[Congressional Record (Bound Edition), Volume 147 (2001), Part 5]
[Extensions of Remarks]
[Pages 6444-6445]
[From the U.S. Government Publishing Office, www.gpo.gov]



             THE REWARDING PERFORMANCE IN COMPENSATION ACT

                                 ______
                                 

                          HON. CASS BALLENGER

                           of north carolina

                    in the house of representatives

                        Thursday, April 26, 2001

  Mr. BALLENGER. Mr. Speaker, today, I am reintroducing ``The Rewarding 
Performance in Compensation Act'' which will help workers to share, 
financially, when their efforts help produce gains for their company in 
productivity, sales, fewer injuries, or other aspects of performance. 
The Rewarding Performance in Compensation Act would amend the Fair 
Labor Standards Act (FLSA) to specify that an hourly employee's regular 
rate of pay for the purposes of calculating overtime would not be 
affected by additional payments that reward or provide incentives to 
employees who meet productivity, quality, efficiency or sales goals. By 
eliminating disincentives in current law, this legislation will 
encourage employers to reward their employees and make it easier for 
employers to ``share the wealth'' with their employees.
  The pressures of worldwide competition and rapid technological change 
have forced most employers to seek continuous improvement in 
productivity, quality, and other aspects of company performance. 
Employers often seek to encourage and reward employee efforts to 
improve productivity, quality, etc. through what are called 
``gainsharing'' plans--linking additional compensation to measurable 
improvements in company, team, or individual performance. Employees are 
assigned individual or group productivity goals and the savings 
achieved from improved productivity, or the gains, are then shared 
between the company and the employees. The payouts are based directly 
on factors under an employee's control,

[[Page 6445]]

such as productivity or costs, rather than on the company's profits. 
Thus employees directly benefit from improvements that they help to 
produce by increasing their overall compensation.
  Unfortunately, employers who choose to implement such programs for 
their hourly employees can be burdened with unpredictable and complex 
requirements by the FLSA, which clearly did not envision these types of 
``pay based on performance'' plans.
  For example, if a bonus is based on production, performance, or other 
factors, the payment must be divided by the number of hours worked by 
the non-exempt employee during the time period that the bonus is meant 
to cover, and added to the employee's regular hourly pay rate. This 
adjusted hourly rate must then be used to recalculate the employee's 
overtime rate of pay. The employer is then responsible to pay the 
difference between the old overtime pay rate and the new recalculated 
overtime pay rate. For other types of employees, such as executive, 
administrative, or professional employees who are exempt from minimum 
wage and overtime, an employer can easily give financial rewards 
without having to recalculate rates of pay.
  Simply put, this legislation would amend the FLSA to allow employers 
to give non-exempt hourly employees gainsharing or performance bonuses 
without making employers go through the cost of recalculating hourly 
and overtime pay. This would give hourly non-exempt employees the same 
access to bonuses and gainsharing programs that exempt employees 
receive.
  Performance bonuses and gainsharing programs are a way for employees 
to share in the success of the company they work for. Whether exempt or 
non-exempt, all employees should have the same opportunity to receive 
bonuses for their hard work.

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