[Congressional Record Volume 144, Number 74 (Wednesday, June 10, 1998)]
[House]
[Pages H4466-H4475]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                    SALES INCENTIVE COMPENSATION ACT

  The SPEAKER pro tempore. Pursuant to House Resolution 461 and rule 
XXIII, the Chair declares the House in the Committee of the Whole House 
on the State of the Union for the consideration of the bill, H.R. 2888.

                              {time}  2251


                     In the Committee of the Whole

  Accordingly, the House resolved itself into the Committee of the 
Whole House on the State of the Union for the consideration of the bill 
(H.R. 2888) to amend the Fair Labor Standards Act of 1938 to exempt 
from the minimum wage recordkeeping and overtime compensation 
requirements certain specialized employees, with Mr. Watts of Oklahoma 
in the chair.
  The Clerk read the title of the bill.
  The CHAIRMAN. Pursuant to the rule, the bill is considered as having 
been read the first time.
  Under the rule, the gentleman from Pennsylvania (Mr. Goodling) and 
the gentleman from New York (Mr. Owens) each will control 30 minutes.
  The Chair recognizes the gentleman from Pennsylvania (Mr. Goodling).
  Mr. GOODLING. Mr. Chairman, I yield myself such time as I may 
consume.
  Mr. Chairman, I want to express my strong support for H.R. 2888 and 
urge my colleagues to support the legislation. I also want to urge my 
colleagues to reject any amendments that may be offered to weaken or to 
undercut the bill.
  It is not often that we can come to the floor with a bipartisan labor 
bill. We did it a couple of weeks ago. We are back again with another. 
I know that the gentleman from Illinois (Mr. Fawell) has worked very 
long and hard with the gentleman from New Jersey (Mr. Andrews) and 
others on the Democrat side to put this bill together. That is why 
particularly I hope that the House will reject any amendments that 
would undercut the bill that has been so painstakingly negotiated and 
crafted on a bipartisan basis in our committee.
  Mr. Chairman, the reason for this bill was better stated by former 
Secretary of Labor Robert Reich a few weeks ago than I could when he 
was describing the changed nature of, quote, sales persons in modern 
business. Certainly no one can deny the fact that Robert Reich is a 
strong, strong supporter of the employee. Let me quote just a couple of 
lines from Mr. Reich's speech to

[[Page H4467]]

the American Compensation Association:

       A lot of people who are called sales reps are no longer 
     really sales reps. In the best companies they are helping 
     customers define what the customers need, and it's true of 
     business customers as well as individuals. They are not just 
     selling a mass production product or service. They are not 
     just persuading someone to take something. They are actually 
     advising somebody about a package of goods and services that 
     meets the needs of that individual and those sales people are 
     therefore more like management consultants.

  I continue quoting from Robert Reich:

       Those sales people are the key glue, the human capital, 
     that advises the company about new and evolving needs among 
     customers, and also advises the people who are developing the 
     goods, and developing the services, and developing the 
     technologies about what the market needs. Those sales people 
     are at the center of this new competitive strategy which 
     relies on customization and value.

  The problem that we are addressing with H.R. 2888 is the problem of 
fitting these 21st century sales persons into a 60-year-old law. The 
Fair Labor Standards Act already addresses the situations of sales 
employees who travel from customer to customer, the outside sales 
person. And it already addresses the situation of sales persons who 
work in retail stores. But it does not address the situation of these 
modern inside sales persons who often sell very sophisticated and 
complex products and services and who do so by using the tools of 
modern commerce, telephone, fax, computer, and the Internet.
  As a result, a law meant to protect workers ends up denying these 
professional sales employees the flexibility and opportunity to 
maximize their sales and income. As Mr. Anthony Williams, one of the 
employees who testified in support of H.R. 2888 before our committee 
said,

       I consider myself a professional salesman and would like to 
     be treated as such. The inside sales force is certainly every 
     bit as professional, knowledgeable and well trained as the 
     outside sales force. We deserve to be seen as such by the 
     wage and hour laws.

  Another employee who testified in support of H.R. 2888, Ms. Leronda 
Lucky, put it this way:

       I am in this business because I am a sales person. My 
     motivation to sell is the earning potential that I have. I 
     would like to be able to earn as much money as possible. My 
     clients do not necessarily have 9-to-5 work hours. Many start 
     their day early in the morning and work until late in the 
     evening. I need the flexibility to determine when I need to 
     meet with the customers on their hours. Being an exempt 
     employee would provide for that flexibility.

  Mr. Chairman, H.R. 2888 is a very carefully negotiated and crafted 
bill. It does not exempt all sales persons from the Fair Labor 
Standards Act. It reaches only those who by reason of their specialized 
and technical knowledge, and their relationship with their customers, 
meet the conditions laid out in the bill. Those employees must receive 
a substantial share of income based on commissions from sales. So H.R. 
2888 is a narrow bill, and reflects the specific needs and 
responsibilities of many sales employees in 1998.
  It is time to update the 60-year-old law, when the tools that today's 
sales people use, like faxes and computers, were not even imagined 60 
years ago.
  Again I urge my colleagues to support this bipartisan legislation.
  Mr. Chairman, I reserve the balance of my time.
  Mr. OWENS. Mr. Chairman, I yield myself such time as I may consume. I 
am strongly opposed to H.R. 2888.
  Mr. Chairman, why are we here at 11 o'clock tonight? Why is this bill 
on the floor as an open rule tonight or any other time? This is a very 
trivial piece of legislation in one sense. By itself it does not have 
much meaning. But if you look at it in the context of a whole series of 
small, seemingly trivial bills which harass American working families, 
then this is a very important bill. It is probably not important to 
many people because it has an open rule. Nothing comes to this floor 
with an open rule that is really important. When bills related to 
budgets and taxes and really important things come to the floor, they 
do not have an open rule. So it is really being treated in a very 
trivial way and by itself it would be, but it is part of a bigger 
guerilla campaign, a guerilla warfare campaign of the Republican 
majority against the American working families.
  At a time like this in America when the stock market is booming, 
unprecedented prosperity, why are we chipping away at the wages and 
income of the people at the very bottom? We are talking about sales 
people and calling them managing consultants. What managing consultant 
do you know that makes $22,000 a year? That is what we are talking 
about. When you take the wages plus the commissions, the cut-off point 
for this is $22,000 a year. At that point, the Fair Labor Standards Act 
ceases to apply and these people are left out there on their own. If 
they can sell and make commissions, then good. But since they are 
inside salesmen and since they are helping customers with the product, 
giving advice, they are doing a number of things which do not bring a 
commission. You only get a commission when you sell. If you do not 
sell, you do not get a commission. But they are doing lots of other 
work.

                              {time}  2300

  So why are we here chipping away at the income of people at that 
level? As my colleagues know, this is a part of a campaign that I find 
baffling, the majority party continues. Today we had a series of bills 
on OSHA where they were chipping away at the safety and health 
standards for American workers. Now we are going to the heart of the 
matter, and we are going after their cash. We are taking away the cash.
  Now this bill is like a landmine on the way to a bigger objective. As 
my colleagues know, the bigger objective is to take away overtime cash 
payment for overtime completely. I think many of us still remember that 
the 105th Congress opened up with a bill which was a comp time bill, a 
bill which said that an employer could give comp time instead of cash 
to employees. I think my colleagues may remember that that bill passed 
the House of Representatives. It is still out there. The Senate has not 
acted upon it yet, we have not had a conference, but there is still a 
danger in this year, and I call this to the attention of all the 
working families out there. As my colleagues know, I hope they are 
still awake, I hope they are here. We can take advantage of this 
maneuver that they are pulling to alert people that the comp time bill 
is out there still. It passed the House of Representatives, it is 
waiting, they are waiting to take away overtime, they are going to take 
away cash for their overtime.
  This is part of the whole plot, and if our colleagues pass this, we 
are one step further along the road to taking cash payment for 
overtime.
  Now at that time when we had that bill on the floor, I proposed a 
compromise. I proposed that, all right, there is a lot of talk about 
middle-class families, people who are making $100,000 or more. They 
want comp time, and they do not want to be bound by having to take 
their overtime only in cash payments. They want to be able to take time 
off. So I had a simple proposal, a simple amendment, put it on the 
floor. I said that all those people who are making minimum wage, and if 
they are making minimum wage, it meant their salary, their total 
earnings for the year, assuming they worked every hour of a 40-hour 
week for the whole year, was less than $12,000 a year. Anybody earning 
minimum wage, less than $12,000 a year, let them remain under the Fair 
Labor Standards Act and receive cash payment. They need cash to put 
food on the table. They need cash for clothing, for shelter. They do 
not need comp time. That is what they need.
  That bill was voted down here. It did get 170-some votes, but it was 
voted down. As my colleagues know, how can we keep saying with an 
honest and with a straight face that this prosperous economy cannot 
afford to have people receive overtime payment when they are making 
less than $12,000 a year? And here we have another situation, another 
standard of $22,000 a year.
  Now unless somebody complains that I am not germane, let me proceed 
to say that this piece of legislation, the effect of this legislation 
is to permit employers to either require workers to work longer hours, 
how to pay workers less for each hour's work. Far from enhancing the 
earning opportunity of workers, the primary effect of this legislation 
is to increase the income of the employers at the expense of the

[[Page H4468]]

workers. H.R. 2888 exempts an undetermined number of nonretail inside 
sales personnel from the requirement that employers pay time and a half 
for hours worked in excess 40 hours a week. Based on data from the 
Bureau of Labor Statistics, as many as 1.5 million workers may lose 
overtime protection if this legislation is enacted.
  Unlike outside sales people, an inside sales person is directly 
employed in making and processing sales for their entire time at work, 
and I want to emphasize again Secretary Reich was right. They are 
engaged in a large number of activities that do not necessarily end up 
in sales. They do provide advice, they do explain things. There are a 
number of ways in which inside sales persons are working all the time 
and there is no commission attached to their labor.
  I agree with the chairman of the committee. As my colleagues know, 
managing consultants is what we could describe them as in terms of the 
duties that they perform. They do not get a managing consultant's pay, 
and that is what we should focus on. We are not talking about people 
who get paid at the level of managing consultants or any other kind of 
consultant.
  Since the employer is receiving a direct benefit from the employee's 
labors, from the employee's entire work period, employers should be 
required to pay overtime when the employee is required to work more 
than 40 hours in a week as the law currently provides. There is no 
justification for denying overtime pay to these workers.
  There is some confusion. I do not know why there is such confusion. 
It is a simple matter. They are forcing people to work, and they are 
not paying them in accordance with the overtime regulations of the Fair 
Labor Standards Act if they exempt them, force them into an exempt 
status.
  Under this legislation, employees are exempted if they earn wages or 
salary of $16,000 a year and if they earn an additional $6,500 a year 
in commissions. In other words, the $16,000 an employee must earn in 
wages or salary is regardless of the number of hours that he works, 
that is worked by this employee. An employee, by being required to work 
more than 40 hours a week may be paid well below the time and a half 
standards, well below 1.5 times the minimum wage, and still qualify for 
the exemption so long as the annual wage exceeds $16,068.40. A minimum 
wage worker who is required to work 60 hours a week without a 
sufficient base salary, to be exempted from overtime by this 
legislation.
  This legislation further provides that an employer need not pay 
anything in wages or salary to covered workers for hours worked beyond 
40 hours a week. In other words, an employee who earns $7.73 an hour 
and earns the equivalent of another $3.09 an hour in commissions may be 
required to work overtime without earning a penny more in wages and 
salaries.
  This bill does not simply repeal the requirement that employees be 
paid 1.5 times their regular rate of pay for overtime work, it repeals 
a requirement that an employer provide any wage or salary for hours 
worked in excess of 40 hours a week. Employers may still require 
employees to work overtime. If during the overtime period the employee 
earns no commissions, then the employee would be paid nothing, nothing 
at all, for the additional hours worked.
  Exempting workers who make no more than $22,600 a year from overtime 
protection is a horrific policy, and that is what it all boils down to. 
If at this hour of the night I am certain that anybody listening is 
confused, and there are a lot of folks who seem permanently confused, 
it all boils down to taking a person who is in combination salary plus 
commissions at the level of $22,600 a year and saying to them, ``You 
are no longer going to get paid cash for your overtime, you are not 
going to get anything for your overtime, and your employer can work you 
as many hours as he wants to because there's no reason why they 
couldn't schedule you to work. It doesn't cost them anything. It costs 
you your hours, time away from your family, but at 22,600 you're in 
another zone.''

  $22,600 happens to be 12 percent below the average annual income 
earned for all workers. Let me repeat. $22,600 is 12 percent below the 
average annual income for all workers. The median income for nonretail 
sales representatives is $40,000. Under the current law, employees in 
the computer programing industry must make $57,000 a year before they 
are exempted from overtime. And I want to repeat that again. The 
computer programing industry has a unique exemption, and I was a part 
of the legislation which gave that exemption. Some of us are accused 
sometimes of not being willing to compromise, of not being willing to 
change anything that has been in the law for 30 years or being 
dogmatic, et cetera.
  No. We have a clear situation with the computer programing industry. 
It was clear that they needed some relief from the Fair Labor Standards 
Act, and we gave it to them, but it was reasonable. The threshold 
number was $57,000 a year. Employees in the computer programing 
industry must make $57,000 a year before they are exempted from 
overtime.
  Now considering all the other reasons why they needed to be exempted, 
and they gave good reasons, if it had not been at a level of $57,000 a 
year, I would have never agreed to it.

                              {time}  2310

  Many others would not have agreed to it. That is the crux of the 
matter tonight. What is your breaking level, where do you start 
shutting off cash payments on overtime for the people that the law is 
designed to protect?
  Notwithstanding the unprecedented prosperity the economy has enjoyed 
over the past 5 years, income disparity between the very wealthy and 
everyone else is increasing. The drop in overall unemployment rates has 
not significantly diminished the fact that more and more Americans must 
work longer hours just to make ends meet. Rather than addressing these 
matters, H.R. 2888 exacerbates them. The majority party continues to 
exacerbate the problems faced by working families in America.
  Working families in America should know that we are not here to 
discuss tonight the important issues like a raise in the minimum wage. 
If we just raise the minimum wage in a very conservative way, 50 cents 
a year for the next 2 years, by the year 2000 we would have a minimum 
wage of $6.15 an hour. We would still be behind in terms of not being 
able to keep up with inflation, but that is not even being entertained. 
We cannot even talk about that. It is not put on the floor for 
discussion.
  We have something called the American Competitiveness Act, which goes 
after people who are computer programming specialists and information 
technology workers. Instead of training more workers and discussing how 
we can train more workers and have the workers in this country, people 
who are now being laid off and downsized from other jobs, trained to 
take these jobs, we just passed something in the other body which is 
called the American Competitiveness Act, a real outrageous name for 
such an act.
  The American Competitiveness Act will soon be on the floor of this 
House, and it was not even sent to our committee. It is handled by 
another committee. But it deals with taking jobs away from workers.
  It is going to raise the quota for the admission of professionals 
into this country and allow more people with computer programming 
knowledge to come in. Thirty thousand more will be allowed in per year 
for the first year, and 20,000 a year for the next 3 or 4 years.
  That needs to be discussed. We are taking jobs and total income, 
total salary, away from large numbers of American workers. They are 
striking, I understand, now in Flint, Michigan, because workers are 
concerned about their jobs being taken overseas. We are not discussing 
that in the Committee of Education and Workforce. We do not protect the 
work force in this committee. The majority makes certain that the work 
force is harassed and that we are constantly finding ways to downsize 
the income and downsize the health and safety standards for working 
people.
  This is a serious flawed piece of legislation, and although it looks 
small, it is a land mine on the way to another catastrophe. The big 
catastrophe is waiting. We already passed it out of the House, it is 
waiting out there, and it is called comp time. They are going to take 
away the protections of the

[[Page H4469]]

Fair Labor Standards Act from everybody and have comp time replace cash 
time for overtime, cash payment for overtime.
  This is an important bill. Keep your eyes on the guerrilla war being 
raged by the Republican majority. This is a seriously flawed piece of 
legislation. I urge its defeat.
  Mr. Chairman, I reserve the balance of my time.
  Mr. GOODLING. Mr. Chairman, I yield 6 minutes to the gentleman from 
Illinois (Mr. Fawell), the subcommittee chairman, the engine that is 
trying to drive labor and management into the 21st Century before it is 
too late.
  Mr. FAWELL. Mr. Chairman, I thank the gentleman for yielding me time.
  Mr. Chairman, it all depends on how we look at legislation like this, 
whether we see opportunities, as I see, or whether we see a lot of 
limitations, as I gather the gentleman from New York (Mr. Owens) does 
see.
  But this legislation, I do not think, is difficult to understand. It 
amends Section 13.1 of the Fair Labor Standards Act to simply allow a 
defined group of people called inside sales people to be exempt from 
the overtime provisions of the Fair Labor Standards Act.
  The reason for that is so that a lot of these people, especially 
young people in the sales business, they are pretty well prepared 
professionals, they would like to be able to work on a commission 
basis. They really prefer that. They really prefer the opportunity that 
would be afforded to them. Right now they do not have that opportunity, 
because employers are not wild about going into overtime and all that 
is involved with that.
  These rights, by the way, of working on a commission basis have long 
been enjoyed by sales people who work outside the office under the 
title of outside salesmen exemption. That has been granted by the Fair 
Labor Standards Act ever since it was created.
  Nobody has, I think, felt there is a white flag we had to fly for the 
outside salesmen of America, who have done a pretty good job. These are 
people who customarily and regularly work away from the employer's 
place of business for the purpose of selling tangible and intangible 
items of property.
  Now, what we did here, though, was something special. We sat down, 
and we had the gentleman from New Jersey (Mr. Andrews) and I and others 
on both sides of the aisle thinking, well, how can we do this and 
settle the fears of those in dealing with labor law about maybe that 
somehow would be taking advantage of workers? What we tried to do, in a 
bipartisan effort, and I think we accomplished that, was to specially 
define those who are in inside sales work who could take advantage of 
this.
  We set forth what is called a duties test, and made clear that only 
those who have specialized and technical knowledge of the product and 
detailed knowledge of the customer's needs could take advantage of 
this, and they are people who are in sales and predominantly serving 
regular customers, positions that require a detailed understanding of 
the needs of those to whom the employee is selling.
  Then we went a bit further and said that we are going to guarantee, 
in effect, that, come heck or high water, no matter what happens, if 
they fail in their commissions earnings, these young people that talked 
before said nothing about opportunities. They said they really wanted 
to have these opportunities. But we would require that the employers 
would guarantee in effect around $22,500. Maybe that is not a good 
living wage; nobody is necessarily saying that. It is not a cap, it is 
a floor.
  We are simply saying if some catastrophe were to occur here and you 
did not make as much, these young people are thinking of making 
$50,000, $60,000, $70,000, if they just had the opportunity to go at it 
and do it their way with commissions and not be on an hourly wage.
  They explain that, look, you know, we have clients to serve, and we 
can better serve them on the weekends, we can better serve them on 
Saturday evening, early in the morning when these customers are going 
to work. We would like to have the opportunities, the very same 
opportunities that outside salesmen have had for years.
  The times have changed. This is now 1998. It was 1938 when that law 
was drafted. In those days the traveling salesman would kiss the good 
wife good-bye and go out into the country in a car and rumble around 
for a couple of weeks before he came back in order to be able to 
communicate. They did not even have the telephone in very good shape in 
those days.
  Today we have the fax, we have computers, the Internet, and types and 
kinds of ways of being able to communicate. You do not have to go into 
the old car and rumble out into Iowa and the Midwest and so forth to do 
that.
  Then we said also before you can qualify here, you have to be on the 
commission basis, which is pretty vital.
  Now, that does not seem to me to be any furtive effort by those of 
us, both Republicans and Democrats alike here, of trying to do harm and 
do something bad for the working people of America. Again, I say these 
were young people who are asking for these advantages.

                              {time}  2320

  I simply want to say this is a bipartisan bill. I want to laud the 
gentleman from New Jersey (Mr. Andrews) who has diligently sat down and 
tried to painstakingly set up these standards so that we would not have 
people fearing the ways in which I think the very fine gentleman from 
New York has expressed his fears about this bill.
  I think it is an excellent piece of legislation, and I hope people 
will receive it in the manner in which it should be received.
  Mr. OWENS. Mr. Chairman, I yield such time as she may consume to the 
gentlewoman from California (Ms. Woolsey), an expert management 
personnel consultant, a real consultant.
  (Ms. WOOLSEY asked and was given permission to revise and extend her 
remarks.)
  Ms. WOOLSEY. Mr. Chairman, before coming to Congress, I spent over 20 
years as a human resources professional; 10 years as an H.R. manager of 
a high-tech manufacturing company, and 11 years as a human resources 
consultant. Did I earn more than $22,000 a year? Yes, I did. That is 
because I know something about the Fair Labor Standards Act.
  The Fair Labor Standards Act allows employers to exempt employees 
from overtime if the employee has specialized skills, a high level of 
education, advanced training, and/or a minimum level, a professional 
level of compensation.
  This bill would allow an employer to exempt certain jobs from 
overtime regardless of the credentials of the person filling that job. 
The job title in H.R. 2888 becomes more important than the person.
  Some time ago, as my colleague, the gentleman from New York (Mr. 
Owens) mentioned, Congress passed legislation to exempt certain 
computer industry jobs. They exempted them from overtime. That was if 
that job paid $57,000 or more a year.
  I voted for this. I voted for it because a salary in the $50,000 
range does not need overtime nearly as much as the jobs we are talking 
about tonight. This bill exempts employees who make less than half that 
amount.
  The Bureau of Labor Statistics shows that the median income for 
nonretail positions is $40,000 a year. At the very least, the income 
limitation on this bill should be $40,000 to ensure that overtime taken 
from workers would be a much less significant loss, to ensure that 
these positions are truly considered professional.
  This bill would be acceptable, perhaps, if the decision to work 
overtime was left to the employee, if it were totally voluntary, but 
this is not how H.R. 2888 works.
  This bill takes away overtime, gives the employer the right to insist 
on overtime work and insist that the employee work at their straight 
rate of pay, really, within that week's salary. If they are paid for a 
40-hour week, they get paid for 40 hours. Whether or not they work 42, 
44, 46, 48, they get paid for 40.
  No wonder, Mr. Chairman, we have heard from employers all over the 
country telling us how employees benefit from this bill, while, I want 
my colleagues to know, I have not heard yet from one worker that this 
is what they would prefer.
  I ask my colleagues, unless we make overtime voluntary, unless we 
raise the salary floor to at least $40,000, which is the average for 
nonretail sales jobs, that we vote against 2888.

[[Page H4470]]

  Mr. GOODLING. Mr. Chairman, I yield 6 minutes to the gentleman from 
New Jersey (Mr. Andrews), the coauthor of the bill.
  (Mr. ANDREWS asked and was given permission to revise and extend his 
remarks.)
  Mr. ANDREWS. Mr. Chairman, I thank the gentleman from Pennsylvania 
for yielding, and I thank the ranking member for his cooperation in 
this matter.
  Mr. Chairman, I rise in support of the bill, and I would like to 
thank my coauthor, the gentleman from Illinois (Mr. Fawell) for his 
diligence in preparing this piece of legislation.
  I share with my ranking member opposition to a plan that would 
replace cash with comp time. I share his sympathies for an increase in 
the minimum wage. I would oppose a bill that would divest 1.5 million 
American workers from the right to receive overtime. That is not the 
bill before us tonight.
  The bill before us tonight is not a bill that divests people of 
overtime. I believe it is a bill that appropriately invests a carefully 
selected number of people with an opportunity to better themselves.
  It is not a partisan bill. Five Democratic members of this committee, 
including myself, are sponsors of this bill. We believe that this is a 
bill that opens up opportunity for people.
  It is important, first, to talk about what the bill is not and whom 
it does not cover. If you drive a truck and deliver goods along a 
route, this bill does not cover you because you are not an inside sales 
person. If you are a phone solicitor, someone that makes cold calls to 
people you have never spoken to before and tries to sell them a credit 
card or a magazine subscription or some other good, this does not apply 
to you because you are not dealing with an established customer base.
  If you stand on your feet in an appliance store or a department store 
or furniture store and wait for the customers to come in, this does not 
apply to you because you are not dealing with a sophisticated product 
and existing customer base; and the law, simply by its terms, does not 
apply. This bill applies to a carefully selected group of people who 
are engaged in the process of doing better by working more.
  Tomorrow morning, one of the beneficiaries of this bill is going to 
go to work, and she is going to go to work at a food distribution 
company. Her assigned clientele will be a group of restaurants or food 
stores. Her job will be to work with that existing customer base to try 
to make the best deals and the best connections she can with that 
existing customer base.
  She has the opportunity, provided that she is primarily engaged in 
sales, provided that she needs specialized consultive knowledge, 
provided that she can exercise discretion in the relationship with the 
client or customer, and provided that she is dealing with primarily an 
existing customer base, she has the opportunity to move ahead and make 
more and increase her income.
  This is not a situation where people who are involved in a cold call 
selling situation can be compelled to work more hours. This is a 
situation where people who are engaged in what former Secretary of 
Labor Reich has described as the new sales force in the economy will be 
given an opportunity to advance the cause in the income of that 
particular individual.
  It is very important to understand that this is a carefully tailored 
piece of legislation, designed not to cover people who could be easily 
exploited by an unscrupulous employer, but rather to open the doors of 
opportunity for an employee who wishes to improve her situation or his 
situation by working at hours and times where the customer base and the 
clientele is more likely to respond.
  To understand why this law is needed, my colleagues need to 
understand how it would be different if my hypothetical individual who 
is a food sales person were working as an outside sales person. If this 
same sales person got in her car or her van and drove from customer to 
customer instead of sitting at her desk and communicating with those 
customers on the telephone or via the fax machine or via the computer 
or the Internet, under the present law, if she sits behind the wheel of 
a car or a van and drives from place to place, she is not subject to 
the provisions of the 40-hour workweek. But if she sits behind a desk 
under what I would assume would be more productive and beneficial 
circumstances and works her customer relations with a phone and a fax 
machine and a computer, she is covered by the law.
  This proposal, with bipartisan support, carefully drawn after due 
consideration of objections, and made in good faith by both sides of 
the aisle, this plan is resolved to address that anomaly and treat that 
person the same if she is sitting in the office making the sales as she 
would be if she is driving out on the road and making the sales.
  In support of H.R. 2888, the ``Sales Incentive Compensation Act,'' I 
believe the following points should be made.
  The bill sets out important criteria for those employees to be 
exempted. First, employees must be highly skilled. The exemption is 
directed at professional employees functioning in a similar capacity as 
``outside sales'' employees. In this regard, these employees must have 
highly specialized and technical knowledge about both the products or 
services they offer as well as the clients with whom they deal. These 
``highly specialized'' professionals typically receive extensive 
training to prepare them to sell a variety of products and/or services 
and they receive frequent follow-up training or related educational 
instruction.
  Second, employees must exercise independent judgment and discretion. 
It is fundamental that these employees are required, by the nature of 
their work, to exercise independent judgment and discretion in making 
these sales. These are not telemarketers or semi-skilled sales staff. 
Rather, the bill is designed to identify salespeople who act in a 
professional capacity utilizing substantial discretion in their work.
  Third, employees must have continuing and regular contact with 
customers. These employees can only gain the extensive knowledge of 
their clients needs envisioned by the law through regular and repeated 
contact with these customers. One-time calls, whether made by the sales 
person or the customer, cannot serve as the basis for the type of 
specialized knowledge of the customers' needs which would permit the 
employee to act in the consultative or advisory capacity necessitated 
by the bill. This means in practical terms that the employee must have 
a continuing relationship with a vast majority of customers to whom he 
or she makes sales.
  In addition to the duties criteria, there are several requirements 
related to compensation. First, the employee must receive a guaranteed 
salary. The bill requires receipt of compensation which is not affected 
by the actual number of hours the employee may work in a given period. 
As a result, the employee cannot earn an hourly wage, but must be given 
a predetermined and guaranteed salary regardless of the number of hours 
actually worked. This is reflective of the professional status the 
employee must possess.
  The second major component is that the compensation earned as 
incentive pay must serve as an inducement and reward for individual 
effort. In this regard, the incentive pay should be in the form of 
individual commissions based on each sale generated by the employee. 
Such a requirement does not prohibit incentives based on reaching 
individual or group sales quotas, etc., but these methods must be 
constructed in such a way as to make individual sale commissions 
readily identifiable.
  Third, employees must be rewarded with at least as high a level of 
incentive compensation (formula or rate) in hours above forty per week 
as they received in hours below forty per week. As a result, if quotas 
or other incentive plans are used which do not explicitly reward 
employees for each sale generated, the manner and rate of incentive 
pays must make it perfectly clear that the employee is earning at least 
as much for sales generated in overtime hours as he or she would earn 
for same sales in non-overtime hours.

                              {time}  2330

  This is carefully drawn. It is narrowly tailored. I very much 
appreciate the support of my four Democrat colleagues on the committee 
for this bill, and I appreciate the diligence and persistence of my 
coauthor, the gentleman from Illinois (Mr. Fawell).
  Mr. Chairman, I too would urge the adoption of the bill and the 
defeat of amendments that have been proposed.
  Mr. OWENS. Mr. Chairman, I yield 5 minutes to the gentleman from Ohio 
(Mr. Kucinich).
  Mr. KUCINICH. Mr. Chairman, I want to say with all due respect to the 
gentleman from New Jersey (Mr. Andrews) my good friend, and the 
gentleman from Illinois (Mr. Fawell), that I have to take exception 
with the import of this bill, no matter how well-

[[Page H4471]]

crafted it may seem or well-intentioned it may be.
  Mr. Chairman, for 60 years the Fair Labor Standards Act has operated 
to protect workers from excessive hours on the job by requiring 
employers to pay time-and-a-half for overtime. Most Americans except 
this and expect it. Work overtime, expect to be paid for it.
  This measure before us, the Sales Incentive Compensation Act, would 
undermine the Fair Labor Standards Act and open up an enormous 
loophole. It would allow employers to avoid paying overtime to certain 
categories of employees.
  This bill would enable companies to declare that certain workers are 
in sales positions and then deny them a salary or an hourly wage for 
the time they work over 40 hours per week. For these specialized 
employees, companies would only have the obligation to pay them 
commissions as a substitute for the time-and-a-half pay.
  About 1.5 million workers would be affected by this loophole. This 
bill would provide a powerful incentive for employers to push their 
employees to work as many hours as possible. It would lead to endless 
litigation as the courts battle over who does and does not qualify 
under the vague and broad provisions in this bill. In addition, the 
Department of Labor has concluded that this bill would impose new 
paperwork and recordkeeping requirements on businesses. So there are 
unintended consequences.
  Mr. Chairman, I would agree with my colleague that many of the same 
arguments put forth here parallel the discussion we had on comp time. 
The reason people work overtime is to get paid for overtime. They do 
not work overtime to give the money to their employer. They work 
overtime to give the money to their family. I believe that the argument 
that people who work overtime ought to get time off in the case of comp 
time, or a commission or not at the election of their employers, is a 
misplaced argument.
  Now, there are some proponents of this bill who would say that they 
just want people to make more money, not less, and to do that they are 
going to cut out time-and-a-half for overtime and replace it with a 
sales commission. I think that assertion challenges common sense 
notions of why people work overtime. The harder people work, the more 
they should get paid from their employer.
  This legislation affects employees. So if employees work more than 
their full-time allotment, they should be paid for it. And if their 
diligence, their labor produces a higher benefit, then let the employer 
take the benefit. But let the employee be able to get at least time-
and-a-half. In a sense, we are asking the employees to take the risk 
when it is the employer who gets the benefit.
  I say let the employee get the benefit and the employer take the 
risk. Let the employee get paid time-and-a-half for overtime.
  This bill benefits employers at the expense of employees. It is going 
to result in workers being required to work more hours. The simple fact 
is, and every American worker knows this, it is the employer who 
controls the hours that people work, not the employee. The employer 
controls how long the employee is going to work.
  This bill unfortunately discourages employees and it encourages 
employers to require workers to work overtime. It exempts employers 
from the requirement that they pay an employee any wage at all for 
overtime hours. How many people out there would want to work overtime 
and not get paid anything? Who would take that deal in this country?
  Years ago there was an American humorist who said, ``Never give a 
sucker an even break.'' Working people in this country deserve to be 
paid time-and-a-half for overtime and employers ought to be challenged 
to do that.
  Mr. GOODLING. Mr. Chairman, I yield 2\1/2\ minutes to the gentleman 
from Nebraska (Mr. Barrett), an important member of our committee.
  Mr. BARRETT of Nebraska. Mr. Chairman, I thank the gentleman from 
Pennsylvania (Chairman Goodling) for yielding me this time.
  Mr. Chairman, if we mentioned comp time or flex time or telecommuting 
or inside sales personnel to people back 20 or 30 years ago, we 
probably would have gotten a very, very strange look. But these terms 
today, they are a reality. This is today's workplace. And they have 
gone largely unrecognized in today's antiquated labor laws.
  Today we take a small step forward to recognize what is already 
occurring in the labor force, but the Federal Government has been very, 
very slow to respond.
  H.R. 2888 allows professional sales people working regularly with 
established clients to be exempt from minimum wage and overtime 
requirements. The bill permits some inside sales workers to earn a 
salary and be treated like a professional along with their outside 
sales counterparts.
  In this era of family-friendly workplaces, Congress should embrace a 
bill giving the people the flexibility to use technological advances 
and changes in our economy to work near their home in jobs that they 
enjoy or need and be closer to their families.
  This bill enjoys bipartisan support. It lets a fresh breeze into the 
stale and outdated Federal laws that have restricted the economic 
liberty of an entire class of professional working people. When the 
House does pass H.R. 2888, we should be proud of our actions to allow 
people to again capture the American dream of being rewarded for their 
hard work.
  I also want to take a moment to thank the gentleman from Illinois 
(Mr. Fawell) my friend and colleague, for authoring this legislation 
and for all of his years of hard work to improve the working conditions 
and benefits of millions and millions of Americans. I am sure that he 
will take to his retirement the same zeal and determination that has 
marked has career as a very distinguished public servant and lawyer.
  With that, Mr. Chairman, I encourage my colleagues to support H.R. 
2888.
  Mr. OWENS. Mr. Chairman, may I inquire as to how much time is 
remaining on both sides?
  The CHAIRMAN. The gentleman from New York (Mr. Owens) has 6 minutes 
remaining, and the gentleman from Pennsylvania (Mr. Goodling) has 10\1/
2\ minutes remaining.

                              {time}  2340

  Mr. GOODLING. Mr. Chairman, I yield 2\1/2\ minutes to the gentleman 
from Michigan (Mr. Hoekstra), another member of our committee.
  Mr. HOEKSTRA. Mr. Chairman, I thank the gentleman for yielding time 
to me.
  I also congratulate my colleagues for putting this bill together. I 
hope that in the coming months and the coming years we can build on 
this bipartisanship and seriously take a look at America's labor laws, 
labor laws that were developed in the 1930s and the 1940s.
  And now, as we take a look at entering a new millennium, we recognize 
that the workplace has changed. We have moved into a global economy. 
The types of products and services that we are excelling in and 
producing in this country have evolved and changed.
  In the last 8, 9 months, we have gone around the country, we have had 
roundtables. We have had hearings. We are learning that for us to be 
globally competitive, we need to restructure and reevaluate the legal 
framework within which we compete. And as we change this framework and 
as we evolve it, it is going to create more opportunities for American 
workers. It is going to enable American workers to be more competitive, 
to be more productive.
  And when they are more productive, they can earn a higher standard of 
living. We want to eliminate bureaucracy. We want to eliminate rules 
and regulations, rules and regulations that do not fit the 1990s.
  One of the facilities that we had the opportunity to visit was an IBM 
facility in Atlanta. What we saw in Atlanta was a telemarketing center, 
actually a sales consultant center where people over the phone were 
selling multimillion dollar computer systems. Ten years ago these would 
have had to have been sold face to face. Now they can be sold over the 
telephone.
  The nature of the product has changed; the nature of the customer has 
changed. And the nature of the way that you service these clients has 
changed.
  This bill recognizes the changes that are taking place. It says that 
we can service these customers in a new and in a better way and in a 
more productive way.
  Again, I applaud my colleagues on this effort and urge my colleagues 
to support this bill tomorrow.

[[Page H4472]]

  Mr. OWENS. Mr. Chairman, I yield myself such time as I may consume.
  We could have total bipartisan cooperation if we really recognized 
what is at the heart of this controversy at this point. It is money. It 
is only money; $22,600 a year is not a proper cutoff point.
  I recognize that the Fair Labor Standards Act is 60 years old. We 
have made some adjustments in situations where adjustments made sense, 
but here we are proposing to make an adjustment on the backs of the 
working families. We are proposing an adjustment which has no logical 
rationale. Common sense has been thrown out the window. We have a 
cutoff point of $22,600 a year.
  We did this same thing for the computer programming industry. They 
had certain circumstances which made it evident that large amounts of 
hours were required, and they could not keep paying more and more 
overtime, but they had a staff of specialized people. They could not go 
out and get more people because they did not have the skills. We took 
that into consideration and we amended the 60-year-old Fair Labor 
Standards Act. And certainly we could work out an amendment now, a 
bipartisan amendment, if we would just admit the fact that $22,600 a 
year is not a proper cutoff point.
  My colleague from California, an expert in human resources, said that 
the average is $40,000 a year for retail salespeople, it is $40,000 a 
year, not $57,000 like the computer programming people.
  Well, this particular industry has a set of facts which we should all 
look at, and maybe she is right, $40,000 is the figure, not $57,000. We 
cannot just be arbitrary and say $57,000, that is a pretty good living 
even now. We did that a few years ago. But even now $57,000 looks 
pretty good compared to $22,600.
  So if we are not interested in robbing the working families to make 
the rich richer, which is what most of the amendments that are brought 
to the committee by the Republican majority do, if we are not 
interested in exploiting working families, if we really care about 
working people, if we are a committee that is concerned with work force 
protections and not work force harassment, then we could work out a 
compromise.
  We should withdraw this bill now, work out a compromise, and let us 
arrive at a figure between $40,000 and $57,000, and we can accept a lot 
of other rather vague things that are here that may make for 
difficulties in the future.
  The whole definition of what a specialist is and who is selling a 
specialized product. I know people who are in the grocery business, and 
they insist that they are specialists, they are professionals. Not 
everybody can come in and sell groceries.
  It used to be there was a sitcom at one time where the guy was a 
hardware store owner and used to get all riled up about what it took to 
sell hardware. And he would always end his statements by saying, this 
is not just some little common thing in the street; hardware is 
something special.
  So everybody can make the argument that they are a specialist. 
Certainly employers who want to make people work more hours without 
overtime could always say, you are really a specialist. You are selling 
eggs and milk, but you are a specialist and you do not get any 
overtime.
  There are a lot of pitfalls here. We can settle it all and reach 
agreement, if we would just talk about a reasonable, common sense 
figure that does not exploit working families. Do not put people in a 
bind where they cannot get any more cash for overtime at the level of 
$22,600 a year. Let us go on and take a hard look at all the factors 
and come back and offer the working families something which comes off 
the table.
  The table is full now of goodies. It is a very prosperous time. Wall 
Street is making more money than they ever made before. The Dow Jones 
average hovers between 8000 and 9000 on a daily basis. It is just 
amazing that the energy of the Republican majority is all concentrated 
at taking things away from working families at a time like this.
  We have a window of opportunity. Let us share the prosperity. If we 
have to set some figures for exemption in the Fair Labor Standards Act, 
let us raise them high enough to be meaningful for working families.
  Mr. Chairman, I yield back the balance of my time.
  Mr. GOODLING. Mr. Chairman, I yield 2\1/2\ minutes to the gentleman 
from Pennsylvania (Mr. Peterson).
  Mr. PETERSON of Pennsylvania. Mr. Chairman, I rise to support H.R. 
2888.
  It is obvious to me that those that oppose this bill do not 
understand the dynamics of sales in this country.
  I would ask everybody here tonight, would you like to go back to the 
rotary telephone, get rid of the systems in your offices that have the 
rotary phone that you dial by hand that are not connected to each 
other? No, you would not. It would not make any sense to you. Would you 
like to go back to the mechanical typewriter and do away with the 
computer systems that are all networked and go back?
  The law that is in place is holding us back in this country from 
allowing salespeople to do what they do best.
  Salespeople are undervalued in your view. The salespeople are the oil 
and gas of the American economic engine. They are what drives it. As 
salespeople are successful and they earn a commission, they make more 
money. And they put their friends and neighbors to work because they 
sell more goods that make a company go.
  Technology today allows companies to do more sales inside instead of 
wasting travel time. And this bill is narrowly drafted, probably a 
little more narrowly drafted than I would have agreed to, it is 
narrowly drafted. You do not have to worry about a $20,000 person. You 
give them a sales commission, and they are going to make 30, 40, the 
sky is the limit.
  Flexibility of time in the sales force is a benefit to the customer 
and a benefit to the employee. He or she may want to go home and fix 
dinner and then make some calls after dinner. They may want to pick up 
their children at day care and go home and then make some sales calls. 
It is not a one-way street.
  Commission is a huge incentive and do not ever undervalue it. If you 
are selling by the hour and you are selling by commission and you both 
have equal sales ability, the commission person will always sell more 
goods and put more people to work in the overall company.
  It is time to unleash the salespersons and stop limiting their 
ability to incentive sale. They will earn more and you will increase 
employment in manufacturing, and you will increase employment in the 
service industry. You will increase employment in wholesale. I want to 
tell my colleagues, it will increase the economic drive in this 
country.
  Mr. OWENS. Mr. Chairman, will the gentleman yield?
  Mr. PETERSON of Pennsylvania. I yield to the gentleman from New York.
  Mr. OWENS. Mr. Chairman, does the gentleman realize this is about 
inside sales, which means people cannot go home and make phone calls 
from home. They have to be on the job. That is the whole thing. They 
are bound to the job. They are bound at the spot.

                              {time}  2350

  They are bound at the spot. They are inside.
  Mr. PETERSON of Pennsylvania. It should not be that narrow. Because 
sales can be made on the telephone at home just as easily as they can 
be made in the office.
  Mr. GOODLING. Mr. Chairman, I yield such time as he may consume to 
the gentleman from New Jersey (Mr. Andrews).
  Mr. ANDREWS. Mr. Chairman, I thank the gentleman for yielding me this 
time. I want to engage my colleague in a colloquy.
  The Sales Incentive Compensation Act does not change the law of 
impasse in any way. The bill does not create a new right or authority 
for an employer to implement unilaterally the exemption provided by the 
legislation in a circumstance where an employer is engaged in 
collective bargaining negotiations with a labor organization and the 
negotiating parties have reached an impasse.
  As a coauthor of H.R. 2888, I want to make it clear that the bill may 
not be used as an instrument, if an impasse occurs, to secure an 
outcome that would never result from the normal ebb and flow of the 
free collective bargaining process.
  Am I correct that it is the understanding of my coauthor of the bill

[[Page H4473]]

that it does not create a new right to impose unilaterally a settlement 
during an impasse?
  Mr. FAWELL. Mr. Chairman, will the gentleman yield?
  Mr. ANDREWS. I yield to the gentleman from Illinois.
  Mr. FAWELL. It is my understanding that the legislation does not 
change the laws regarding an employer's rights to unilaterally impose 
conditions in the face of an impasse in collective bargaining.
  Mr. ANDREWS. Under current law, when collective bargaining reaches an 
impasse, employers have a perverse incentive to bargain to impasse and 
then compel a union to acquiesce in conditions mandated by the 
employer.
  From a related point of view, it is not the intent of the Sales 
Incentive Compensation Act to create a new defense for an unfair labor 
practice perpetrated by an employer or to create an exemption excusing 
what would otherwise be an unfair labor practice.
  The Sales Incentive Compensation Act does not create a right or 
authority for an employer to implement unilaterally the exemption 
provided by the legislation in a circumstance where an employer is 
engaged in collective bargaining negotiations with a labor organization 
and the negotiating parties have reached an impasse.
  As an author of H.R. 2888, I want to make clear that the bill should 
not be used as an instrument, if an impasse occurs, to secure an 
outcome that would never result from the normal ebb and flow of the 
free collective bargaining process. Under current law, when collective 
bargaining reaches an impasse, employers have a perverse incentive to 
bargain to impasse and then compel a union to acquiesce in conditions 
mandated by the employer.
  From a related standpoint, it is not the intent of the Sales 
Incentive Compensation Act to create a new defense for an unfair labor 
practice perpetrated by an employer.
  Mr. GOODLING. Mr. Chairman, I yield the balance of my time to the 
gentleman from Illinois (Mr. Fawell).
  Mr. FAWELL. Mr. Chairman, it seems to me that in the comments, the 
gentleman from New Jersey (Mr. Andrews) made the statement that this 
bill does not divest people from overtime, rather it gives 
opportunities. I think that is the key distinction perhaps between the 
two sides here.
  We on this side and a number of my colleagues on the other side of 
the aisle see that there are all kinds of opportunities, especially 
young people who are only making $20,000 or less than that. When 
Leronda Lucky testified before the subcommittee of the gentleman from 
North Carolina (Mr. Ballenger), she made this statement:

       There is also a very important customer service component 
     to my job. My clients do not necessarily have to have 9-to-5 
     work hours. Many start their days early in the morning and 
     work until late in the evening. I need the flexibility to 
     determine when I need to meet with customers on their hours. 
     Being an exempt employee would provide that flexibility.

  The gentleman from Pennsylvania (Mr. Goodling) previously referred to 
Robert Reich's statement, and I quote:

       A lot of people who are called sales reps are no longer 
     really sales reps. They are actually advising somebody about 
     a package of goods and services that meets the needs of that 
     individual, and those sales people are therefore more like 
     management consultants.

  So it is different. Times have changed. We have to recognize that 
that is so. That is what I think this legislation does. I believe it is 
going to be very beneficial for a lot of people who see a great deal of 
opportunity.
  Mrs. McCARTHY of New York. Mr. Chairman, I rise in strong support of 
H.R. 2888, the Sales Incentive Compensation Act. I want to commend my 
colleagues, Mr. Andrews and Mr. Fawell, for their hard work in 
developing this bipartisan bill.
  I am cosponsor of H.R. 2888 because I believe that it will open up 
opportunities for inside salespeople to earn more and succeed in the 
workforce. This bill recognizes that the workforce has changed in the 
sixty years since the Fair Labor Standards Act was passed. Today, 
salespeople can be more productive than every by using computers, faxes 
and E-mail to reach their clients, instead of travelling door-to-door.
  But while outside salespeople are exempt from the FLSA, inside 
salespeople are not. Many inside salespeople are told to go home after 
40 hours because their employers do not want to pay them overtime. This 
limits their chance to earn big commissions.
  H.R. 2888 is sensible, balanced legislation. It will give 
professional, expert salespeople the chance to maximize their sales, 
while protecting millions of workers who depend upon the FLSA to 
guarantee their hard-earned benefits.
  During Committee mark-up, I offered an amendment to H.R. 2888 to 
clarify even further that route sales drivers, a class of workers that 
deserves FLSA protection, would not be affected by this bill. My 
amendment was accepted.
  I am pleased to support this bill not only on its merits, but because 
of the process that has led to its consideration. This bill is the 
product of good-faith discussions between members on both sides of the 
aisle.
  It has been developed in an atmosphere of trust and mutual respect, 
and I would hope that this bill can be a model for other legislation 
that this body debates. It shows that when we put partisanship aside, 
everyone wins.
  I urge my colleagues to support this bill.
  Mr. CLAY. Mr. Chairman, I oppose this bill because it shortchanges 
some 1.5 million sales employees by denying them overtime pay. Although 
the bill guarantees that workers will receive the low salary of $22,000 
annually, this hardly compensates for the loss of the overtime pay.
  The overtime laws, like the minimum wage, were designed to protect 
working families from exploitation. Employers should not be permitted 
to make employees work excessive hours away from their families without 
fair and decent compensation.
  It is shameful that we should act to diminish the prosperity of 
working families at the same time that corporate profits and stock 
market prices are off the charts.
  This assault on working families also makes a mockery of those hollow 
assertions Republicans made on this floor months ago in support of flex 
time. Make no mistake, this bill means working families who work in the 
sales occupation will be required to work more hours for less pay. This 
bill does not permit employees to refuse overtime work.
  This Congress should not support any legislation that benefits 
special interests at the expense of working families.
  I urge all Members to preserve the historic protections of the Fair 
Labor Standards Act, and reject this mean-spirited attack on workers.
  The CHAIRMAN. All time for general debate has expired.
  Pursuant to the rule, the committee amendment in the nature of a 
substitute printed in the bill is considered as an original bill for 
the purpose of amendment under the 5-minute rule and is considered 
read.
  The text of the committee amendment in the nature of a substitute is 
as follows:

                               H.R. 2888

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Sales Incentive Compensation 
     Act''.

     SEC. 2. EXEMPTION.

       Section 13(a) of the Fair Labor Standards Act of 1938 (29 
     U.S.C. 213(a)) is amended by striking the period at the end 
     of paragraph (17) and inserting a semicolon and by adding at 
     the end the following:
       ``(18) any employee employed in a sales position if--
       ``(A) the employee has specialized or technical knowledge 
     related to products or services being sold;
       ``(B) the employee's--
       ``(i) sales are predominantly to persons who are entities 
     to whom the employee's position has made previous sales; or
       ``(ii) position does not involve making sales contacts;
       ``(C) the employee's position requires a detailed 
     understanding of the needs of those to whom the employee is 
     selling;
       ``(D) the employee's position requires the employee to 
     exercise discretion in offering a variety of products and 
     services;
       ``(E) the employee receives--
       ``(i) base compensation, determined without regard to the 
     number of hours worked by the employee, of not less than an 
     amount equal to one and one-half times the minimum wage in 
     effect under section 6(a)(1) multiplied by 2,080; and
       ``(ii) in addition to the employee's base compensation, 
     compensation based upon each sale attributable to the 
     employee;
       ``(F) the employee's aggregate compensation based upon 
     sales attributable to the employee is not less than 40 
     percent of one and one-half times the minimum wage multiplied 
     by 2,080;
       ``(G) the employee receives a rate of compensation based 
     upon each sale attributable to the employee which is beyond 
     sales required to reach the compensation required by 
     subparagraph (F) which rate is not less than the rate on 
     which the compensation required by subparagraph (F) is 
     determined; and
       ``(H) the rate of annual compensation or base compensation 
     for any employee who did not work for an employer for an 
     entire calendar year is prorated to reflect annual 
     compensation which would have been earned if the employee had 
     been compensated at the same rate for the entire calendar 
     year.''.

     SEC. 3. CONSTRUCTION.

       The amendment made by section 2 may not be construed to 
     apply to individuals who are employed as route sales drivers.

  The CHAIRMAN. During consideration of the bill for amendment, the

[[Page H4474]]

Chair may accord priority in recognition to a Member offering an 
amendment that he has printed in the designated place in the 
Congressional Record. Those amendments will be considered read.
  The Chairman of the Committee of the Whole may postpone a request for 
a recorded vote on any amendment and may reduce to a minimum of 5 
minutes the time for voting on any postponed question that immediately 
follows another vote, provided that the time for voting on the first 
question shall be a minimum of 15 minutes.
  Are there any amendments to the bill?


                 Amendment No. 1 Offered by Mr. Fawell

  Mr. FAWELL. Mr. Chairman, I offer an amendment.
  The CHAIRMAN. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 1 offered by Mr. Fawell:
       Page 4, strike lines 8 through 13 and insert the following:
       ``(B) the employee's--
       ``(i) sales are predominantly to persons or entities to 
     whom the employee's position has made previous sales; or
       ``(ii) the position does not involve initiating sales 
     contacts;

  Mr. FAWELL. Mr. Chairman, this amendment is noncontroversial. It 
would make two technical changes in the bill for the purpose of 
correcting a provision adopted during the committee markup which 
inadvertently substituted the words ``who are'' for the word ``are''; 
and the word ``making'' for the word ``initiating.''
  It is my understanding that the amendment will not be opposed by the 
gentleman from New York (Mr. Owens). I would urge my colleagues to 
support this technical change.
  Mr. OWENS. Mr. Chairman, we accept the amendment.
  The CHAIRMAN. The question is on the amendment offered by the 
gentleman from Illinois (Mr. Fawell).
  The amendment was agreed to.


                  Amendment No. 2 Offered by Mr. Owens

  Mr. OWENS. Mr. Chairman, I offer an amendment.
  The CHAIRMAN. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 2 offered by Mr. Owens:
       Page 6, line 9, strike the period, quotation marks, and the 
     period following and insert a semicolon and insert after line 
     9 the following:
     except that an employer may not require an employee who is 
     exempt from overtime payment under this paragraph to work any 
     hours in excess of 40 in any workweek or 8 in any day unless 
     the employee gives the employee's consent, voluntarily and 
     not as a condition of employment, to perform such work.''.

  Mr. OWENS. Mr. Chairman, this amendment provides that employees who 
lose their overtime protection as a result of this legislation will 
have a right to choose whether or not they will work overtime. They 
will have the right and not the employer. Employers would be prohibited 
from requiring those sales people to work in excess of 40 hours a week, 
or 8 hours a day.
  The proponents of H.R. 2888 as we have heard tonight contend that 
workers want to work overtime without overtime pay. For 60 years 
Americans have had this protection in place for inside sales people and 
sales have gone very well. The economy has boomed. Why fix it if it is 
not broken already? We have a working situation here. But they say that 
workers want to work overtime without overtime pay. They have overtime 
pay now. Workers are dying to give it up. They have stated repeatedly 
that this legislation is intended to help workers. I have said that is 
not the case. I submit that claims that this legislation will help 
workers are wholly false. This legislation will help employers, but it 
will harm workers.
  Under current law, the only legal restriction on the number of hours 
an employee may be required to work is a requirement that employers pay 
time and a half for hours worked in excess of 40 hours a week. This 
puts a brake on exploitation. This puts a brake on employers who want 
to drive their workers in order to make greater profits without also 
compensating the workers.
  Under H.R. 2888, an employer would no longer be required to pay a 
worker anything for overtime work except for such commissions as the 
employee may earn during that period. Indeed if an employee earns no 
commission during the overtime period, the employer is not required to 
pay the employee anything at all for that work. This legislation shifts 
business risks from the employer to the employee.
  H.R. 2888 also creates a powerful incentive for employers to require 
employees to work overtime by permitting employers to pay a worker less 
for overtime work than for regular work. In my view, this consequence 
is obvious and intentional. However, if this legislation is truly 
intended to benefit employees, then clearly the worker and not the 
employer should exercise control over how much overtime will be worked. 
That is all that my amendment would accomplish. Employers may continue 
to require employees to work 8 hours a day and 40 hours a week. 
Employers may continue to specify when those hours will be worked. 
However, if the employee is going to undertake the risk of working 
additional hours beyond 40 hours, with no guarantee of being paid for 
those hours, it would be at the employee's own choosing and not the 
employer.
  Even if my amendment is adopted, many workers will not have a true 
choice. $22,600 is not a living wage for most families. Many workers 
would be financially compelled to work overtime. However, my amendment 
ensures that all employees who would otherwise lose overtime protection 
would at least have some voice as to how much overtime they will work 
and when they will work it.

                              {time}  2400

  If those who support H.R. 2888 are serious about their desire to help 
workers, they will support my amendment.
  Mr. Chairman, I urge the adoption of this amendment.
  Mr. FAWELL. Mr. Chairman, I rise in opposition to the amendment 
offered by the gentleman from New York (Mr. Owens).
  Mr. Chairman, we still have the same dichotomy here in operation. The 
gentleman from New York again has his eye upon what he sees as a 
tremendous loss; that is, of the overtime provisions.
  The employees who came into our committee and asked for the right to 
be able to assume commissions as a base of being able to work more and 
make more look at the opportunities coming from the fact that they now 
are going to have a commission's basis of earning. Not only are they 
going to have that commission basis of earning, but they are going to 
have a foundation of a guarantee of $22,500 a year that the employer is 
going to have to pay.
  Now there are various classifications of employees who are exempt 
from the Fair Labor Standards Act provisions. We have made reference to 
some of them: professional, executive, administrative, outdoor 
salesman, for instance. I do not think that of all of the many examples 
of exemptions that are in the statute right now, and this is the 18th 
one that we have put here, that there ever has been a provision that 
would give to the employee the right to issue some kind of a consent. 
What is always set forth is not always because with the outside 
salesmen they did not even get any kind of a guarantee of any kind of a 
salary. It is zilcho, nothing. They are just out there and working on 
commissions, but take administrative positions where an exemption from 
overtime is granted.
  The only other, the only other thing that is granted to an 
administrative employee is, believe it or not, a guarantee of $250 a 
week. That is all. There is nothing in any those instances where 
exemptions are granted, and exemptions from overtime have always been a 
part of the Fair Labor Standards Act.
  And there is good reason for that, very good reason for that. Once we 
start doing that, then, well, what should it be? Oral consent or 
written consent? When must they set forth this consent? How often can 
it be? Must it be renewed? We can go on and on with a lot of other 
provisions, and if the employer should suggest that one ought to be 
able to go on commissions and give consent here.
  Mr. ANDREWS. Mr. Chairman, would the gentleman yield?
  Mr. FAWELL. I yield to the gentleman from New Jersey.
  Mr. ANDREWS. Mr. Chairman, I want to join the gentleman in respectful 
opposition to this amendment. I

[[Page H4475]]

think the point he is making is very important, that the amendment 
opens an awful lot of questions about how the consent would be 
expressed, to whom, whether it could be altered, whether someone could 
be exempt for a week and then go back to nonexempt the next week, 
whether or not the requests would have to be oral or in writing. And I 
believe what it would do would be to unduly complicate matters, and for 
that reason I would join the gentleman in his opposition to the 
amendment.
  Mr. FAWELL. This is precisely why in all of those instances where 
exemptions are granted, nothing like this has ever been put into the 
Fair Labor Standards Act.
  I want to add also that the gentleman from New York (Mr. Owens) 
actually is extending the overtime provisions to now include the 8-hour 
day as well as the 40-hour work week. The Fair Labor Standards Act has 
always applied only to a 40-hour work week, not to an 8-hour day, too. 
So he is bringing in something completely new to the Federal law, the 
Fair Labor Standards Act.
  Mr. OWENS. Mr. Chairman, will the gentleman yield?
  Mr. FAWELL. I yield to the gentleman from New York.
  Mr. OWENS. In the list of extensions, are there other situations 
which involve part of the income being derived from commissions?
  Part of this 22,000 is commissions. It is only 16,000 that is really 
salary, and part is commission. Is there any other situation where an 
exemption is given to some position which makes up commissions, is made 
up partially with commissions?
  Mr. FAWELL. There is, insofar as retail service positions are 
concerned.
  Mr. OWENS. Mr. Chairman, I thank the gentleman..
  Mr. FAWELL. Mr. Chairman, that is all that I have to say.
  The CHAIRMAN. The question is on the amendment offered by the 
gentleman from New York (Mr. Owens).
  The question was taken; and the Chairman announced that the noes 
appeared to have it.
  Mr. OWENS. Mr. Chairman, I demand a recorded vote, and pending that, 
I make the point of order that a quorum is not present.
  The CHAIRMAN. Pursuant to House Resolution 461, further proceedings 
on the amendment offered by the gentleman from New York (Mr. Owens) 
will be postponed.
  The point of no quorum is considered withdrawn.


                    Amendment Offered by Mr. Andrews

  Mr. ANDREWS. Mr. Chairman, I offer an amendment.
  The Clerk read as follows:

       Amendment offered by Mr. Andrews:
       Page 5, line 1, strike ``the employee's position requires'' 
     and insert ``the employee has''.
       Page 5, beginning in line 4, strike ``the employee's 
     position requires the employee to exercise'' and insert ``the 
     employee exercises''.

  Mr. ANDREWS (during the reading). Mr. Chairman, I ask unanimous 
consent the amendment be considered as read and printed in the Record.
  The CHAIRMAN. Is there objection to the request of the gentleman from 
New Jersey?
  There was no objection.
  Mr. ANDREWS. Mr. Chairman, I offer this amendment to conform the bill 
to a provision that was proposed by the gentleman from New York (Mr. 
Owens) in committee so that the rest of the bill can conform to that so 
that the reference would be to the employee's position and the 
employee. This makes it very clear that the position and the employer 
are both covered. This conforms the bill that we adopted in committee 
to the suggestion of Mr. Owens that was adopted in committee. I would 
urge its adoption.
  Mr. FAWELL. Mr. Chairman, will the gentleman yield?
  Mr. ANDREWS. I yield to the gentleman from Illinois, my coauthor.
  Mr. FAWELL. Mr. Chairman, we have no objection to this amendment.
  Mr. OWENS. Mr. Chairman, will the gentleman yield?
  Mr. ANDREWS. I yield to the gentleman from New York.
  Mr. OWENS. Mr. Chairman, no objection to the amendment.
  The CHAIRMAN. The question is on the amendment offered by the 
gentleman from New Jersey (Mr. Andrews).
  The amendment was agreed to.
  The CHAIRMAN. Are there further amendments?
  Mr. GOODLING. Mr. Chairman, I move that the Committee do now rise.
  The motion was agreed to.
  Accordingly, the Committee rose; and the Speaker pro tempore (Mr. 
Peterson of Pennsylvania) having assumed the Chair, Mr. Watts of 
Oklahoma, Chairman of the Committee of the Whole House on the State of 
the Union, reported that that Committee, having had under consideration 
the bill (H.R. 2888) to amend the Fair Labor Standards Act of 1938 to 
exempt from the minimum wage recordkeeping and overtime compensation 
requirements certain specialized employees, had come to no resolution 
thereon.

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