans get the pay that they deserve.
    Ms. Shea-Porter. Thank you.
    And do you believe that the Department of Labor's 
enforcement agencies are adequately staffed, given the millions 
of employers in workplaces around the country?
    Mr. Stettner. No. They're woefully understaffed.
    Ms. Shea-Porter. And one last question: Throughout the 
previous administration, we saw the Wage and Hour Division 
focus enforcement on low-wage industries. Can you talk about 
why that practice is important?
    Mr. Stettner. So wage and hour violations are not equally 
distributed. They're really concentrated in some of the 
industries you mentioned: fast food, agricultural, janitorial 
services. Unfortunately, many of the businesses in this sector, 
part of their business model is keeping labor costs so low that 
they routinely break the law. We need to change that practice.
    And, in fact, if there are minuscule price increases that 
happened on your burger, that would be worth it to make sure 
that the working families that work there get a fair pay.
    Ms. Shea-Porter. Thank you.
    I think a lot of people don't realize, because they didn't 
work in an industry like that, that there is a lot of 
difficulty, that they bring workers in and they make the 
effort, they pay the bus fare or whatever it is to get there, 
the gasoline, and then they're told they're not needed or come 
back in three hours. And these are working conditions that a 
lot of us would not accept. So I want to thank you for 
highlighting this.
    And I yield back.
    Chairman Byrne. Thank you.
    The gentlewoman yields back.
    The gentleman from Wisconsin, Mr. Grothman, is recognized 
for five minutes.
    Mr. Grothman. Ms. Walters, I wanted to talk to you a little 
bit more about the overtime rule that caused the workers who 
were previously exempt from overtime to be included in 
overtime.
    I always like to repeat a story. A buddy of mine back home, 
his daughter got a job, probably earning in this--you know, 
under this amount. He told her, always be the first one at work 
in the morning and the last one to go home at night. You know, 
be a hard worker and you're going to move up, and she was a 
hard worker and moved up.
    What impact would this have on your business or the 
businesses that you advise, I guess, if some employee wanted to 
work extra hard and really, you know, go all out?
    Ms. Walters. So if the employee--and I think many, many 
employees want to work extra hard. The question is, what does 
that get you? So if we're talking about more money, that may 
not be the result. Even the Department of Labor, when the final 
regulations came out, the DOL provided examples where an 
employer could prohibit overtime and might not do that--
    Mr. Grothman. As a practical matter, you'd get in trouble 
with your boss for working hard, wouldn't you?
    Ms. Walters. I'm sorry. Say again?
    Mr. Grothman. If you define working hard as putting in 
another half-hour at the end of the day or do something extra, 
you'd get in trouble with your boss because they would have to 
pay you more, right?
    Ms. Walters. Well, if you're nonexempt, then, yes, the 
employer has to pay for that time.
    Mr. Grothman. Right, right, right. Okay. So it would be a 
problem.
    I think in some jobs you can be in a position--usually, I 
think of a salaried job--in which you're supposed to complete 
something by the end of the day, maybe complete a report or 
something. Well, what if at the end of the day you don't feel 
you've done a good job on the report? Aren't you kind of stuck 
in a situation where either you have to turn in a not-very-good 
report or hang around an extra hour if you want and finish 
things?
    What would you do if you were an employee and it's five 
o'clock and you'd like to spiff this up a little bit more or do 
a little bit of work? You know, so you could either turn in the 
report, which you don't think is adequate, at 5:00 or hang 
around at 5:30 and get in trouble with your boss because 
they've got to pay for you for a half-hour of overtime. What 
would you do in that position?
    Ms. Walters. You know, it's interesting. We often find the 
stories, I often hear it's the star employee, it's the star 
performer who says, ``No, no, no, I don't mind, I'll do this 
extra work without pay.'' And you can't. Obviously, we've said 
an employer has to pay for that time.
    So what would I do? I'd have to talk to my boss and say, do 
you want my quality or do you want my time? And then we figure 
it out from there.
    Mr. Grothman. I like the rule was put together by somebody 
who likes to golf all the time. Yeah.
    Okay. Next question. Mr. Brantley, can you give us any 
suggestions--you spoke about the overtime rule--any other 
suggestions you have for changes in the wage-and-hour policy?
    Mr. Brantley. Absolutely. One of the key challenges with 
the policy as currently constructed relates to how we 
characterize part-time employment.
    So let's take the example of an accountant who's a CPA who 
has been working full-time for years who we make an 
accommodation so that person can be at home part-time to spend 
with a newborn or with an elderly parent. If that salary of 
that CPA professional staff member goes below $47,000, all of a 
sudden we are no longer able to consider that person as an 
exempt employee.
    The same could be true for a fundraising development 
professional who is ready to retire, and we'd like to provide a 
stipend so that person could actually provide some services to 
our college or university. If that looks anything like part-
time, that person could all of a sudden be characterized as 
nonexempt and be required to complete a timesheet for the first 
time in his or her career.
    Mr. Grothman. Okay. It makes things a little bit more 
difficult.
    Ms. Riner, a question for you. We'll get you all. You 
expressed frustration in your testimony, the way the Department 
treated your company. Has the Department worked with you in any 
ways to ensure that small businesses which are franchised can 
succeed?
    Ms. Riner. No, sir. Unfortunately, we've really had an 
adversarial relationship, to the extent that we've had to take 
them to court to protect our business. So we had hoped in the 
beginning that we were working together, we hoped that we were 
educating them as to our model, but, unfortunately, that didn't 
happen. So we're in court, trying to bring resolution and 
protect our industry.
    Mr. Grothman. Okay.
    This is a more sensitive question. Are any of you familiar 
with the EEO-1 form?
    Mr. Brantley, you're familiar with it?
    Mr. Brantley. Yes.
    Mr. Grothman. Yeah. How long have you been familiar with 
the form, or how long have you been familiar with organizations 
that have to fill out that form?
    Mr. Brantley. Well, as a human resource professional my 
entire career, I have a long history of completing that form.
    Mr. Grothman. Okay. To make things turn out right in that 
form, do you or people like you advise people who should be 
hired, who should be promoted?
    Mr. Brantley. Well, most employers that have Federal 
contracts have to have an affirmative action plan. So, in turn, 
as part of that, you have goals and expectations in terms of 
your recruitment efforts.
    Mr. Grothman. Does it ever change who's hired or promoted 
because you want the numbers to work out right on that form?
    Mr. Brantley. Well, obviously, the perspective of any 
employer should be that we're hiring the right person for the 
job. It's just, as it relates to our recruitment efforts, the 
types of things that we're doing to attract a more diverse 
applicant pool.
    Mr. Grothman. Does it affect that--you know, if you have 
two people applying for a job or three people applying for a 
job, you may pick somebody different than you would otherwise?
    Mr. Brantley. The guidance is, if both positions are equal, 
if both individuals are equal, that you would defer to someone 
from a minority status.
    Mr. Grothman. Okay.
    Thank you.
    Chairman Byrne. The gentleman's time has expired.
    The Chair does want to recognize the presence of Mr. Scott, 
the Ranking Member on the full Committee.
    I understand you don't have any questions, but you're 
always welcome here, and we love seeing you.
    Mr. Scott. Well, thank you, Mr. Chairman. I had three other 
meetings at the same time. I apologize for being late. But I 
appreciate your leadership and the Ranking Member. Thank you.
    Chairman Byrne. Thank you, sir. Glad to have you.
    Now we call on Mr. DeSaulnier for five minutes.
    Mr. DeSaulnier. Thank you, Mr. Chairman. I want to thank 
you and the Ranking Member and the witnesses.
    And these are odd hearings for me, when we went through the 
rule last session, because, as somebody who managed and owned 
restaurants for almost 35 years, someone who was once a 
registered Republican but has a difference of opinion, and just 
from my life experience and my work experience--and it may be 
just that northern California is different. Clearly, it's 
different. But, Mr. Stettner, some of my questions are directed 
at just the economic benefits.
    So, when I owned restaurants, I liked to go by the Ford 
rule, that I wanted a product but also an income, that my 
employees could afford the product. Now, recognizing what the 
business owners have said here and in other hearings, there's a 
struggle when your costs go up. I always felt like I could make 
that struggle work and pass it on to my customers, even though 
they were struggling as well.
    But I found that if you paid more--and I always thought it 
was sort of outrageous that I looked at my leases and I wanted 
to make sure they were--the landlord wanted to make sure it was 
indexed for inflation but minimum wage isn't indexed for 
inflation, although that's about to change in California.
    So my question is more directed--it strikes me that, coming 
from northern California, coming from a business ownership, 
having looked at schedules--and I can't remember a time where I 
didn't have to pay an hour if I had split-shifts, I didn't have 
to pay overtime if we went over--it is less than 40 hours in 
California. So I had to manage that, and I had to have my 
managers manage that, and it worked.
    Also, in California, we have a flexible work schedule, that 
if a majority of the employees vote to have a flexible work 
schedule, they can have it. It's fairly easy to access through 
the State workforce development website. And it's an important 
thing.
    As Ms. Walters, as you said, there are a lot of good 
employees, I've had good employees, who have said, ``I'll work 
an extra hour. I don't want to spend an hour and a half in 
traffic. And you need somebody to do this.'' But I would always 
say, ``I'm required to pay you overtime, and I will do that.'' 
But it worked. And given that all my competitors, who were 
complying legally, had to do the same thing, it seemed to work 
out.
    So my question, Mr. Stettner, is, in the Bay Area, which is 
part of California that's the fifth-largest economy in the 
world, in 2015 our GDP grew by almost 12 percent. We protect 
consumers, we have very stringent consumer laws, very strict 
worker enforcement laws, stricter than the ones that we are 
debating today, strict environmental laws, but the economy 
works. And we clearly have challenges. Our housing costs are a 
big challenge for us.
    So if you could help me a little bit about why it works in 
some areas and why businesses flourish, but there's this theory 
that in other areas in the country, if you do this, businesses 
will not be able to sustain and have the kind of benefits we 
have in California, in the urban areas.
    Mr. Stettner. So, when workers have more in their pocket, 
they're able to spend more, and it goes directly into the hands 
of businesses. When workers are paid more, they're more likely 
to stay at a firm, more likely to gain a skill and help that 
firm become more productive.
    It's no coincidence that Walmart, which is all over the 
country, including the South, recently increased their wages of 
their associates, explicitly because that's what they needed to 
compete more on quality, as there was much more competition 
from other retaliators offline and online. And, in fact, some 
of the best low-wage retail businesses pay good wages.
    Mr. DeSaulnier. So the transition part, so if you're in 
another part of the country and, say, you want to start to have 
the economy grow faster than one or two percent, and you 
believe this research, how do you help businesses transition to 
that? Or is it just, as in my case, you accepted it and you 
realized that, through your own business experience, that you 
could struggle for a while--a matter of months, in my case--
but, ultimately, as you said, the research--and my life 
experience bore out the research that you allude to.
    Mr. Stettner. So most of the costs are businesses, like the 
overtime rule. Although that $1.2 billion in pay raises is 
significant, it's less than .1 percent of all wages paid in the 
country. So, right now, in general, corporations have taken the 
most of that growth. The first step to making it work better is 
to have more of it shared. And that's going to help lift all 
boats.
    Mr. DeSaulnier. I'll just conclude, Mr. Chairman, I would 
like to submit a letter from similar business owners from my 
experience and my view, from the Businesses for a Fair Minimum 
Wage for the record, if that's acceptable.
    Chairman Byrne. Without objection, so ordered.
    [The information follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. DeSaulnier. And just say it's troubling to me when I 
see--not to vilify CEOs of publicly traded companies, but, for 
instance, publicly traded fast-food restaurants have gone up in 
compensation by almost 1,000 percent since the 1970s, while 
workers wages have raised about 11 percent but their 
productivity has gone up 70 percent. It strikes me that we all 
should really have a reflective period to talk about that and 
balance it.
    And I know both parties share the desire to raise wages and 
the ability to have a quality life for middle-income and lower-
income people. But it seems like there could be a legitimate 
discussion around these issues since we have different parts of 
the country that have different problems and address them in a 
different way with different results.
    Thank you, Mr. Chairman.
    Chairman Byrne. Thank you.
    The gentleman yields back.
    Well, we've come to the end. I would like to again thank 
our witnesses for taking the time to testify before our 
subcommittee today. I know you took a lot of time to prepare to 
be here and you had to travel to be here, and we want to thank 
you for that time and for the considerable testimony you've 
given us. Very helpful to the subcommittee's work.
    Mr. Takano, do you have any closing remarks?
    Mr. Takano. I do, Mr. Chairman.
    Chairman Byrne. You are recognized.
    Mr. Takano. Thank you. Thank you.
    Well, I'd like to also thank all the witnesses for coming 
to the Committee today to share their views.
    As we all know, there was supposed to be another hearing 
this morning across the Capitol. The Senate HELP Committee was 
scheduled to hold a hearing on Andy Puzder's nomination to be 
Secretary of Labor. In a victory for working families, Mr. 
Puzder has now withdrawn his name from consideration.
    This administration ran a campaign that promised to defend 
working people, but the nomination of Andy Puzder, a fast-food 
CEO with a history of minimum-wage and overtime violations and 
a declared opposition to efforts to raise wages for working 
people, was a betrayal of working people across this country. 
Andy Puzder chose to make a profit by cutting corners and 
breaking the law. Through his words and actions, Mr. Puzder 
repeatedly demonstrated his disdain for working people.
    We heard today about how workers in low-wage industries 
like fast food are repeatedly cheated out of their fair pay. 
These workers deserve a Secretary of Labor who will fight to 
recover their hard-earned pay.
    I urge the President to keep his promise to support working 
families and nominate a Secretary of Labor who is better suited 
to meet the mission of the Department of Labor: to foster, 
promote, and develop the welfare of wage earners, improve their 
working conditions, and advance their opportunities for 
profitable employment.
    But no matter who heads the Department of Labor in the 
Trump administration, the members of our Committee must insist 
that the Department of Labor does its job by holding employers 
accountable for misclassifying their workers and stealing their 
pay.
    The American people are counting on us, and we cannot let 
them down. Mr. Chairman, I hope that we can agree that Federal 
wage-and-hour policies for the twenty-first century should put 
America's families first.
    But before I yield back, I would like to ask unanimous 
consent to submit for the record letters from Jobs With 
Justice, the Economy Policy Institute, and the National 
Partnership for Women and Families, and the American 
Sustainable Business Council. As these letters from business 
representatives--
    Chairman Byrne. Without objection, so ordered.
    Mr. Takano. Thank you.
    [The information follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Byrne. Have you concluded?
    Mr. Takano. Mr. Chairman, I have concluded my statement.
    Chairman Byrne. Thank you, Mr. Takano, and look forward to 
working with you and the other members of the subcommittee.
    We are going to make America great again, but we're not 
going to make America great again if we don't make the lives of 
the hardworking people of America great again.
    The average person in this country wakes up every morning, 
hurriedly gets himself ready to go to work, and they go to work 
and they work hard. A lot of them are doing that while they're 
raising children, which is its own job, a very hard job.
    And as I travel around my district and go to see the places 
where people work--and I'm from lower Alabama; we don't have 
very many big businesses--I talk to the people that work there, 
and I hear what they tell me. And there are so many times when 
the Federal Government is in the way. In some cases, Ms. Riner, 
we're worse than in the way; we're actually harming the ability 
of people to do what they want to do to make their lives 
better.
    I don't think that most of us in the Federal Government 
intend to be in the way. Sometimes the one law we pass up here 
the most is the law of unintended consequences. And sometimes 
we pass these laws to promulgate these regulations thinking 
they're going to have one effect and they have another.
    I know this, that if you go around the workplaces that I've 
been to over the last three years, they don't look like the 
workplaces that I started in as a teenager during the 1970s--
washing cars and making wooden slats for shutters, sandblasting 
the oil storage tanks. That's the kind of stuff I had to do, 
like most young people had to do. The workplace is so 
different.
    I don't think our laws have kept pace with that change, 
and, worse, I think our laws and the way we're trying to apply 
them are actually getting in the way. So I hope that what we 
can do, with the good help of you who came here today to give 
us this testimony, I hope what we can do is to figure out a way 
where we can work together to make the lives of these 
hardworking Americans great again.
    I believe the vote last fall was an urgent plea from them: 
Please help us. Give us the sort of freedom and flexibility in 
our lives, including our lives where we work every day, so that 
we can do what we want to do and become who we want to become. 
That's the American Dream.
    So I appreciate so much all of you being here and your 
testimony. I appreciate so much all the members of the 
subcommittee who came here today.
    There being no further business, the subcommittee stands 
adjourned.
    [Additional submissions by Mr. Byrne follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    [Extensive material was submitted by Ms. Riner. The 
submission for the record is in the committee archive for this 
hearing.)
    [Whereupon, at 11:30 a.m., the subcommittee was adjourned.]

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