[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]


                      RESTORING THE VALUE OF WORK:
                 EVALUATING DOL'S EFFORTS TO UNDERMINE
                      STRONG OVERTIME PROTECTIONS

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

                                HEARING

                               BEFORE THE

                 SUBCOMMITTEE ON WORKFORCE PROTECTIONS

                         COMMITTEE ON EDUCATION
                               AND LABOR
                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION
                               __________

             HEARING HELD IN WASHINGTON, DC, JUNE 12, 2019
                               __________

                           Serial No. 116-28
                               __________

      Printed for the use of the Committee on Education and Labor
      
      
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           Available via the World Wide Web: www.govinfo.gov
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                              ___________

                    U.S. GOVERNMENT PUBLISHING OFFICE
                    
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                    COMMITTEE ON EDUCATION AND LABOR

             ROBERT C. ``BOBBY'' SCOTT, Virginia, Chairman

Susan A. Davis, California           Virginia Foxx, North Carolina,
Raul M. Grijalva, Arizona            Ranking Member
Joe Courtney, Connecticut            David P. Roe, Tennessee
Marcia L. Fudge, Ohio                Glenn Thompson, Pennsylvania
Gregorio Kilili Camacho Sablan,      Tim Walberg, Michigan
  Northern Mariana Islands           Brett Guthrie, Kentucky
Frederica S. Wilson, Florida         Bradley Byrne, Alabama
Suzanne Bonamici, Oregon             Glenn Grothman, Wisconsin
Mark Takano, California              Elise M. Stefanik, New York
Alma S. Adams, North Carolina        Rick W. Allen, Georgia
Mark DeSaulnier, California          Francis Rooney, Florida
Donald Norcross, New Jersey          Lloyd Smucker, Pennsylvania
Pramila Jayapal, Washington          Jim Banks, Indiana
Joseph D. Morelle, New York          Mark Walker, North Carolina
Susan Wild, Pennsylvania             James Comer, Kentucky
Josh Harder, California              Ben Cline, Virginia
Lucy McBath, Georgia                 Russ Fulcher, Idaho
Kim Schrier, Washington              Van Taylor, Texas
Lauren Underwood, Illinois           Steve Watkins, Kansas
Jahana Hayes, Connecticut            Ron Wright, Texas
Donna E. Shalala, Florida            Daniel Meuser, Pennsylvania
Andy Levin, Michigan*                William R. Timmons, IV, South 
Ilhan Omar, Minnesota                    Carolina
David J. Trone, Maryland             Dusty Johnson, South Dakota
Haley M. Stevens, Michigan
Susie Lee, Nevada
Lori Trahan, Massachusetts
Joaquin Castro, Texas
* Vice-Chair

                   Veronique Pluviose, Staff Director
                 Brandon Renz, Minority Staff Director
                                 ------                                

                 SUBCOMMITTEE ON WORKFORCE PROTECTIONS

               ALMA S. ADAMS, North Carolina, Chairwoman

Mark DeSaulnier, California          Bradley Byrne, Alabama,
Mark Takano, California                Ranking Member
Pramila Jayapal, Washington          Francis Rooney, Florida
Susan Wild, Pennsylvania             Mark Walker, North Carolina
Lucy McBath, Georgia                 Ben Cline, Virginia
Ilhan Omar, Minnesota                Ron Wright, Texas
Haley M. Stevens, Michigan



                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on June 12, 2019....................................     1

Statement of Members:
    Adams, Hon. Alma S., Chairwoman, Subcommittee on Workforce 
      Protections................................................     1
        Prepared statement of....................................     3
     Byrne, Hon. Bradley, Ranking Member, Subcommittee on 
      Workforce Protections......................................     5
        Prepared statement of....................................     6

Statement of Witnesses:
    Babcock-Stiner, Ms. Anne R. Esq., Senior Vice President of 
      Human Resources, Pathstone Corporation.....................    19
        Prepared statement of....................................    21
    McCutchen, Ms. Tammy D., Esq., Principal, Littler Mendelson 
      PC.........................................................    28
        Prepared statement of....................................    30
    Winebrake, Mr. Pete, Managing Partner, Winebrake and Santilo, 
      LLC, Dresher, PA...........................................    41
        Prepared statement of....................................    43
    Shierholz, Dr. Heidi., Ph.D.,Senior Economist and Director of 
      Policy, Economic Policy Institute..........................     8
        Prepared statement of....................................    11

Additional Submissions:
    Chairwoman Adams:
        Prepared statement from the National Employment Law 
          Project (NELP).........................................   164
        Letter dated May 21, 2019 from the National Employment 
          Law Project (NELP).....................................   164
        Letter from College and University Professors............   180
    Mr. Byrne:
        Letter dated May 20, 2019 from the American Hotel and 
          Lodging Association (AHLA).............................   200
        Letter dated May 21, 2019 from Society for Human Resource 
          Management (SHRM)......................................   284
        Letter dated June 12, 2019 from the American Hotel and 
          Lodging Association (AHLA).............................   206
        Letter dated June 12, 2019 from the International 
          Franchise Association (IFA)............................   293
        Prepared statement from McCutchen, Ms. Tammy D...........   307
        Prepared statement from the College and University 
          Professional Association for Human Resources (cupa-hr).   207
        Letter from the College and University Professional 
          Association for Human Resources (cupa-hr) 





    DeSaulnier, Hon. Mark, a Representative in Congress from the 
      State of California:
        Letter dated May 21, 2019 from State Attorney Generals...   131
    Jayapal, Hon. Pramila, a Representative in Congress from the 
      State of Washington:
        Letter dated May 21, 2019 from the State of Washington 
          Office of the Governor.................................   124
        Article: Punching In Legal Drama for Labor Department....   127
    Omar, Hon. Ilhan, a Representative in Congress from the State 
      of Minnesota:
        Letter dated May 21, 2019 from The American Federation of 
          labor and Congress of Industrial Organizations (AFL-
          CIO)...................................................   100
    Takano, Hon. Mark, a Representative in Congress from the 
      State of California:
        Letter dated June 8, 2016 from the Economic Policy 
          Institute..............................................    57
        Report: More Than Eight Million Workers Will Be Left 
          Behind By The Trump Overtime Proposal..................    65
    Stevens, Hon. Haley M., a Representative in Congress from the 
      State of Michigan:
        Letter date May 17, 2019 from the State of Michigan 
          Office of the Governor.................................    89
        Letter date May 21, 2019 from AARP.......................    91
    Wild, Hon. Susan, a Representative in Congress from the State 
      of Pennsylvania:
        Letter from the Department of Labor and Industry.........    84
        Questions submitted for the record 



    Responses to questions submitted for the record by:
        Dr. Shierholz............................................   312
        Mr. Winebrake............................................   313

 
                      RESTORING THE VALUE OF WORK:
                  EVALUATING EVALUATING DOL'S EFFORTS
                TO UNDERMINE STRONG OVERTIME PROTECTIONS

                              ----------                              


                        Wednesday, June 12, 2019

                       House of Representatives,

                 Subcommittee on Workforce Protections,

                   Committee on Education and Labor,

                            Washington, DC.

                              ----------                              

    The subcommittee met, pursuant to notice, at 10:17 a.m., in 
room 2175, Rayburn House Office Building, Hon. Alma Adams 
[chairwoman of the subcommittee] presiding.
    Present: Representatives Adams, DeSaulnier, Takano, 
Jayapal, Wild, McBath, Omar, Stevens, Scott (ex officio), 
Byrne, Walker, Cline, and Foxx (ex officio).
    Also present: Representative Morelle.
    Staff present: Tylease Alli, Chief Clerk; Ilana Brunner, 
General Counsel, Health and Labor; Emma Eatman, Press 
Assistant; Eli Hovland, Staff Assistant; Eunice Ikene, Labor 
Policy Advisor; Stephanie Lalle, Deputy Communications 
Director; Jaria Martin, Staff Assistant; Richard Miller, 
Director of Labor Policy; Max Moore, Office Aide; Udochi 
Onwubiko, Labor Policy Counsel; Veronique Pluviose, Staff 
Director; Banyon Vassar, Deputy Director of Information 
Technology; Joshua Weisz, Communications Director; Rachel West, 
Senior Economic Policy Advisor; Cyrus Artz, Minority 
Parliamentarian; Courtney Butcher, Minority Coalitions and 
Members Services Coordinator; Cate Dillon, Minority Staff 
Assistant; Rob Green, Minority Director of Workforce Policy; 
Bridget Handy, Minority Communications Assistant; John Martin, 
Minority Workforce Policy Counsel; Sarah Martin, Minority 
Professional Staff Member; Kelley McNabb, Minority 
Communications Director; Brandon Renz, Minority Staff Director; 
Ben Ridder, Minority Legislative Assistant; Meredith Schellin, 
Minority Deputy Press Secretary and Digital Advisor; and 
Heather Wadyka, Minority Staff Assistant.
    Chairwoman Adams. The Subcommittee on Workforce Protections 
will come to order.
    Welcome, everyone. I note that a quorum is present.
    Representative Joe Morelle of New York will be 
participating in today's hearing, with the understanding that 
his questions will come only after all members of the Workforce 
Protection Subcommittee on both sides of the aisle who are 
present have an opportunity to question the witnesses.
    Without objection, so ordered.
    The subcommittee is meeting today in an oversight and 
legislative hearing to hear testimony on evaluating the 
Department of Labor's efforts to undermine strong overtime 
protections.
    Pursuant to committee rule 7(c), opening statements are 
limited to the chair and ranking member. This allows us to hear 
from our witnesses sooner and provides all members with 
adequate time to ask questions.
    I now recognize myself for the purpose of making an opening 
statement.
    Today, we will discuss the importance of strong overtime 
pay protections for American workers. Since the passage of the 
Fair Labor Standards Act in 1938, Congress has guaranteed basic 
overtime protections by requiring certain workers to be paid 1-
1/2 times their regular rate of pay for any hours worked over 
40 in a workweek.
    As our witnesses will discuss, strong overtime protections 
help achieve three key goals. They protect workers from being 
forced to work excessive hours; they ensure that working extra 
time comes with extra pay; and they encourage employers to hire 
more employees rather than overwork current employees.
    Unfortunately, due to weak overtime standards, some 
employers are relying on a business model that shifts extra 
work normally done by workers with overtime protections to 
workers without overtime protections. This leaves some salaried 
workers who should be eligible for overtime working 50- and 60-
hour weeks without additional pay and other workers with too 
few hours.
    While growing income inequality and the declining power of 
workers have only reinforced the need for strong overtime 
protections, the Federal Government has repeatedly failed to 
properly update overtime standards to keep pace with the 
economy.
    Under fair standard--under Fair Labor Standards Act 
regulations, salaried workers who earn below a salary level 
established by the Department of Labor are automatically 
eligible for overtime pay.
    In 1975, the Department of Labor set the salary level to 
$13,000 per year. That was equivalent to almost $58,000 a year 
when translated into 2020 dollars. At that salary level, over 
60 percent of full-time salaried workers were eligible for 
overtime pay based on their salaries alone.
    Twenty-nine years later, in 2004, the Department of Labor, 
under the Bush Administration, set the salary level to $23,660 
a year. This is equivalent of about $33,000 a year in 2020. The 
salary level covered only about 13 percent of the full-time 
salaried work force in 2004, compared with 60 percent back in 
1975. This salary threshold was developed using a flawed 
methodology.
    Over the next decade, failure to update the salary level 
meant more and more workers were without overtime protections.
    In 2016, the $23,600-a-year salary level covered fewer than 
7 percent of the full-time salaried work force.
    Recognizing this harmful trend, the Obama Administration 
finalized a rule to raise the salary level to roughly $47,500 
in 2016. This long overdue update would have extended overtime 
protections for 4.2 million workers, restored overtime 
protections to one-third of the full-time salaried work force, 
put $1.2 billion into the pockets of lower-and middle-wage 
workers, and established automatic updates to prevent another 
lapse in overtime protections.
    In 2020, the salary level would have been approximately 
$51,000 a year. Unfortunately, a flawed district court ruling 
blocked the Department from implementing and enforcing the 
rule. Rather than defending the Obama-era overtime update in 
court, the Department of Labor is now proposing a new lower 
salary level of about $35,000 a year to take effect in 2020.
    The Trump administration's proposed salary level, based on 
a flawed methodology first used in 2004, would cover only 15 
percent of full-time salaried workers compared to the 33 
percent that would have been covered under the Obama rule. It 
would leave 8.2 million workers behind and deny American 
workers more than $1.2 billion in additional pay.
    The new proposal also fails to include automatic updates to 
the salary level, leaving salaried workers vulnerable to, once 
again, losing overtime protections in the foreseeable future.
    After more than 40 years, without an adequate update to the 
overtime rule, the Trump administration's proposals falls well 
short of what workers deserve. Despite the President's promise 
to fight for American workers, his administration continues to 
block Federal policies that would lift working families into 
the middle class. Congressional Democrats stand ready to 
protect workers where the administration fails to do so.
    The Restoring Overtime Pay Act, H.R. 3197, introduced by 
Congressman Mark Takano, would codify the strong salary 
threshold set in the 2016 final rule and require automatic 
updates every 3 years to ensure the level remains in line with 
overall increases in workers' wages.
    Restoring workers' access to strong overtime protections, 
raising the Federal minimum wage, and protecting workers' right 
to join a union are Federal policies that would improve 
standards of living and stimulate local economies across the 
country. These three pillars are essential labor market 
institutions upon which working people rely. However, the Trump 
administration continues to oppose each of these efforts to 
give hardworking Americans a raise.
    Today's hearing is an opportunity to examine the Federal 
Government's responsibility to restore overtime protections for 
millions of workers. It is also a chance to discuss the 
importance of building an economy that works for all Americans, 
not just the wealthy few.
    I want to thank all of our witnesses for being here today, 
and I look forward to your testimony.
    I now recognize the distinguished ranking member for the 
purpose of making an opening statement.
    [The statement of Chairwoman Adams follows:]

 Prepared Statement of Hon. Alma S. Adams, Chairwoman, Subcommittee on 
                         Workforce Protections

    Today, we will discuss the importance of strong overtime pay 
protections for American workers.
    Since the passage of the Fair Labor Standards Act in 1938, Congress 
has guaranteed basic overtime protections by requiring certain workers 
be paid one-and-a-half times their regular rate of pay for any hours 
worked over 40 in a workweek.
    As our witnesses will discuss, strong overtime protections help 
achieve three key goals:
    They prevent workers from being forced to work excessive hours,
    They ensure that working extra time comes with extra pay, and
    They encourage employers to hire more employees rather than 
overwork current employees.
    Unfortunately, due to weak overtime standards, some employers are 
relying on a business model that shifts extra work normally done by 
workers with overtime protections to workers without overtime 
protections.
    This leaves some salaried workers--who should be eligible for 
overtime--working 50-and 60-hour weeks without any additional pay and 
other workers with too few hours.
    While growing income inequality and the declining power of workers 
have only reinforced the need for strong overtime protections, the 
Federal Government has repeatedly failed to properly update overtime 
standards to keep pace with the economy.
    Under Fair Labor Standard Act regulations, salaried workers who 
earn below a salary level established by the DOL are automatically 
eligible for overtime pay.
    In 1975, the Department of Labor set the salary level to $13,000 
per year.
    That was equivalent to almost $58,000 a year when translated into 
2020 dollars.
    At that salary level, over 60 percent of full-time, salaried 
workers were eligible for overtime pay based on their salaries alone.
    Twenty-nine years later in 2004, the Department of Labor under the 
Bush Administration set the salary level to $23,660 a year.
    This is the equivalent of about $33,000 a year in 2020.
    This salary level covered only about 13 percent of the full-time, 
salaried work force in 2004, compared with 60 percent back in 1975.
    This salary threshold was developed using a flawed methodology.
    Over the next decade, failure to update the salary level meant more 
and more workers were without overtime protections.
    In 2016, the $23,660 a year salary level covered fewer than 7 
percent of the full-time, salaried work force. Recognizing this harmful 
trend, the Obama Administration finalized a rule to raise the salary 
level to roughly $47,500 in 2016.
    This long-overdue update would have:
    Extended overtime protections for 4.2 million workers,
    Restored overtime protections to one-third of the full-time, 
salaried work force,
    Put $1.2 billion into the pockets of lower-and middle-wage workers, 
and
    Established automatic updates to prevent another lapse in overtime 
protections.
    In 2020, the salary level would have been approximately $51,000 a 
year.
    Unfortunately, a flawed district court ruling blocked the 
Department from implementing and enforcing the rule.
    Rather than defending the Obama-era overtime update in court, the 
Department of Labor is now proposing a new, lower salary level of about 
$35,000 a year to take effect in 2020.
    The Trump administration's proposed salary level, based on a flawed 
methodology first used in 2004, would cover only 15 percent of full-
time, salaried workers compared to the 33 percent that would have been 
covered under the Obama-era rule.
    It would leave 8.2 million workers behind and deny American workers 
more than $1.2 billion in additional pay.
    The new proposal also fails to include automatic updates to the 
salary level, leaving salaried workers vulnerable to once again losing 
overtime protections in the foreseeable future.
    After more than 40 years without an adequate update to the overtime 
rule, the Trump administration's proposal falls well short of what 
workers deserve.
    Despite the president's promise to fight for American workers, his 
administration continues to block Federal policies that would lift 
working families into the middle class.
    Congressional Democrats stand ready to protect workers where the 
Administration fails to do so.
    The Restoring Overtime Pay Act, H.R. 3197, introduced by 
Congressman Mark Takano, would codify the strong salary threshold set 
in the 2016 final rule and require automatic updates every 3 years to 
ensure the level remains in line with overall increases in workers' 
wages.
    Restoring workers' access to strong overtime protections, raising 
the Federal minimum wage, and protecting workers' right to join a union 
are Federal policies that would improve standards of living and 
stimulate local economies across the country.
    These three pillars are essential labor market institutions upon 
which working people rely.
    However, the Trump administration continues to oppose each of these 
efforts to give hardworking Americans a raise.
    Today' s hearing is an opportunity to examine the Federal 
Government's responsibility to restore overtime protections for 
millions of workers.
    It is also a chance to discuss the importance of building an 
economy that works for all Americans, not just the wealthy few.
    I want to thank all of our witnesses for being with us today and I 
look forward to your testimony. I now yield to the Ranking Member, Mr. 
Byrne for his opening statement.
                                 ______
                                 
    Mr. Byrne. Thank you, Madam Chairwoman.
    And hello and welcome to all of the witnesses that are 
here.
    After clocking 40 hours of work, there are few incentives 
as attractive as overtime pay to motivate an individual to come 
back for more that week. The Department of Labor should make 
sure those entitled to overtime pay receive it, and the 
proposed overtime rule from the Department of Labor will help 
ensure that. But my colleagues on the other side of the gavel 
aren't hearing it.
    This spring, the Department of Labor published a notice of 
proposed rulemaking in the Federal Register which raised the 
annual salary threshold to be exempt from overtime pay by over 
$11,000. This rule would make over 1 million additional 
American workers eligible for overtime pay. One million.
    So when I see the label for this hearing where it says 
DOL's efforts to undermine strong overtime protections, I see 1 
million reasons why that statement is untrue.
    For some reason, this sensible proposal to modernize the 
overtime pay salary threshold doesn't make my friends on the 
other side happy. Rather than welcoming this exceptional 
opportunity, they would rather wallow in their partisan 
opposition to President Trump and oppose any and every policy 
coming out of his administration, even when the policies are as 
reasonable as this one.
    We are here today because of stunts in political point 
scoring, the other side insists on revisiting the radical and 
discredited Obama-era overtime rule, which everyone should 
recall was invalidated in a U.S. District Court. The Obama rule 
was invalidated in a U.S. District Court.
    The Obama rule proposed to hike the threshold for exemption 
from overtime pay by over 100 percent to a salary of almost 
$50,000. As the court wrote in its decision invalidating the 
rule, quote, The Department has exceeded its authority and gone 
too far with the final rule, close quote. A Federal district 
court said that.
    In addition to being excessive, misguided, and unworkable, 
this spike wasn't projected to help workers in the long run. 
Young Americans would have been particularly harmed by the rule 
because it would have increased college costs and made it 
harder for graduates to begin their careers.
    We heard from a number of universities in the past two or 3 
years that it would decimate their ability to offer services to 
college students. And that is one of the most important things 
we deal with on this committee, is education.
    The Obama scheme would have resulted in fewer job 
prospects, less flexibility in the workplace, and less 
opportunity to move up the economic ladder. Small businesses, 
nonprofit employers, colleges and universities, and the people 
all these American institutions serve, would have been hit the 
hardest by the Obama Administration's rule. That is ironic 
considering we presumably work on this committee to promote and 
protect these very sectors of our country.
    I want to remind my colleagues on the other side that the 
Department of Labor reached its salary threshold in the 
proposed rule using the same sound methodology as the Bush 
Administration did in 2004, which set the current minimum that 
we use today, $23,660. It is entirely reasonable and, indeed, 
wise in this time of economic growth to look at what has worked 
before. Instead of rebelling in political outcry, we would all 
serve America's middle-class workers well to take a step back 
and be objective about this.
    Times have changed and the economy along with it. And this 
proposed rule is a responsible, reasonable, and workable answer 
in keeping with the purpose and historical level of the 
overtime salary threshold, and most importantly, in affirming 
the value of every American worker.
    Madam Chairwoman, to you and to everybody who is here 
today, I am going to offer my apologies. I am on another 
committee, the Armed Services Committee. We are marking up the 
National Defense Authorization Act today, and it may very well 
be that I get up and leave before the hearing is over to go 
vote in that committee. I am not angry. I am not put out. I 
really would rather be here. But I think it is important that I 
have my vote over there. So, I want you to understand that I 
will be back as quickly as I can if that occurs.
    And with that, I yield back.
    [The statement of Mr. Byrne follows:]

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

    Thank you for yielding.
    After clocking 40 hours of work, there are few incentives as 
attractive as overtime pay to motivate an individual to come back for 
more that week. The Department of Labor should make sure those entitled 
to overtime pay receive it, and the proposed overtime rule will help 
ensure that. But my colleagues on the other side of the gavel aren't 
hearing it.
    This spring, the DOL published a Notice of Proposed Rulemaking in 
the Federal Register, which raised the annual salary threshold to be 
exempt from overtime pay by over $11,000. This rule would make over one 
million additional American workers eligible for overtime pay. One 
million.
    For some reason, this sensible proposal to modernize the overtime 
pay salary threshold doesn't make Democrats happy. Rather than 
welcoming this exceptional opportunity, they would rather wallow in 
their partisan opposition to President Trump and oppose any and every 
policy coming out of this administration, even when the policies are as 
reasonable as this one. We're here today because, in stunts of 
political point-scoring, Democrats insist on revisiting the radical and 
discredited Obama-era overtime rule, which everyone should recall, was 
invalidated in a U.S. District Court.
    The Obama rule proposed to hike the threshold for exemption from 
overtime pay by over 100 percent to a salary of almost $50,000. As the 
court wrote in its decision invalidating the rule: ``The Department has 
exceeded its authority and gone too far with the Final Rule.'' In 
addition to being excessive, misguided, and unworkable, this spike 
wasn't projected to help workers in the long run. Young Americans would 
have been particularly harmed by the rule, because it would have 
increased college costs and made it harder for graduates to begin their 
careers. The Obama scheme would have resulted in fewer job prospects, 
less flexibility in the workplace, and less opportunity to move up the 
economic ladder.
    Small businesses, non-profit employers, colleges and universities, 
and the people all these American institutions serve would have been 
hit the hardest by the Obama Administration's rule. That's ironic, 
considering we presumably work on this committee to promote and protect 
those very sectors of our country.
    I want to remind my Democrat colleagues that the DOL reached its 
new salary threshold in the proposed rule using the same sound 
methodology as the Bush Administration in 2004, which set the current 
minimum that we use today: $23,660. It is entirely reasonable and, 
indeed, wise in this time of economic growth to look at what has worked 
before. Instead of rebelling in political outcry, we would all serve 
American middle-class workers well to take a step back and be objective 
about this.
    Times have changed and the economy along with it, and this proposed 
rule is a responsible, reasonable, and workable answer in keeping with 
the purpose and historical level of the overtime salary threshold and 
most importantly, in affirming the value of every American worker.
    Thank you.
                                 ______
                                 
    Chairwoman Adams. Thank you. Thank you very much.
    Without objection, all of the members who wish to insert 
written statements into the record may do so by submitting them 
to the committee clerk electronically in Microsoft Word format 
by 5 p.m. on Tuesday, June 25.
    I will now introduce our witnesses.
    Dr. Heidi Shierholz is Senior Economist and Director of 
Policy at the Economic Policy Institute. Dr. Shierholz 
previously served as Chief Economist to the U.S. Secretary of 
Labor under Secretary Thomas Perez.
    Ms. Tammy McCutchen is a Principal in Littler Mendelson's 
Washington, DC. office. Ms. McCutchen previously served as 
Administrator of the Wage and Hour Division of the U.S. 
Department of Labor.
    Mr. Pete Winebrake is the Founder and Managing Partner of 
Winebrake and Santillo, LLC, based in Dresher, Pennsylvania. 
Mr. Winebrake has litigated hundreds of wage and overtime 
lawsuits in courts throughout the United States.
    I am pleased now to recognize my colleague, Representative 
Morelle, to briefly introduce his constituent who is appearing 
before us as a witness today.
    Mr. Morelle. Thank you, Madame Chairwoman, for the courtesy 
to a nonmember of the subcommittee, allowing me a moment to 
introduce my constituent.
    I am pleased to welcome to this Workforce Protection 
Subcommittee, Ms. Anne Babcock-Stiner. Anne is an attorney and 
the Senior Vice President of Human Resources for PathStone 
Corporation, a not-for-profit community development 
organization in my district of Rochester, New York. She 
previously served as a Deputy Attorney General for the Indiana 
Attorney General's Homeowner Protection Unit. In her capacity 
at PathStone, Ms. Babcock-Stiner has provided comprehensive 
holistic services to those in need from work force development 
initiatives, education, and health services, to ensuring safe, 
stable housing.
    PathStone helps create opportunities for individuals and 
families throughout our community. I am so grateful to 
PathStone for their many contributions to our community and for 
their continued commitment to advocating for stronger worker 
protections, and I am particularly delighted to have Ms. 
Babcock-Stiner here today.
    And I would ask my colleagues also to note that she is 
spending her birthday with us, and I wish her all the best 
wishes on another safe trip around the sun.
    So happy birthday.
    And thank you, Madame Chair.
    Chairwoman Adams. And thank you.
    And happy birthday.
    We appreciate all of the witnesses for being here today and 
look forward to your testimony.
    Let me remind the witnesses that we have read your written 
statements, and they will appear in full in the hearing record.
    Pursuant to committee rule 7(d) and committee practice, 
each of you is asked to limit your oral presentation to a 5-
minute summary of your written statement.
    And let me remind the witnesses that pursuant to title 18 
of the U.S. Code, section 1001, it is illegal to knowingly and 
willfully falsify any statement, representation, written 
document, or material fact presented to Congress, or otherwise 
conceal or cover up material fact.
    Before you begin your testimony, please remember to press 
the button on the microphone in front of you so that it will 
turn on and the members can hear you. As you begin to speak, 
the light in front of you will turn green. After 4 minutes, the 
light will turn yellow to signal that you have 1 minute 
remaining. When the light turns red, your 5 minutes have 
expired, and we ask that you would please wrap up your 
testimony.
    We will let the entire panel make their presentations 
before we move to member questions. When answering a question, 
please remember to, once again, turn your microphone on.
    I am going to first recognize Dr. Shierholz.

   STATEMENT OF HEIDI SHIERHOLZ, PH.D., SENIOR ECONOMIST AND 
         DIRECTOR OF POLICY, ECONOMIC POLICY INSTITUTE

    Ms. Shierholz. Chair Adams, Ranking Member Byrne, and 
members of the subcommittee, thank you very much for the 
opportunity to testify here today.
    The overtime protections of the Fair Labor Standards Act 
are a crucial part of a vibrant middle class because they give 
employers the incentive to hire more workers rather than 
overwork existing employees, and they ensure that workers are 
fairly compensated when they are asked to work long hours.
    In the Fair Labor Standards Act, Congress provided overtime 
protections to most workers, but directed the Secretary--the 
Secretary of Labor to exempt a limited number of well-paid, 
bona fide managers, executives, or highly trained 
professionals, since these workers command enough bargaining 
power, enough control over their own work and schedules that 
they don't actually need the protections.
    For an employee to be exempt from overtime protections 
under this exemption, they must earn a salary, they must pass 
the duties test based on the actual work that they do, and they 
must earn above the salary threshold.
    The salary threshold can best be thought of as a bright-
line proxy for the duties test that simplifies the 
determination of exemption, it helps ensure that frontline 
supervisors who get relatively low pay and have little 
bargaining power are not taken advantage of, and it reduces the 
misclassification of nonexempt workers as exempt.
    In 2016, the Department finalized an overtime rule 
following an exhaustive rulemaking process. That rule increased 
the salary threshold to roughly $47,000, which is the 40th 
percentile of earnings of full-time salaried workers in the 
lowest wage census region.
    However, a single district court judge in Texas held the 
rule to be invalid. And instead of defending this rigorously 
determined rule, the Department, under the current 
administration, has proposed a new rule with a much lower 
threshold. The Department's current threshold set--current 
proposal sets the threshold at roughly $35,000 in 2020, which 
is essentially the 20th percentile of earnings of full-time 
salaried workers in the lowest wage census region. So this is 
the same methodology that was used in the 2004 rule. 
Unfortunately, the methodology in the 2004 rule was 
fundamentally flawed.
    So historically, the Department sets tests for overtime 
eligibility in one of two ways. It pairs a low salary 
threshold, which covers few workers, with a strong duties test, 
which covers more workers, or it pairs a strong--a high salary 
threshold, which covers more workers, with a weak duties test, 
which covers fewer workers.
    Both of those options create the intended balance. But in 
2004, the Department paired a low salary threshold with a weak 
duties test. And because of this erroneous mismatch, the 
methodology from the 2004 rule departs from decades of 
historical precedent and is fundamentally inappropriate.
    In 2016, the Department corrected this error by keeping the 
same lenient duties test that was used in the 2004 rule but 
correctly pairing it with a higher salary threshold. In fact, 
in 2016, the Department picked nearly the lowest possible 
threshold, consistent with historic precedent.
    According to the methodology that was used to calculate the 
thresholds from 1958 until the 2004 error, the Department 
should have set the threshold in 2016 somewhere between $46,000 
and $65,000. They chose $47,000.
    So, a key thing this highlights is that while the increase 
in the threshold in the 2016 rule was large, it was only 
because it had been over 40 years since the threshold had been 
appropriately updated.
    At its core, the Department's proposal is based on the 
notion that someone making $35,000 a year is a well-paid 
executive who does not need or deserve overtime protections.
    My analysis, which uses the exact same methodology that DOL 
does to look at their impact, finds that 8.2 million workers 
who would have benefited from the 2016 rule will be left behind 
by the Department's proposal. That includes 4.2 million women, 
3.0 million people of color, and 2.7 million parents of 
children under the age of 18. And together, workers will lose 
$1.2 billion annually.
    Congress should step in and pass the Restoring Overtime Pay 
Act, which codifies the 2016 rule as a floor and upholds the 
purpose of the overtime provisions of the Fair Labor Standards 
Act.
    Thank you.
    [The statement of Ms. Shierholz follows:]
    
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    Chairwoman Adams. Thank you very much.
    Ms. Babcock-Stiner, you are recognized for 5 minutes.

  STATEMENT OF ANNE BABCOCK-STINER, SENIOR VICE PRESIDENT OF 
             HUMAN RESOURCES, PATHSTONE CORPORATION

    Ms. Babcock-Stiner. Thank you, Chairwoman Adams, Ranking 
Member Byrne, and other members of the subcommittee, for the 
opportunity to present at today's hearing.
    My name is Anne Babcock-Stiner, and I am the Senior Vice 
President of Human Resources at PathStone Corporation, a New 
York-based nonprofit with a mission of building economic self-
sufficiency for families and communities. I am honored to be 
here representing an employer that has a rich history of 
advocating for strong worker protections.
    PathStone has about 600 employees in seven different States 
and in Puerto Rico, who serve more than 41,000 individuals each 
year through our work force, community and housing development 
programs.
    Back in 2016 when the Department of Labor proposed raising 
the salary threshold to $47,476, PathStone was compelled to 
conduct a mission-based analysis to determine what this would 
mean for our constituents and for our employees. We concluded 
that we must support and implement the proposed salary 
threshold, and we remain firmly committed to this position 
today.
    A higher salary threshold has value to both employees and 
employers. As the Department has noted, many nonexempt 
classifications can be made with a salary level test alone. 
While the classifications under the salary level test can be 
made with a quick payroll report, the duties test can be 
subject to multiple interpretations. Each exemption has a 
lengthy list of factors that must be analyzed. And this task 
goes far beyond an examination of job descriptions, work plans, 
and organizational charts.
    The law requires that we must examine what the employee is 
actually doing, and this process must be repeated every single 
time we make a program adjustment or a staffing change.
    Because the duties test is so difficult to apply in 
practice, the salary threshold becomes even more important. 
However, the value of the salary threshold is dependent on the 
level at which it is set, as demonstrated by an analysis of 
PathStone's 490 full-time employees.
    At the current salary threshold of just about $23,000, 
PathStone has to review the job duties of 176 employees to 
determine their exemption status. At the proposed threshold of 
$35,000, we have to review the job duties of 133 employees. And 
at the 2016 proposed threshold of about $47,000, we have to 
review the job duties of only 102 employees.
    It quickly becomes clear that as the salary threshold 
increases, the number of employees that must be continuously 
reviewed under the duties test decreases.
    There are numerous strategies that can be deployed once it 
is determined that an employee is subject to reclassification, 
none of which are specifically mandated by the law. For 
employees who routinely work no more than 30 hours per week, we 
can reclassify them with little to no financial impact. For 
employees who are close to the new salary threshold and who 
routinely work more than 40 hours per week, we can increase 
their salaries to maintain their exempt status, and we can 
mitigate the financial impact by reorganizing job duties and 
workloads.
    Reallocating job duties is particularly effective when job 
duties are moved from an employee who has been reclassified as 
nonexempt to an employee who is given an increase to maintain 
their exempt status because we can directly tie the salary 
increase to additional job duties.
    Some critics claim that reclassification reduces scheduling 
flexibility and benefit eligibility. However, not all employers 
tie benefit packages to exemption status. At PathStone, our 
president and CEO has the same benefit package as an entry 
level receptionist.
    Furthermore, while nonexempt employees certainly do come 
with more timekeeping requirements, technology is making this 
task significantly easier.
    Nonprofits have been held up as a poster child for 
employers that will be hurt by an increased salary threshold. 
But this argument is invariably advanced by those who are not 
familiar with mission-based work. There is no question that a 
higher salary threshold will impact our operations, 
particularly considering that we are prohibited from 
renegotiating our Federal contracts. However, just as our 
mission must guide our actions when we serve our constituents, 
it must also guide us when we act as an employer.
    PathStone's mission of economic self-sufficiency compels us 
to support robust regulations and oppose the Department's 
attempt to undermine strong overtime protections.
    Thank you.
    [The statement of Ms. Babcock-Stiner follows:]
    
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    Chairwoman Adams. Thank you very much.
    I will now recognize Ms. McCutchen for 5 minutes.

 STATEMENT OF TAMMY D. MCCUTCHEN, PRINCIPAL, LITTLER MENDELSON 
                               PC

    Ms. McCutchen. Madam Chair, members of the Subcommittee, 
thank you for giving me the opportunity to speak today on the 
proposed overtime regulations.
    I have been living with these regulations for almost 20 
years now, revising the regulations in 2004 when I served as 
the Wage and Hour Administrator, and preparing comments for the 
Chamber in 2015, 2017, and for the current proposal.
    For our conversation today, it is important to understand 
two things. First, in the FLSA, Congress created exemptions for 
executive, administrative, and professional employees based on 
job duties, without reference to salary. The text of the 
statute refers only to job duties.
    Second, going back to 1940, again and again, the Department 
has Stated that the purpose of the salary level is only to 
screen out obviously nonexempt employees. If the salary level 
becomes too high, however, it stops serving as a proxy for the 
duties test. It becomes the whole test, which is what the Texas 
court found in his reason for invalidating the 2016 rule.
    The Department proposes to increase the minimum salary 
level for exemption by nearly 50 percent, from less than 
$24,000 annually to over $35,000. Much of the commentary around 
the Department's proposal has focused on the salary level. But 
more important than the final number is the method the 
Department used to reach it.
    The Department used, more or less, the same methodology as 
in 2004, a rule, by the way, that has been in effect for nearly 
15 years without a single legal challenge. That methodology was 
the best choice for two reasons. First, it is consistent with 
historical practice in the Department; and, second, it is the 
approach that best finds that salary level that can serve as a 
proxy for job duties without replacing the job duties test.
    Now, we must remember that the FLSA needs to work 
throughout the country, without adverse impact on local 
economies and jobs. It must work in every State and every 
industry, in large cities and tiny towns, for small businesses 
and large, for profits and nonprofits. Like the minimum wage, 
States can set a higher threshold salary level, and they have 
done so.
    In California, for example, exempt employees must be paid 
an annual salary of $49,920. The State of Washington is 
expected to soon set a similar salary level for exempt 
employees in that State. In New York, the salary level is 
$58,500.
    Now, while that high level may fit the economic conditions 
of New York, it does not work in Alabama, where it is less 
expensive to buy a house than it is to buy a parking spot in 
Manhattan.
    In any case, applying the 2004 methodology to set the 
salary level was the Department's only viable option, given the 
Texas court's decision invalidating the 2016 rule. Referring to 
the statutory text, the court reasoned that Congress gave the 
Department authority to define the exemptions by reference to 
an employee's duties, not by reference to their salaries. The 
salary test was, therefore, lawful only when it did serve as a 
proxy for duties.
    For most of its history, the Department used the salary 
test in just that way, but in 2016, the court found the 
Department exceeded its authority by setting out to reclassify 
millions of employees based on salary alone. The court also 
stated that if the Department had simply updated the salary 
levels using the 2004 methodology, its action would almost 
certainly have been lawful.
    Most argue that it is time to increase the salary level. 
Those who oppose the proposed $35,000 salary level, that it is 
too low, want the Department to stubbornly defend the 2016 
rule, offering no compromise between $24,000 and $48,000, even 
today. But defending that rule will almost certainly result in 
extensive and lengthy additional litigation, as the Trump 
administration did appeal the grant of the injunction to the 
Fifth Circuit and that appeal is still pending, and also 
perhaps a trip to the Supreme Court. Years of additional delay 
and--with uncertain results.
    It was the overreach in 2016, the refusal to find 
compromise even today, which has undermined overtime 
protections for the last 3 years, not the current proposal. 
Thus, respectfully, I must take issue with the title of this 
hearing as I disagree with the conclusion that the Department 
is seeking to undermine the FLSA's overtime protections. The 
opposite is true. The Department's proposal will ensure that 
the salary level is increased now.
    Thank you.
    [The statement of Ms. McCutchen follows:]
    
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    Chairwoman Adams. Thank you.
    Mr. Winebrake, you are recognized for 5 minutes.

  STATEMENT OF PETE WINEBRAKE, MANAGING PARTNER, WINEBRAKE & 
                         SANTILLO, LLC

    Mr. Winebrake. Thank you, Chairwoman Adams and Ranking 
Member Byrne. It is a great pleasure to be here before you all 
today.
    I am a workers' rights lawyer from Pennsylvania, and I have 
had the great privilege of representing thousands of workers 
throughout this country in Fair Labor Standards Act cases and 
hundreds of workers who have been paid salaries and have not 
gotten the benefit of overtime.
    I want to--I want to tell you today about my clients, about 
my salaried clients. And all of the people I am going to tell 
you about today are individuals who make over $35,000 a year. 
Generally speaking, they make somewhere between 35 to the low 
40's.
    These salaried clients who I represent, almost none of them 
went to college. Very few went to college. They generally work 
between 55 and 70 hours per week. It is very important that you 
all realize that in fast food and in the retail industries, it 
is not uncommon for workers to work--salaried workers to work 
65, 70, sometimes even 75 hours a week.
    My clients are working class. Very few of them have any 
meaningful amount of savings. Very few of them have retirement 
accounts. Many of them lack reliable transportation. And I 
would say that the great majority of them are literally living 
paycheck to paycheck.
    And what do my salaried clients do? What do they do on a 
day-to-day basis? I will tell you what they do. I have 
represented account managers. They get a fancy job title, 
``Account Manager,'' paid a salary of about $36,000, $37,000 a 
year for custodial service companies. These workers are 
basically doing janitorial work at nursing homes, cleaning the 
floors, washing windows, doing janitorial work.
    The store managers and assistant store managers who I 
represent at small convenience stores and at dollar stores and 
at other retail establishments, what are they doing on a day-
to-day basis? They are working the cash register, they are 
stocking shelves, they are cleaning the bathrooms, they are 
cleaning the floors. If they work in a convenience store that 
is associated with a gas station, they are going outside and 
they are cleaning near the--near the gas--where the gas is 
pumped.
    The salaried employees who I represent in the restaurant 
and fast food industry, they are given the fancy job title of 
``Assistant Manager.'' But what are they really doing on a day-
to-day basis? They are busing tables, they are serving 
customers, they are expediting food, they are cooking, they are 
washing dishes.
    Over and over again--over and over again, it is the same 
business model that I see in every one of these cases. And the 
business model is very simple. Take a location, whether it be a 
store, a restaurant, staff it with one or two salaried 
employees and a bunch of hourly employees, set a very strict 
payroll budget that is very difficult to meet if you give the 
hourly employees overtime.
    Remember, if you give the hourly employees overtime, you 
have to pay them overtime. Every extra hour that an hourly 
employee has to work is an hour that the company has to pay 
for. But if you give all that extra work to the salaried 
employee, the employer doesn't have to pay anything. It is free 
labor. So, the business model is very simple. Staff the 
location with a couple salaried employees, and whenever you 
need someone to do extra work, give that extra work to the 
salaried employee and benefit from that free work.
    This fight that I have been watching, and in some ways have 
been a part of for the past 2 or 3 years, over these 
regulations, what this is all about is preserving that business 
model. The reason the chamber is putting up the fight that it 
is fighting is they will fight very hard to preserve that 
business model.
    And I urge the members of this committee to do everything 
you can to take that business model away.
    Thanks so much, and that is all that I have.
    [The statement of Mr. Winebrake follows:]
   
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    Chairwoman Adams. Thank you very much.
    And I want to thank all of the witnesses for their 
testimony.
    Under committee rule 8(a), we will now question witnesses 
under the 5-minute rule.
    I now recognize myself for 5 minutes.
    Dr. Shierholz, as I understand it, if the Department's 
approach for setting the salary level is flawed, it will result 
in a salary level too low. And a salary level that is too low 
makes more employees likely to be improperly classified as 
exempt, depriving these workers of overtime pay.
    So, can you speak to how the duties test and the salary 
level work together to draw a line between those workers who 
are eligible for overtime pay and those who are not under the 
white-collar exemption?
    Ms. Shierholz. Yes. Thank you. So, the salary threshold--
and Tammy talked about this too--can just best be thought of as 
a really bright-line proxy for the duties test. It makes it 
simple to determine exemption. It makes sure that workers who 
work a--who are--like, say, frontline supervisors who work 
limited number of--they do a great deal of nonexempt work and 
have little bargaining power, that those workers are not taken 
advantage of and helps reduce the misclassification of non-EAP 
workers as EAP exempt. So that is what the salary threshold 
does.
    And then the duties test is a more specific mechanism that 
helps deter---that determines exemption for people who pass the 
salary threshold. Those two tests have always worked together.
    Unlike what was claimed by the district court judge, the 
2016 rule did not eclipse the duties test. It was still needed 
for 6.5--the determination of overtime status for 6.5 million 
workers above the duties test. So those--that is the way those 
two tests work together.
    Chairwoman Adams. Okay. Dr. Shierholz, the Department has 
based its current proposal on the methodology used in 2004. The 
slide that we have before you, we have--shows that the salary 
level set since 1949, inflated to 2020 dollars, so we can 
compare what the Department is proposing to historical levels.
    I think the chart makes a few things clear. First, the 2014 
salary level was not in line with the historical trends, and it 
tells me that there was something wrong with the methodology 
they used to that salary level. Secondly, the 2016 rule was in 
line with the historical trends. And, third, the current 
administration is taking an approach that would once again take 
us outside of the historical levels.
    Why was the 2004 update to the salary level based on a 
flawed methodology?
    Ms. Shierholz. Like I don't, I am not sure of the 
motivation for that, but it absolutely was in error. There was 
an absolute pairing of the--of a low salary threshold with a 
weak duties test. It shouldn't have happened, and that is what 
we have been stuck with until now. There is an opportunity to 
really fix that error.
    Chairwoman Adams. Why would the Department choose to double 
down on a flawed methodology from 2004 with its current 
proposal, and how does the Department's approach affect working 
people?
    Ms. Shierholz. To be honest, I think the Department is 
bowing to the interests of the Chamber of Commerce. The core 
provisions of their proposal is actually almost exactly what 
the chamber asked for. I think this department is really 
prioritizing the interest of corporate executives over those of 
working people and leaving working people behind.
    Chairwoman Adams. Ms. McCutchen States that the Department 
had no choice but to use the 2004 methodology for its recent 
proposal. Is this true?
    Ms. Shierholz. No, this is not true at all. The 2016 
threshold was--the 2016 rule was vacated by a single district 
court judge in Texas. The Department could have defended it.
    Chairwoman Adams. Okay. Thanks very much.
    I am going to now recognize the Ranking Member for his 
questioning, 5 minutes.
    Mr. Byrne. Thank you, Madam Chairwoman.
    Ms. McCutchen, if I am right, throughout the entire 8 years 
of the Clinton Administration, we didn't get an increase in the 
threshold. But midway through the Bush Administration, we did, 
under your leadership. And it was only at the very end of the 
Obama Administration that we got a new rule, and that rule was 
so flawed, it was struck down by a Federal court.
    So, I agree with you that the overtime salary threshold 
should be updated, and I applaud the Labor Department for 
proposing a solution in this area and for being responsible.
    My biggest worry is that setting the threshold too high--
and I think you referred to this--will harm small businesses, 
nonprofits, and institutions of higher education, as well as 
the populations they serve.
    In your opinion--in your opinion, does the proposed rule 
adequately take these distinct employers into account?
    Ms. McCutchen. I share your concern, and I would add to 
that local government entities who operate on budgets and 
objected to this 2016 rule, as did nonprofits, higher 
education.
    Except in 2016, the Department also shared your concern and 
thus set the salary level at the low end of salaries paid to 
employees in lower wage regions, industries, small businesses, 
et cetera. In 2016, we saw a huge negative reaction and 
concerns from the vast majority of nonprofits who filed 
comments, local governments and higher education.
    I think most of the comments that have been submitted in 
response to this proposal support the $35,000 level, although 
that is not universal. And in meetings held by the Small 
Business Administration Office of Advocacy, we did hear from 
SAS it's a small business that even at $35,000, the new salary 
level would be devastating to them.
    Mr. Byrne. Well, that doesn't sound like a bunch of big 
corporate executives.
    Ms. McCutchen. No.
    Mr. Byrne. These bad, mean corporate executives. It sounds 
like people that run colleges and universities and nonprofits 
and small businesses, as you say, municipalities. So, we do 
have to take that into account--or the Department of Labor has 
to take that into account when they set this rule, too. Don't 
they have to take that into account?
    Ms. McCutchen. They certainly do. And that is why the Texas 
court invalidated it. And I do want to reemphasize that is on 
appeal. The Trump administration appealed it. And, you know, if 
that moves forward, because this proposal is pushed aside, we 
have years of litigation in front of us before we get any 
increase at all. And I think that would be devastating too.
    Mr. Byrne. I agree with that.
    You know, it seems to me that sometimes we would rather 
litigate than actually solve a problem. And it sounds like the 
Department of Labor is doing is trying to solve a problem.
    I have been listening to some of the testimony about a 
single district judge. That is our system. We have got single 
district judges that have ruled against President Trump all 
over the country, and it is in effect. That's the law. We all 
learned that in law school, that a single district judge can do 
that.
    But as you say, that ruling is on appeal. And I hope that 
while it is on appeal, that the Department of Labor will take 
responsible action to take care of the working people in 
America out there.
    Let me change subjects for a minute. We know that one of 
the most extreme impacts of the radical salary threshold 
included in the discredited Obama overtime rule would have been 
a mass reclassification of employees from white-collar salaried 
employees to hourly workers. By the way, I heard from some of 
those people, and they didn't like being reclassified.
    What negative effects does this type of reclassification 
have on workplace advancement opportunities, worker status and 
morale, and workplace flexibility?
    Ms. McCutchen. Well, Mr. Byrne, in response to the 
Department of Labor's 2017 Request for Information from the 
public about the impact of that high salary level, we did a 
survey of employers about how they reacted to it, particularly 
employers who implemented the change before the injunction was 
entered. And what they told us is that they have reduced hours, 
they have reduced jobs, they automated, and they raised 
consumer prices. And how that is good for employees, I just 
can't understand.
    Mr. Byrne. I agree with you about that.
    Sometimes in some of this high-flown rhetoric, we forget 
about the real people that are out there. And I am telling you, 
I heard from a lot of people who said they did not like being 
reclassified. They took it very negatively themselves.
    And I just want to applaud you, when you had the 
responsibility, for being responsible, for proposing a 
responsible rule based on responsible methodology. And I just 
wish that the previous Democratic administration and the 
subsequent Democratic administration would have done the same 
thing. Because if they had, the workers of America would have 
been a lot better off.
    With that, I yield back.
    Chairwoman Adams. Thank you very much.
    I will yield now to Mr. Takano from California for 5 
minutes.
    Mr. Takano. Thank you, Chairwoman Adams, for this critical 
hearing on overtime standards established under the Fair Labor 
Standards Act.
    Yesterday, I introduced--reintroduced the Restoring 
Overtime Pay Act, a bill that would strengthen worker 
protections by raising the overtime salary threshold under 
which most full-time salary workers are automatically eligible 
for overtime pay. It sets the salary threshold to the 40th 
percentile of earning of workers in the lowest wage census 
region.
    In 2020, the salary level would be about $51,000 per year 
under my bill. In 2016, the Obama Administration finalized a 
rule that would have strengthened overtime for workers by 
setting the salary threshold to $47,476, with automatic updates 
every 3 years to remain in line with the economy.
    Madam Chair, I have a signed letter by dozens of nonprofit 
organizations that have commented in support of the 2016 final 
rule. I have asked that this letter be entered into the record.
    Chairwoman Adams. Without objection.
    [The information referred to follows:]
   
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    Mr. Takano. Yes, without objection.
    In March, the Trump administration proposed a new rule to 
set the salary threshold at $35,308 a year in 2020, without 
automatic indexing. This administration proposal is troubling 
as it does not go far enough to strengthen overtime protections 
for workers and would leave behind about 8.2 million workers, 
far from being a radical proposal.
    The Obama Administration, you know, proposed what was 
adequate. The Trump administration falls far short of serving 
ordinary Americans.
    Madame Chair, I have a report from the Economic Policy 
Institute that outlines how fewer workers will benefit from the 
Trump proposal compared to the Obama rule, and I ask that this 
report be entered into the record.
    Chairwoman Adams. Without objection.
    [The information referred to follows:]
    
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    Mr. Takano. My first question is for Dr. Shierholz. As was 
mentioned, a Texas district court concluded that the 2016 
salary threshold was too high because the number of newly 
overtime eligible workers was high. Can you respond--can you 
respond to this flawed reasoning, Dr. Shierholz?
    Ms. Shierholz. Yes, that is a really good point. So the 
number of workers affected by any increase in the salary 
threshold is an absurd measure to use to determine whether that 
threshold is appropriate or not, because the number of workers 
affected by any threshold is that--that measure is affected by 
things that have nothing to do with the appropriateness of the 
threshold, like how long it has been since the last update and 
whether the prior update was appropriate.
    The reason the 2016 rule had affected a lot of workers was 
because the rule had not been appropriately updated for over 40 
years. That is the reason why.
    Mr. Takano. Atrophy--the law that was meant to protect 
workers, abuses--I mean, the reason why they put this threshold 
in and protect salaried workers is because employers found 
clever ways to get around the overtime rule for hourly workers.
    And I find it a very specious argument that because we had 
neglected at the Federal Government to set a new threshold 
level, suddenly a rule which would have caught them up--
ordinary workers up, the judge then said, oh, there is too many 
people that would be eligible. It really angers me that such 
specious arguments are being used in this committee room to 
leave these workers vulnerable.
    Because the Trump administration's refusal to defend the 
salary level in the 2016 final rule, American workers are 
losing wages every day. In 2020, workers stand to lose about 
$1.2 billion in wages.
    Dr. Shierholz, my bill is based on provisions from the 2016 
Obama-era rule. How would the Restoring the Overtime Pay 
strengthen the overtime protections for workers?
    Ms. Shierholz. It would get--so workers who would get new 
protection--it would be 4.6 million workers who would get new 
protections under the Restoring Overtime Pay Act, or would get 
a bump up to the new salary, and there would be 8.9 million 
workers who earn between the old salary and the salary in this 
act who would get strengthened protection.
    Mr. Takano. Only one more question. Dr.--Mr. Winebrake, it 
really angered me, the model you illustrated. Does the 
Department of Labor have the authority to include automatic 
increase provisions in its rulemaking?
    Mr. Winebrake. Sure. Remember, in section 13(b) of the--
    Mr. Takano. Turn your microphone on, please.
    Mr. Winebrake. Sorry about that.
    In section 13(b) of the Fair Labor Standards Act, Congress 
explicitly gave the Department of Labor the authority to, 
quote, define and delimit the white collar exemption. And under 
that authority, that is an extremely broad grant of authority. 
The Department of Labor can implement a salary threshold, could 
determine what that threshold should be, and can index. There 
is nothing--no reason why it can't.
    Mr. Takano. Thank you.
    Madame Chair, my time has run out. But before I yield back, 
let me just say that this court ruling--I don't know that it 
would have taken years and years for this litigation to go 
through. Such a laughable ruling. Any appeals court would have 
to look at what the law explicitly says in statute, where they 
have the authority--this was no overreach here. And this is--
the current overtime threshold of overtime pay is out of date 
and does not support working families.
    Chairwoman Adams. The gentleman is out of time.
    Mr. Takano. I yield back.
    Chairwoman Adams. Thank you.
    I will recognize Dr. Foxx for 5 minutes.
    Dr. Foxx.
    Ms. Foxx. Thank you, Dr. Adams.
    Ms. McCutchen, as you indicated, salaries vary from region 
to region and industry to industry, and the cost of living 
varies across the country. Despite this reality, your testimony 
indicates that the discredited Obama DOL's overtime rule 
implemented a salary threshold at the 40th percentile of all 
full-time salaried workers nationwide, while in the past, DOL 
used the 10th and 20th percentile of salaries in the lowest 
wage regions and the industry sector with the lowest wages to 
determine the proposed threshold.
    Which approach is more appropriate, given the alarmingly 
negative impact the Obama rule would have had on small 
businesses? Is the current proposed salary threshold fair to 
small businesses and employees alike?
    Ms. McCutchen. Well, I was at DOL, we set the threshold--I 
was at DOL in 2004 when we chose the 20th percentile. So, it 
probably will not surprise you that I think that is the most 
appropriate level. Now, we doubled the 10th percentile that was 
used in 1958 because of the changes that we made in the duties 
test in 2004, just accounting for all that mismatch argument 
that we keep hearing about.
    In 2016--and nobody explained why that--that 20th 
percentile was not appropriate or was insufficient to avoid 
that mismatch or why doubling to the 40th percentile in 2016 
was necessary or--necessary at all, since we had already 
adjusted.
    Now, since 1940, DOL stated that the only purpose of the 
salary level is to screen out those obviously nonexempt 
employees. No one has presented any evidence at all that 
employees paid below the 40th percentile are obviously 
nonexempt, all of them, so that it is a reasonable proxy.
    So, it may be true in San Francisco, but it is certainly 
not true in rural communities in your own district that 
everybody below the 40th percentile is obviously nonexempt. I 
think the 20th percentile is the appropriate line to protect 
employees adequately in all States, in all regions, in all 
industries.
    Ms. Foxx. Thank you.
    Ms. McCutchen, the invalidated Obama Labor Department's 
overtime rule included a provision that indexed the salary 
threshold for exempt workers, which would likely have increased 
the threshold every 3 years without fulfilling all the 
procedural requirements designed to produce sound rules.
    How would this discredited approach have impacted business 
owners and, in particular, small businesses? And does the 
current DOL overtime proposal balance the need for timely 
updates to the salary threshold with the need for public input 
regarding potential impacts on stakeholders, including small 
businesses?
    Ms. McCutchen. With automatic increasing, which, by the 
way, doesn't occur anywhere else in the FLSA, would have really 
adversely impacted small business and local governments and 
universities because you would have changes that occurred 
automatically, regardless of the economic conditions, right? 
And so, the small businesses would be given increases, even if 
economic conditions didn't justify it, as our numbers, as you 
know, always are not fully up-to-date. They follow our major 
economic indicators. And so, it would be very--very 
precedential for that.
    I think DOL has struck a good balance, committing to review 
the salary levels every 4 years but not make increases until it 
goes through the notice and comment rulemaking required by the 
Administrative Procedures Act. And that is what the FLSA text 
requires.
    So, we set in 2004 rulemaking that Congress did not grant 
DOL the authority to make those automatic increases, and that 
has not changed. Congress has not passed an automatic 
inflationary increases to the minimum wage, as we have seen 
States do. So, if the minimum wage is not indexed based on 
inflation, how can anybody argue that it is appropriate to 
index by inflation an exemption from the minimum wage? I just 
don't think how that argument can possibly be true.
    Ms. Foxx. Well, thank you for that. You basically answered 
my third question. But I will make one quick comment.
    What you indicate is we could be in the midst of a 
recession and that automatic increase be written into the 
statute and have to go into effect, even if we were in the 
midst of a recession, right?
    Let me say, you have mentioned this--I don't know if you 
want to say anything else about your feeling that the 
Department does not have the authority by statute.
    Is there anything else you would like to add to that?
    Ms. McCutchen. I would like to add to that, speaking on my 
own behalf, because this is not the view of the Chamber, and I 
am probably an outlier.
    I do not believe the Department of Labor has the authority 
to set any minimum salary level for three reasons. First, the 
text of the statute does not include compensation at all. It is 
just duties. Second, other exemptions in the FLSA do include 
compensation requirements, like the section 7(i) exemption for 
commissioned employees, like the hourly rate for exempt 
computer employees. So, when Congress wanted to put in a 
compensation requirement, they knew how to do that.
    And, third, remember, these white-collar exemptions are 
exemptions from both the minimum wage and overtime. And I 
personally just don't see how Congress could have authorized 
the Department of Labor to set a minimum wage--for an exemption 
for minimum wage which is higher than minimum wage.
    Ms. Foxx. Thank you, Madam Chairwoman. Thank you for your 
indulgence.
    Chairwoman Adams. Thank you very much.
    I will recognize now the gentlelady from Pennsylvania, Ms. 
Wild.
    Ms. Wild. Thank you, Madam Chairwoman.
    Before I start, I would ask recognition and unanimous 
consent to introduce into the record a letter from the 
Pennsylvania Department of Labor and Industry. It is a letter 
supportive of an increase in the overtime exemption salary 
threshold for executive, administrative, professional, 
computer, and outside sales.
    Chairwoman Adams. Without objection.
    [The information referred to follows:]
  
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    Ms. Wild. Thank you.
    Ms. McCutchen, you have made it perfectly clear that you 
are opposed to automatic indexing. You are aware, are you not, 
that the Secretary of Labor, Mr. Acosta, publicly stated that 
the Department of Labor should consider automatic indexing to 
make updates more efficient than the time and resources 
intensive rulemaking process?
    Ms. McCutchen. Yes, I am aware of that.
    Ms. Wild. So, you disagree with him about that?
    Ms. McCutchen. Yes.
    Ms. Wild. Would you agree that automatic indexing would be 
more efficient on a time and resource basis than engaging in 
formal rulemaking?
    And I am just asking you whether you believe it to be more 
efficient on a time and resource basis, not whether you agree 
with it.
    Ms. McCutchen. I do not know. I mean, it is certainly 
against the law.
    Ms. Wild. It is certainly--I am sorry?
    Ms. McCutchen. It is against the Administrative Procedures 
Act, right. So, the Administrative Procedures Act was enacted 
to make regulations hard. So, the fact that it is hard to 
regulate is not a sufficient reason to ignore the requirements 
of the Administrative Procedures Act.
    Ms. Wild. Well, you are not disagreeing that including 
automatic indexing would be a legal aspect, would you?
    Ms. McCutchen. If Congress changes the statute to allow 
automatic--
    Ms. Wild. That could be done.
    Ms. McCutchen [continuing]. indexing, then it would be 
fine.
    Ms. Wild. And that would be in accordance with the 
Secretary of Labor's recommendations, right?
    Ms. McCutchen. I don't know if that is his most recent 
view. He did say that about 2 years ago in a Chamber of 
Commerce speech, which, of course, tells you he doesn't do 
everything the Chamber of Commerce wants, by the way.
    Ms. Wild. And in February of 2019, you were quoted in a 
Bloomberg article as saying that if the Department of Labor 
tries--and that was just in February of this year--tries to 
automatically index that, quote, we will bring suit in Texas 
again, end quote. Is that a correct statement of your quote?
    Ms. McCutchen. That is--as far as I remember, yes.
    Ms. Wild. Am I not correct that automatic updates would 
grant employers a degree of certainty and predictability, at 
least more so than whether proposed rules might be finalized?
    Ms. McCutchen. It is tough--predictability is tough because 
the method that the Department of Labor used in 2006 to set 
that salary level is not easily repeatable. In fact, Ron Bird, 
the economist for the Chamber and a former DOL Chief Economist, 
himself had trouble duplicating and replicating the analysis 
that got the Department of Labor to its current proposal. It 
took him months to do so. So, I doubt it would provide any 
predictability for a small business who is not a Ph.D. 
economist.
    Ms. Wild. Certainly, more predictable than a formal 
rulemaking process, is it not? You don't need to answer that.
    Let me switch over to Dr. Shierholz, I believe. You have 
heard this line of questioning. Can you tell us why your 
written testimony indicates that automatic indexing is crucial?
    Ms. Shierholz. Yes, and I will just make one correction. 
The 2016 rule, that was based on a series that was published on 
a quarterly basis by the Bureau of Labor Statistics. They 
could--anyone could look at that at any time and know exactly 
what to expect going forward.
    And the automatic indexing is absolutely crucial, because 
when something isn't indexed, that means that the threshold 
immediately erodes over time as a standard and it provides 
fewer and fewer and fewer protections--
    Ms. Wild. Exactly as we have seen happen, correct?
    Ms. Shierholz. Yep, that is exactly right.
    Ms. Wild. Let me switch to Mr. Winebrake. It's good to see 
you. Your testimony talks about employers who misclassify 
employees as management to fit that EAP exemption. And I know 
you have litigated a lot of these cases. You give a number of 
examples of fast-food people being classified as assistant 
managers, when in reality all they are doing is working cash 
registers and making burgers.
    Could you tell us, please, what, if any, impact would 
enactment of the Obama-era salary level have on the number of 
lawsuits that allege employer misclassification?
    Mr. Winebrake. It would have a huge impact. I have 
estimated, when I have looked at my law firm's inventory of 
white-collar misclassification cases, that if the salary 
threshold was $47,000 a year, we probably would have filed 70 
percent less lawsuits over the course of the last 5 years.
    Ms. Wild. Thank you very much. I yield back.
    Chairwoman Adams. Thank you.
    We will yield now to the gentleman from North Carolina, Mr. 
Walker, 5 minutes.
    Mr. Walker. Thank you, Madame Chair. And thank you to our 
panel for being here today.
    Our friends and colleagues claim that the Department of 
Labor proposed overtime rule hurts workers the most, when in 
reality the Obama Administration's Department of Labor overtime 
rule would have resulted in millions of employees who perform 
exempt duties being reclassified from salaried to hourly 
workers.
    Ms. McCutchen, I believe this negatively impacts their 
opportunities for career advancement, which poses detrimental 
effects on our local businesses and workers. Can you expand on 
some of the negative impacts on the 2016 Obama overtime rule 
that would have on small business workers? We are not talking 
abstract here, we are talking about the reality of it. Would 
you address that, please?
    Ms. McCutchen. Certainly. And thank you for asking me that 
question. Employees who have been exempt view being 
reclassified as nonexempt as a demotion. And you are nonexempt, 
you have to track your time. These employees hate having to 
punch a time clock. When you are an exempt employee, you can 
leave work early on Friday. You can take time off to go to your 
children's sporting event, and you do not get docked any pay.
    Employees who are reclassified, in particular--in addition 
to the opportunities, they do not like having their time 
closely watched and monitored and losing pay when they decide 
to take a half day off.
    Mr. Walker. Sure. A lot of that is just a relationship on a 
good employee that earns some of those privileges because the 
amount of work and some of the things they are getting 
accomplished, and it really does put them in a negative 
situation. The rules around overtime pay are also complex.
    Many American small businesses such as franchises do not 
have the extensive legal teams and accounting departments to 
help navigate through these laws. Very complicated. Yet, many 
franchisors and other prime companies are ready to provide 
guidance to their franchisees and business partners to help 
them implement the Department's new rule requirements. But 
concerns over triggering joint employer liability, as you know, 
causes hesitation to provide such guidance. With over 24,000 
franchisees just in my home state of North Carolina, this kind 
of guidance would have a significant impact.
    So, would it be beneficial, Ms. McCutchen, for the 
Department of Labor's proposed rule to include a safe harbor 
provision similar to the language included in the Department's 
associated health plan rule to ensure employers are protected 
from unnecessary joint employer liability when promoting 
overtime pay in the workplace? Long question, but would you 
speak to that?
    Ms. McCutchen. I think it would be incredibly beneficial. 
And I don't see any downside or any barrier to the Department 
of Labor for doing so. As you know, most franchisees are small 
businesses, they do not have lawyers, they do not have H.R. 
staff. So, they need to get the guidance. They need to learn 
and educate themselves about the FLSA in some way in order to 
comply.
    And the Department of Labor and the Small Business 
administration, they just don't have enough resources to do 
that. Now, the Department of Labor has done great this year in 
enforcement. They collected a record number of back wages this 
year, $305 million, $33 million more than in 2017, with fewer 
investigators. But enforcement is not enough. You will never 
have enough investigators to go into every business, 
particularly small businesses. So, the only way to improve 
compliance and to help these franchisees to comply is an idea 
like yours.
    Mr. Walker. Just the facts, Ms. McCutchen. The DOL's 
methodology in calculating the updated salary threshold is 
based off the 2004 method used when you were serving as 
Administrator of the Wage and Hours Division. Can you please 
explain how the 2004 methodology avoided the damaging 
consequences of the 2016 rule and would still do so today?
    Ms. McCutchen. Well, it is the difference in the 
percentile, right. The 20th percentile and the 40th, which 
basically doubles the salary level threshold, and that is what 
happened in 2016, but it is also the data that they use. We 
looked at lower wage industries and lower wage regions. The 
methodology in 2006, and frankly, the methodology proposed in 
this proposal, includes, for example, salary data from 
Virginia, Maryland, and the District of Columbia, which are 
three of the 10 highest wage areas in the country. So, you got 
to look at the data, too.
    Mr. Walker. Sure. Well, we thank you for being a witness. 
We thank you for your expertise in this area.
    With that, I yield back, Madame Chair.
    Chairwoman Adams. Thank you.
    I will yield now to the gentlelady from Michigan, Ms. 
Stevens.
    Ms. Stevens. Thank you, Madame Chair.
    I would like to submit, by unanimous consent, two letters 
for the record, one from the Governor of my State of Michigan, 
Governor Gretchen Witmer, and the other from the AARP. These 
comments were submitted to the Wage and Hour Division at the 
Department of Labor regarding the Department's proposal to 
narrow the scope of workers eligible for overtime protections.
    Chairwoman Adams. Without objection.
    [The information referred to follows:]
    
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    Ms. Stevens. Thank you all for joining for today's hearing. 
And thank you to our remarkable chair for holding this hearing 
on the restoring the value of work, evaluating the Department 
of Labor's efforts to undermine strong overtime protections.
    This is an important part of our committee's work as we 
evaluate what the American worker is experiencing as we have 
proposed and sought to put through our committee legislation 
that will raise the minimum wage, and as we engage in this 
conversation around what it actually means to put in a full 
day's work and seek to get ahead. And it is a point of irony as 
we, you know, often have grand conversations within this body 
around regulatory burdens, and yet we are looking to unleash or 
remove some of those burdens for our workers and help them get 
ahead as we tackle this topic.
    But my questions are going to start with Dr. Shierholz. 
Strong work force protections and overtime protections, in 
particular, are critical to older Americans in the work force. 
With older adults continuing to get pushed out of the 
workplace, 56 percent to be exact, before they decide to 
retire, it is more important than ever that our laws protect 
and incentivize living wages for older adults, especially in 
the midst of a retirement savings crisis.
    So, Dr. Shierholz, what are some segments of the work force 
that are most impacted by weak overtime protections?
    Ms. Shierholz. Uh-huh. So, one of the things I can do is 
look at the workers who would be left behind by the current 
proposal relative to the workers that would have gotten 
protections under the 2016 rule. And I have some things in 
front of me, but 1.7 million workers over the age of 55 would 
be left behind by the current proposal relative to the 2016 
rule. So, you are right, we would see a lot of workers--older 
workers affected, along with women, along with people of color, 
along with parents. It really hits the broad middle class.
    Ms. Stevens. And additionally, weak overtime protections 
for all Americans greatly impacts how much time and resources 
family caregivers are able to allocate to their loved ones, 
especially as workers with lower salaries are, in many cases, 
required to work many extra hours without any pay at all.
    And I was wondering, Mr. Winebrake, in your experience 
representing workers, how does a low salary level test and thus 
weak overtime protections impact employees' work life balances?
    Mr. Winebrake. Sure. Well, as I said in my testimony, 
there's this business incentive to shift all of the work onto 
the salaried employee because the company doesn't have to pay 
anything extra for that extra work. It's--I have represented 
many clients who have worked, on a regular basis, 60, 65, 70 
hours a week. I have also--many of my clients have been 
referred to me by workers' compensation lawyers. And the reason 
for that is because when you are working 65, 70 hours a week 
hauling inventory at a dollar store, or on your feet all day in 
a kitchen, you get hurt. You know, you get hurt at work.
    And so even though these individuals are called executives 
for purposes of the law, they are not executives, they are blue 
collar workers, and they are getting hurt. This is also taking 
time away from their families, and they very much resent that, 
that they are working extra hours for free and not being able 
to be home with their kids or their spouse.
    Ms. Stevens. Thank you.
    And with the remaining time I have, Ms. Babcock, I wanted 
to recognize you for your leadership being an H.R. 
representative and testifying here today, particularly given 
the work that you do--the paperwork that you have to do, the 
regulations that you need to comply with. And, you know, if 
there is any other points here particularly along the lines of 
the--on that paperwork front that you could shed light on from 
your experience, we would love to hear from you.
    Ms. Babcock-Stiner. Absolutely. Thank you. One of the 
things that comes with the automatic updates, employers do like 
regulatory predictability and stability. And so, when we have 
these drastic and sporadic changes in the threshold that, you 
know, range in these dollar amounts, in these increments of 
time, it is very hard for us to implement and kind of play 
catch-up. So, we actually do prefer regulatory predictability.
    And as far as paperwork that is--certainly, what we seem to 
be making a living of in the H.R. world, but we really do want 
to reduce it, and one of the things about that salary--
    Chairwoman Adams. The gentlelady is out of time.
    Ms. Stevens. All right. Thank you. I yield back.
    Chairwoman Adams. All right. Thank you.
    I will recognize the gentleman from Virginia, Mr. Cline.
    Mr. Cline. Thank you, Madame Chair. Thank you for holding 
this hearing.
    It is amazing to me that we are holding a hearing that 
considers going backward when the economy is doing so well. We 
should be focused on reducing regulations so that businesses 
have more flexibility to provide the best options to their 
employees.
    The Department of Labor has rolled back more regulations 
than any other Federal agency in the last 2 years, and I 
commend them for that. And there are tangible results that all 
of our constituents are benefiting from no matter where you 
are. The economy is booming. We have the lowest unemployment 
rate in 49 years, 3.6 percent jobless rate, including part time 
is the lowest in 19 years.
    GDP, the last two quarters, 2.2 and 3.1 percent in the 
first quarter. 238,000 new jobs created at the start of the 
year. 151,000 in the past 3 months. But only 75,000 new jobs 
created in May. There is a danger, there is a real danger of 
this economy slowing. And to even consider additional 
regulations that would take this economy in the wrong 
direction, quite frankly, it is very distressing that we are 
even talking about them.
    So, I will ask Ms. McCutchen. Many workers place a high 
value on workplace flexibility, which allows them to maintain 
certain aspects of their personal life that are important to 
them. This economy is definitely focused on workers having 
choices because unemployment is so low. So how would this Obama 
Department of Labor overtime rule, which we are lucky that it 
did not go into effect because, quite frankly, it would have 
started us behind the eight ball before this economic recovery 
even began, and the current boom would have been slowed by so 
much more.
    How would this rule have undermined the flexibility that so 
many workers value? And can you elaborate on the differences 
between salaried workers and hourly workers when it comes to 
workplace flexibility?
    Ms. McCutchen. Let me take your last question first. A 
salary--an exempt employee has a guaranteed salary. That means 
regardless of the hours they work, whether under 40 or over 40 
or even an hour, they get their full salary in any week in 
which they perform any work. A nonexempt employee is paid for 
the hours they actually work, and that really comes into play 
with flexibility.
    It means that if you are reclassified as nonexempt, your 
hours are going to be closely watched, because although we can 
force an increase to the minimum salary level, we can't force 
employers to provide overtime hours. And so, the hours that 
they work are forced to be under 40 because of the cost, and I 
think that is even in Ms. Babcock-Stiner's testimony. That is 
one of the options.
    And a lot of employees prefer to work more. They prefer to 
work different times, especially millennials. So, less 
opportunity for putting in the extra hours in order to advance 
up the chain in a corporation, more control of the hours you 
work and when you work because your employer needs to know when 
you are working. So there goes all the teleworking 
opportunities for, especially millennials, who prefer to work 
at home and don't want the nine to five job.
    Mr. Cline. And with all the disruption that this rule 
caused or was in the process of causing by more than doubling 
the salary threshold, can you speak to the impact that it had 
on small businesses? You spoke to it earlier. But small 
businesses are a major part of my district and just about 
everybody's district. But, in particular, in this gig economy 
that we have, and you spoke to that, small businesses are being 
created and changing and shifting at even faster rates.
    Ms. McCutchen. Well, the money--the extra money for the 
overtime pay just doesn't come down from the air. My mom used 
to tell me, money doesn't grow on trees, right? So, for small 
businesses, they have to find that extra money that the 
government is requiring them to pay from somewhere. It has to 
come from increased consumer prices. It has to come from 
reduced number of jobs or hours. And in this day where we are 
all concerned about the impact of artificial intelligence, it 
can often come from automating jobs completely, when the price 
of--the cost of providing that labor and that overtime exceeds 
the cost of actually automating.
    Mr. Cline. Thank you.
    And, Madame Chair, I yield back the balance of my time.
    Chairwoman Adams. Thank you.
    I will recognize the gentlelady from Minnesota, Ms. Omar.
    Ms. Omar. Thank you, Chairwoman. I would like to ask 
unanimous consent to submit for the record a letter from the 
AFL-CIO, which emphasizes the need for strong overtime 
regulations.
    Chairwoman Adams. Without objection.
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    Ms. Omar. Dr. Shierholz, in your testimony, you describe 
overtime protection as an essential part of ensuring a thriving 
middle class. I couldn't agree more with that assessment. If an 
employer expects their workers to put in time beyond the 
standard 40-hour workweek, then that work should be 
compensated. If workers are going the extra mile, why shouldn't 
employers be expected to do the same? But after seeing the 
latest overtime proposal, I am afraid this protection is being 
eroded, just like so many others have been in the past few 
years. I am concerned that the current administration's only 
goal is to make sure that we have an economy that only benefits 
the wealth.
    With that in mind, Dr. Shierholz, can you tell us how many 
workers would be left behind by the Trump administration's 
proposal?
    Ms. Shierholz. Yep. I calculated this using the exact 
methodology that DOL uses and found that the workers who would 
have gotten protections under the 2016 rule but will not get 
protections under the Trump proposal, if it is implemented, 
number at 8.2 million workers.
    Ms. Omar. And which workers would be hurt the most?
    Ms. Shierholz. It is a real cross section of the middle 
class, but I find that we have these numbers, 4.2 million will 
be women, 3 million people of color, 2.7 million parents of 
children under the age of 18. It really will hit the middle 
class very hard.
    Ms. Omar. And this isn't just a problem for today's 
workers. This proposal will have a long-term impact. By not 
providing automatic adjust in the future, the Department of 
Labor would likely be short-changing workers for many years to 
come.
    Dr. Shierholz, could you share more details about how 
working people would be hurt when the salary threshold remains 
unchanged for a long period of time?
    Ms. Shierholz. Yep. Again, using the exact same methodology 
for calculating the impact that DOL used, I found that 
workers--if the 2019 proposal is implemented, workers will get 
$1.2 billion less than they would have under the 2016 rule. And 
due to the lack of automated -automated--automatic updating in 
the proposal, that would grow to $1.6 billion over the first 10 
years of implementation.
    Ms. Omar. And these are--this is real money in their 
paychecks. This will affect their ability to buy groceries, to 
be able to pay their bills, rent, possibly move to a new 
district with better schools. But as we have heard today, a lot 
of these workers would be denied that extra income under the 
current proposal.
    Could you please tell us how this proposal will cost 
workers in terms of lost earnings compared to the 2016 final 
rule?
    Ms. Shierholz. Yep. So, it will--workers will get $1.2 
billion less. And I think another thing is they will work more 
for that less money, because we know that when we implement 
overtime protections, the people will work less hours for free. 
So, it hits both on you get less money and you work more, so it 
really is a hit to middle-class workers.
    Ms. Omar. So essentially, we are asking people to work for 
less money.
    Ms. Shierholz. Uh-huh.
    Ms. Omar. And society will eventually supplement these 
people because their children will probably need food, so they 
will go on SNAP programs. They will probably need housing 
assistance, and we will try to supplement that. They will 
probably need to go to college, and we will supplement that. 
And so, by not making sure that they are being compensated for 
the work and that we are not paying unlivable wage, we will 
ultimately be costing all of us more money.
    Ms. Shierholz. I couldn't agree more.
    Ms. Omar. Thank you so much. I yield back.
    Chairwoman Adams. The gentlelady from Georgia, Mrs. McBath, 
is recognized for 5 minutes.
    Mrs. McBath. Thank you, Madame Chair.
    I want to thank each and every one of you for your 
testimony today. Thank you for bearing with us. And I know that 
this question--or this has been discussed moments earlier, 
however, I would like to get a different perspective. So, Ms. 
Babcock-Stiner, I will probably be asking you most of the 
questions.
    I would like to know, from your perspective, how does the 
failure to regularly update the salary level impact employees? 
And are automatic updates beneficial for employers?
    Ms. Babcock-Stiner. So, from an employer perspective, 
again, we do like regulatory predictability and to know what is 
coming and when it is coming. In the past, there have been 
large periods of time between the updates to the salary 
threshold, and then updates themselves have been widely varied 
as well.
    So, from an employer perspective, it does make our life a 
little bit easier to know what is coming, as far as the 
automatic updates.
    Mrs. McBath. Okay, thank you. Also, to Ms. Babcock-Stiner, 
how can nonprofits, institutes of higher education, and other 
employers with budget constraints respond to increases in 
salary thresholds?
    Ms. Babcock-Stiner. So, first of all, we have heard a lot 
about nonprofits today and people saying that, you know, they 
will be amongst the biggest victims here. And the reality is we 
do operate under a mission, so we think a little bit bigger 
than just one single bottom line. And so, the other thing to 
keep in mind is the pressures that are put on nonprofits, the 
solution here is not to take away worker protections; the 
solution is to increase the funding for nonprofits. And so, 
short of that, which doesn't seem to be happening, we do have a 
lot of options for shifting around job duties.
    Shifting around job duties does not necessarily mean that 
the people who are exempt are going to be working significantly 
more hours. Shifting around job duties, you know, it gives us 
an opportunity to maybe give somebody a pay increase to 
maintain their exemption status, and they have some additional 
job duties now that go with it.
    From an H.R. perspective, we don't like increasing salaries 
for the sole purpose of, you know, regulation basically, but 
when we can tie it to a small increase in job duties, it 
becomes a very effective tool, from our perspective.
    Mrs. McBath. Thank you. One more question. When a salary 
level is too low, what practical effect does it have on the 
ability of employers to determine whether their workers are not 
eligible for overtime under the EAP exemptions?
    Ms. Babcock-Stiner. So, the salary threshold or anybody who 
is below that is automatically basically disqualified for the 
exempt status. And it is the number of people who are above the 
salary threshold that are really relevant from an H.R. 
perspective, because those are the people who I now have to 
examine each and every one of their job duties to figure out 
whether they are exempt or not.
    So, when the threshold is so low, it becomes, you know, 
basically worthless as a tool to make those nonexempt 
determinations. And so now we have constantly shifting job 
duties every time job duties change, every time direct reports 
change. Even if a manager is not performing well, you actually 
have to reexamine their exemption status to see if they still 
qualify for it.
    So, the lower the threshold, the more numbers there are 
people above it, which means I have to do a lot more work on 
the duties test.
    Mrs. McBath. Thank you so much. I reserve the balance of my 
time to my colleague, Ms. Jayapal, from Washington.
    Chairwoman Adams. Yes. Ms. Jayapal is recognized.
    Ms. Jayapal. Thank you so much for yielding, Congresswoman 
McBath. I do have a full statement for my 5 minutes, but I have 
one question that I wanted to follow-up on.
    Dr. Shierholz, Ms. McCutchen stated that the 2004 DOL 
doubled the percentile from 10 to 20 percent to respond to 
change in the test. Is this the full story?
    Ms. Shierholz. No. In fact, in that rule, they are very 
clear that change from the 10 to 20 percentile was actually 
accounting for other changes in the data set that was used. 
There were technical changes in the data set. So that increase 
in the threshold accounted for that. It did not account for the 
change in the duties test. In fact, there is many places in 
there where they actually talk about how this is a test that is 
consistent with the weaker duties test.
    Ms. Jayapal. Thank you. I thought that was important to 
clarify, Madame Chair.
    Chairwoman Adams. Thank you. Ms. Jayapal, you are 
recognized for 5 minutes.
    Ms. Jayapal. Great. Thank you.
    Thank you all to our witnesses for being here today. Your 
time is really precious, and actually, that is what this 
hearing is about, whether we think people's time is precious. 
Whether this administration thinks that the time of middle-
class people who work for a salary is precious enough to be 
protected. So, I appreciate you choosing to spend your time 
with us.
    I want to share two stories with you from constituents in 
my district. Heather, who was a kitchen manager, says, I worked 
60 to 90 hours every single week. They wanted me there at 10 
a.m. every day for receiving and ordering and through our 
busiest kitchen hours, which lasted right up until closing at 1 
a.m. After 9 months at that job, my body completely rebelled, 
and I had a full-on nervous breakdown.
    Here is Annie's story who works in retail. I am often asked 
to stay later than my scheduled shift time, regardless of my 
state of health or my scheduled shift. I am told that I need to 
stay until the job is done, even if that means sleeping at the 
store.
    These are two of the 8.2 million workers who would have had 
their precious time protected by the Obama Administration's 
carefully tailored overtime protections. Of those workers who 
would have gotten protections, 2.7 million are parents of 
children under 18. Anyone who is a parent can understand, and I 
am one myself, anyone who is a parent can understand how 
important and precious your time is and how important it is to 
protect and value that time.
    Today, we know that the Trump DOL has refused to vigorously 
defend carefully reasoned overtime protections in court, 
instead, coming up with this weak, new overtime salaried 
threshold with no inflation adjustments that would leave many 
workers behind. And I am proud to say that, by contrast, my 
home state of Washington has just proposed very thoughtful 
salary overtime protections.
    Under these State protections, by 2026, salaried workers 
won't be left out of overtime protections, unless they earn 2-
1/2 times the minimum--the State minimum wage. As my Governor, 
Governor Inslee, put it, we know a strong economy goes hand in 
hand with a strong and well-supported work force. My State 
knows that people's time is precious and that they should be 
compensated fairly when they work so hard. And I don't 
understand why the Trump Department of Labor doesn't understand 
that.
    Dr. Shierholz, you were the Chief Economist for the 
Department of Labor under President Obama. You contributed to 
the worker protections that the Trump DOL failed to defend. 
Under those protections, workers would have had to earn a 
higher salary of $47,476 before they could be considered to be 
even possibly exempt from overtime pay, and that salary level 
would be updated automatically every 3 years.
    Why is it important to you, as the Chief Economist of the 
Department of Labor, to ensure that there would be those 
automatic adjustments?
    Ms. Shierholz. When you don't have an automatic adjustment, 
the standard just immediately starts eroding the second it goes 
into effect. And as time passes, you get more and more--it 
erodes more and more. And if you look, between 1938 and 2004, 
the threshold was updated, on average, every 11 years. That is 
the kind of--those are the kind of gaps that are going passed 
over and over again where workers are just left behind.
    Ms. Jayapal. And the Trump administration's proposal fails 
to include automatic updates, but it instead includes this weak 
sort of statement of intention to propose updates every 4 
years. What would be the impact of that failure, the 
administration's failure, to include automatic increases in 
that final rule?
    Ms. Shierholz. Yes. An unenforceable sort of vague 
commitment to notice and comment rulemaking every 4 years is 
just a tried and true recipe for huge stretches to go by 
without any update.
    Ms. Jayapal. So, workers would just continue to be hurt. 
And even if the Department of Labor does adhere to its 
commitment, would it be enough to protect workers in the 
future?
    Ms. Shierholz. Even if--In the very unlikely event they 
were able to up--
    Ms. Jayapal. I always want to give the benefit of the 
doubt.
    Ms. Shierholz. Okay. So, in that event, I still think that 
is too long. The Obama threshold, by doing it every 3 years, 
that pushed the boundaries of what is okay to let that erode 
over time. I mean, I wished it were a year--we did it every 
year. So, going 4 years is just pushing it too far.
    Ms. Jayapal. And, Mr. Winebrake, Secretary Acosta publicly 
stated that the Department should consider automatic indexing, 
but Ms. McCutchen made it clear that management lawyers would 
sue the administration if indexing or cost of living 
adjustments were included.
    Do you think that the Trump Department of Labor bowed to 
the threats of labor management side lawyers and lobbyists when 
it failed to include that automatic increase mechanism in its 
proposal?
    Mr. Winebrake. Well, I don't know what the motivation was 
behind the administration's conduct, but I will say that at the 
Fifth Circuit Court of Appeals in the appeal to the district 
court's decision, the Department of Labor totally changed its 
litigation position. In the opening appellate brief, it said 
that indexing was legal. And then in the reply brief filed by 
the Trump administration, it dropped that argument.
    It is very troubling as a lawyer, and I think we should all 
be troubled, those of who us just care about the government as 
an institution, when in the middle of a litigation, a 
governmental agency literally switches its litigation position 
in the middle of a case. So, I don't know the motivation behind 
that switch, but I know that as a lawyer, I am troubled by the 
kind of instability that is created when we can't rely on our 
government to take a consistent litigation position and carry 
it through. That is what is troubling to me.
    Ms. Jayapal. Thank you for that.
    And, Madam Chair, before I yield back, could I have 
unanimous consent to introduce into the record Governor 
Inslee's comment letter on the 2019 NPRM, and also a Bloomberg 
News article that quotes Ms. McCutchen to the effect of 
management lawyers suing the administration?
    Chairwoman Adams. Without objection.
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    Ms. Jayapal. Thank you.
    Chairwoman Adams. I want to recognize the Chair of the 
Education and--oh, I am sorry, Mr. DeSaulnier.
    Mr. DeSaulnier, you are recognized for 5 minutes. I 
apologize to the Chair.
    Mr. DeSaulnier. That is quite all right. I would have taken 
second place to the Chair.
    Well, I want to thank you all for being here.
    I also wanted to ask unanimous consent to submit for the 
record a letter from State attorney generals opposing the Trump 
administration's--
    Chairwoman Adams. Without objection.
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    Mr. DeSaulnier. Ms. Shierholz, I wanted to ask you sort of 
a disposable income, economic growth, regional question. And I 
do this in the context of having been in the restaurant 
business for 35 years in California, where we go beyond the 
Federal laws. But we had a real problem with the underground 
economy, and we actually worked jointly, when I was in the 
legislature, Republicans and Democrats, because the chamber was 
concerned that people who weren't complying and weren't paying 
our rules were undermining conscientious, law-abiding 
businesses.
    And the relationship to the growth and the economy--now, I 
know every State and every region is different, but I would 
argue, our GDP, particularly in the Bay Area, has grown, 
because we do have good protections for workers. And as 
somebody in the restaurant business, I couldn't afford to pay 
people anything. But it was my job to manage overtime, which 
created more jobs because--you also wanted people in an area 
where there is high cost of living, but difficult 
transportation issues in the service industry to get people 
there, be able to get a livable wage, so they can afford to 
actually live in that region. And this is the context of these 
urban regions are driving the national economy 65 percent--64 
percent of the GDP comes from these urban regions. I don't 
think that is right. I think we should be dispersing more jobs 
around the country. I have some people in the Bay Area who 
disagree with me when I say Google should take more of the jobs 
somewhere else.
    But the dynamics of a regional economy, having people in 
the service industry, for instance, have enough disposable 
income. Because when we raised the minimum wage in California, 
I would argue, as the only member of the legislature who was 
also a member of the California Restaurant Association, that as 
long as it was proportionate, it was good for me, because there 
was more disposable income.
    So, could you talk to that a little bit from an economic 
standpoint, knowing that you can't pay everybody everything 
they want? But we are going in the opposite direction. And I 
would say this in the context of it is a great economy if you 
are not relying on wages. When you rely on wages, you are 
following further behind. When you look at the metrics on 
capital investments, if you own a house, if you own 
investments, it is a great economy. But this is what is adding 
to our inequality.
    So maybe you could just give a little summary of my 
comments.
    Ms. Shierholz. Yep. No, I think that is really important. 
So, we know we have had four-plus decades of rising inequality, 
stagnant wages for working people. And one key driver of that 
is the erosion of labor standards, like the overtime 
protections we are talking about today. If we strengthen those 
protections, we reduce inequality, and what that does is it 
gets money into the hands of people who are likely to spend it, 
rather than people who have a low marginal propensity to 
consume, is the term that economists have, but people who have 
no choice but to spend the money, they get it into their local 
economy, that generates more demand for goods and services, 
that generates jobs. That's good for everyone.
    So, in this way this actually--these kinds of protections 
are deeply important, not just to the individuals who are 
protected, but to the economy as a whole.
    Mr. DeSaulnier. And when you look at the regional 
disparities between urban and rural America, this reinforces 
the disparities, correct?
    Ms. Shierholz. That is exactly right.
    Mr. DeSaulnier. Mr. Winebrake, I want to ask you a question 
about litigation, unnecessary litigation, and our Ranking 
Member has some good points on this. But I read a book by 
Francis Fukuyama, and I actually agreed with him, called 
``Trust.'' And his whole argument as he looks at the amount of 
infrastructure to get people to do the right thing, 
particularly in the business community, and he measures the 
United States and Japan and Europe over time, and I think we 
went from 5 percent in the fifties to 25 percent.
    One of his arguments is, I take from it, is that proper 
regulation is a better enforcer of ethical behavior than 
private rights of action. You sort of said this. Your business 
actually went down when the regulation was more focused. Could 
you maybe elaborate on that observation?
    Mr. Winebrake. Sure. So, a higher--what the salary 
threshold does is it creates a bright-line test. Either if--
let's say the salary threshold were $47,000, that is a bright-
line test. Most of the litigation in white-collar 
misclassification cases happens with employees underneath the 
$47,000 threshold. In fact, when I look at my inventory, it is 
people between $35,000 and $47,000. So, if for all those 
workers who right now it's iffy whether they are misclassified, 
we have to look to their duties. If instead we just had the 
bright-line test, all of those employees underneath $47,000 
would get reclassified without us having to analyze the duties 
test. And, therefore, all of that litigation where lawyers 
fight about is the person's job duties executive or not.
    All of that goes away, and that is the basis for--all of 
the cases that we filed are happening in that gap between the 
Trump administration proposal and the Obama Administration 
proposal.
    Mr. DeSaulnier. I appreciate that. Another incentive for us 
to do what the Obama Administration did, less work for lawyers.
    And I yield back.
    Mr. Winebrake. I don't want to put myself out of business, 
but--
    Chairwoman Adams. The gentleman is out of time. Thank you.
    I want to now recognize the distinguished Chair of 
Education and Labor, Mr. Scott, of Virginia.
    Mr. Scott. Thank you, Madame Chair.
    I just want to get a couple of things on the record. First, 
the Ranking Member talked about the system allowed a single 
judge to set aside rules and regulations, and that is true as 
part of the system. It is also part of the system, as Mr. 
Winebrake pointed out, the appeal is part of the process. Not 
only did the administration switch sides, they also essentially 
suspended the appeal altogether, all the rulemaking. That is 
not part of the system, we should have a full decision.
    Second, Mr. Winebrake, we heard--I think we heard that if 
you are a salaried employee and showed up 1 hour during the 
week, that you could get your full salary. Is that right?
    Mr. Winebrake. It is more complicated than that. My friend 
is correct that if a salaried employee works under 40 hours, 
she could still get the full salary. It is not quite as cut and 
dry as that.
    Mr. Scott. If somebody showed up an hour for the week, they 
would get fired. Isn't that right?
    Mr. Winebrake. Sure. And the other thing to keep in mind, 
Mr. Chairman, is when these salaried employees don't work a 
full week, which is very rare, they are running their leave 
time, they are having to take sick time or vacation time. It is 
not as if it is just free.
    Mr. Scott. I just wanted to make the point that if somebody 
shows up an hour a week, isn't going to get the full salary.
    Ms. Shierholz, the Department of Labor in 2016 did some 
evaluations, and we have heard about higher education--
    Ms. Shierholz. Uh-huh.
    Mr. Scott [continuing]. for example. Most of the people in 
higher--many people in higher education are already exempt, 
like teachers, coaches, department heads, and things like that. 
Did they calculate that about less than 4 percent of workers in 
college would be affected by the rule and most of those don't 
work overtime anyway, and that the effect on payroll would be 
about 2/100th's of 1 percent?
    Ms. Shierholz. Yep. I think that is really important. 
Community colleges, 4-year colleges, the vast majority of their 
staff are teachers, and they are exempt from this entire 
discussion. Research universities may have post-docs who are 
researchers who don't do any teaching that may be affected. 
Asking big research universities to pay their Ph.D. employees 
$50,000 a year is, you know, not an overreach.
    Mr. Scott. And for nonprofits, less than 1 percent of 
nonprofit workers are both directly affected and regularly work 
overtime. Is that right?
    Ms. Shierholz. Yep. Yes.
    Mr. Scott. And that for small businesses, the estimate was 
that the effect on payroll would be less than 1 percent.
    Ms. Shierholz. That is right.
    Mr. Scott. Okay. Now, one of the things about the exemption 
is that it is for bona fide executive, administrative, and 
professional personnel. At this administration's level, 15 
percent of the people would be covered by that. How likely is 
it that somebody who is making less than 85 percent, of 
salaried employees, is actually a bona fide executive, 
administrative, and professional personnel?
    Ms. Shierholz. No, that's a really good point. So, one of 
the issues is the duties test is so weak that somebody can be 
classified as executive, administrative, or professional if 
they spend 99 percent of their time actually doing nonexempt 
duties. And so, the salary threshold is really important in 
that case to make sure that workers who are doing a ton of 
nonexempt duties aren't getting taken advantage of if they are 
being paid really low salaries.
    Mr. Scott. I think we heard somewhere along the lines that 
if you are not exempt, that you have to be reclassified and 
paid as an hourly worker rather than a salaried worker. Is that 
true?
    Ms. Shierholz. That is absolutely false. There are millions 
of salaried workers in this country who get overtime when they 
work more than 40 hours a week. There is nothing in this rule 
that says you have to reclassify salaried workers--
    Mr. Scott. So, if you are not exempt and you are entitled 
to overtime, it would just be prorated based on your salary?
    Ms. Shierholz. Yes.
    Mr. Scott. Now, Mr. Winebrake, you kept talking about 
people working more than 40 hours a week. If they are not 
exempt, they get paid time and a half. Is that right?
    Mr. Winebrake. That is correct.
    Mr. Scott. And if they are exempt, if they work 10 hours 
extra during the week, how do they--much more do they get paid?
    Mr. Winebrake. They get paid zero.
    Mr. Scott. I mean, not time and a half.
    Mr. Winebrake. They get paid nothing. A salaried employee 
just gets no pay for their extra work.
    Mr. Scott. Now, does that extra work that is not paid for 
have to be executive, administrative, or professional?
    Mr. Winebrake. To Dr. Shierholz's point, it generally is 
not. It is generally the reason that--
    Mr. Scott. They just work whatever hours they work. They 
could be stocking shelves for those extra hours.
    Mr. Winebrake. Sure.
    Mr. Scott. But you do not have to be--you are taking 
advantage of the executive, administrative, or professional 
exemption, but the extra hours do not have to be executive, 
administrative, or professional?
    Mr. Winebrake. They generally are not. Correct.
    Mr. Scott. Thank you, Madame Chair.
    Chairwoman Adams. Thank you.
    And thank you all for your testimony and for your questions 
as well.
    I want to remind my colleagues that pursuant to committee 
practice, materials for submission to the hearing record must 
be submitted to the committee clerk within 14 days following 
the last day of the hearing, preferably in Microsoft Word 
format. The materials submitted must address the subject matter 
of the hearing. Only a member of the committee or an invited 
witness may submit materials for inclusion in the hearing 
record. Documents are limited to 50 pages. Documents longer 
than 50 pages will be incorporated into the record via internet 
link that you must provide to the clerk within the required 
timeframe. Please recognize that years from now that link may 
no longer work.
    Again, I want to thank the witnesses for their 
participation today. What we've heard is very valuable. Members 
of the subcommittee may have some additional questions for you, 
and we ask the witnesses to please respond to those in writing. 
The hearing record will be held open for 14 days in order to 
receive those responses.
    I remind my colleagues that pursuant to committee practice, 
witnesses' questions--witness questions for the hearing record 
must be submitted to the majority committee staff or committee 
clerk within 7 days. The questions submitted must address the 
subject matter of the hearing.
    Before recognizing the Ranking Member for his closing 
statement, I would ask unanimous consent to enter the following 
materials into the record: The National Employment Law Projects 
comment letter opposing the Trump Administration's 2019 
proposal; a 2016 letter from over 200 college and university 
professors in support of the 2016 rule.
    Without objection.
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    Chairwoman Adams. I now recognize the distinguished Ranking 
Member for his closing statement.
    Mr. Byrne. Thank you, Madam Chairwoman. And I do agree with 
you, this has been a very enlightening session.
    Let me begin by asking unanimous consent to place into the 
record letters from the following organizations expressing 
concerns with the Department of Labor's 2016 overtime rule: the 
American Hotel and Lodging Association, College and University 
Professional Association for Human Resources, and the Society 
for Human Resource Management.
    Chairwoman Adams. Without objection.
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    Mr. Byrne. Thank you.
    So, what this is really supposed to be all about are the 
people in America who work for a living, and sometimes in 
Washington, we forget them. We start thinking about things 
other than what this law is really aimed at doing, and that is 
protecting and helping men and women that work every day, yes, 
for a paycheck, but they do a lot of things for everybody in 
this country, and America wouldn't be America without them. And 
so, this law was designed to help them.
    When we don't do anything about it, when we wait years and 
years and years before we change the threshold, we are not 
helping them. So, what we have was, prior to the Bush 
Administration, a period--a long period of time, nothing. Then 
at least the Bush Administration took a responsible action. And 
then we had years again when we didn't do anything.
    And what the Trump Administration has done is dealt with 
this expeditiously. That is what is in the best interest of the 
workers of America. And remember what we were talking about 
earlier, some of these people that we tried to reclassify did 
not want to be reclassified. They were angry at being 
reclassified, and no one listened to them. No one paid them any 
attention. There were real costs here.
    The University of Alabama provided information to my office 
that said it would cost the University of Alabama $15 million, 
and they put their decisionmaking in really stark contrast for 
me. They say, do we raise tuition to cover that or do we cut 
back on the services that $15 million represents? Either way, 
we hurt the students at the University of Alabama. And that is 
just one example of many, many universities and community 
colleges that we heard from.
    So, I think sometimes we get up here and we debate these 
things in the ether, and it is not where things really matter. 
They matter out there in the many, many workplaces in America. 
My district doesn't have a lot of large companies in it. We 
have mainly small-to medium-size companies. And that is where 
most of the people are employed. That is where most of our 
workers work, not just in my district, but around America.
    And we oftentimes forget that is who we should be thinking 
about, the workers at those small companies. Yes, workers at 
universities. Yes, workers at nonprofits, who are going to be 
terribly affected in a very terrible way by the Obama rule.
    What the Trump Administration has done has been a 
responsible effort to help the workers of America. And I am 
deeply grateful that they have done that, and I hope they will 
continue to do that. And I hope future administrations will do 
so as well.
    With that, Madam Chairwoman, I yield back.
    Chairwoman Adams. Thank you, Mr. Byrne.
    I now recognize myself for the purpose of making my closing 
statement.
    As we have heard today, over the past 40 years, the Federal 
Government's failure to adequately update the white collar 
salary level has weakened overtime protections for millions of 
workers. These weak protections have made it all too easy for 
salaried workers to be denied the overtime protections to which 
they are entitled.
    In fact, as one of our witnesses testified, some employers 
are building a business model based on weak overtime standards 
by loading up salaried workers with excessive hours, with no 
overtime pay, and leaving other workers with too few hours.
    As we have heard, the Obama rule would have provided 
millions of workers with new or strengthened overtime 
protections. The 2016 rule would have also made it easier from 
employers to properly classify which part of their work force 
is eligible for overtime protections and decreased employers' 
exposure to costly litigation.
    Rather than defending the Obama-era overtime update in 
court, the Trump Labor Department issued a proposal that falls 
well short of what workers deserve. Because the Trump 
Administration is using the same flawed approach used in 2004, 
we do not have to speculate what will happen to workers. We 
know that this proposal will leave too many workers with less 
money in their pockets and less time to spend with loved ones.
    I urge the Department to abandon its current efforts and 
defend the 26--2016 rule in court. Democrats stand ready to 
protect workers where the administration fails to do so. The 
Restoring Overtime Pay Act, H.R. 3197, would codify the strong 
salary threshold set in the 2016 final rule and require 
automatic updates every 3 years to ensure the level remains in 
line with overall increases in workers' wages. I note the 
Department does currently have authority to do so.
    Growing income and inequality and the declining power of 
workers have only reinforced the need for strong overtime 
protections. Restoring workers access to strong overtime 
protections, raising the Federal minimum wage, and protecting 
workers' rights to join a union are the pillars of Federal 
efforts to give hardworking Americans a raise. We must all work 
to build an economy that works for all Americans, not just the 
wealthy few.
    Again, I want to thank all of our witnesses for their 
testimony today.
    If there is no further business, without objection, the 
committee--the subcommittee stands adjourned.
    [Additional submission by Mr. Byrne follows:]
    
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    [Questions submitted for the record and their responses 
follow:]

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    [Dr. Shierholz's response to questions submitted for the 
record follow:]

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    [Mr. Winebrake response to questions submitted for the 
record follow:]

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    [Whereupon, at 12:12 p.m., the subcommittee was adjourned.]

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