[House Report 104-219]
[From the U.S. Government Publishing Office]



104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 1st Session                                                    104-219
_______________________________________________________________________


 
              COURT REPORTER FAIR LABOR AMENDMENTS OF 1995

_______________________________________________________________________


 August 1, 1995.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______


     Mr. Goodling, from the Committee on Economic and Educational 
                 Opportunities, submitted the following

                              R E P O R T

                        [To accompany H.R. 1225]

      [Including cost estimate of the Congressional Budget Office]
  The Committee on Economic and Educational Opportunities, to 
whom was referred the bill (H.R. 1225) to amend the Fair Labor 
Standards Act of 1938 to exempt employees who perform certain 
court reporting duties from the compensatory time requirements 
applicable to certain public agencies, and for other purposes, 
having considered the same, report favorably thereon with an 
amendment and recommend that the bill as amended do pass.
  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Court Reporter Fair Labor Amendments 
of 1995''.

SEC. 2. LIMITATION ON OVERTIME COMPENSATION FOR COURT REPORTERS.

  Section 7(o) of the Fair Labor Standards Act of 1938 (29 U.S.C. 
207(o)) is amended--
          (1) by redesignating paragraph (6) as paragraph (7); and
          (2) by inserting after paragraph (5) the following new 
        paragraph:
  ``(6) The hours an employee of a public agency performs court 
reporting transcript preparation duties shall not be considered as 
hours worked for the purposes of subsection (a) if--
          ``(A) such employee is paid at a per-page rate which is not 
        less than--
                  ``(i) the maximum rate established by State law or 
                local ordinance for the jurisdiction of such public 
                agency,
                  ``(ii) the maximum rate otherwise established by a 
                judicial or administrative officer and in effect on 
                July 1, 1995, or
                  ``(iii) the rate freely negotiated between the 
                employee and the party requesting the transcript, other 
                than the judge who presided over the proceedings being 
                transcribed, and
          ``(B) the hours spent performing such duties are outside of 
        the hours such employee performs other work (including hours 
        for which the agency requires the employee's attendance) 
        pursuant to the employment relationship with such public 
        agency.
For purposes of this section, the amount paid such employee in 
accordance with subparagraph (A) for the performance of court reporting 
transcript preparation duties, shall not be considered in the 
calculation of the regular rate at which such employee is employed.''.

SEC. 3. EFFECTIVE DATE.

  The amendments made by section 2 shall apply after the date of the 
enactment of this Act and with respect to actions brought in a court 
after the date of the enactment of this Act.
                       Explanation of Amendments

    The provisions of the substitute are explained in this 
report.

                                Purpose

    The purpose of H.R. 1225, the Court Reporter Fair Labor 
Amendments of 1995, is to limit the overtime compensation for 
official court reporters when being paid at a per-page rate 
outside of the hours such employee performs other work pursuant 
to the employment relationship with the court.

                            Committee Action

    H.R. 1225 was introduced by Representative Harris Fawell on 
March 14, 1995. There were 4 original cosponsors. The 
Subcommittee on Workforce Protections held a hearing on H.R. 
1225 on July 11, 1995. At that hearing, testimony was received 
from Ms. Paula Laws, President-elect, National Court Reporters 
Association.
    On July 20, 1995, the Committee on Economic and Educational 
Opportunities approved H.R. 1225, as amended, on a voice vote, 
and, by a voice vote, ordered the bill favorably reported.

                     Committee Statement and Views

Background

    State and local official court reporters are typically 
employed by the court at an annual salary, which is set by the 
court and/or the State or local government. The reporter's 
primary duties while working for the court are to record and 
read back court proceedings. While working in this capacity, 
the court reporter is clearly an employee of the court and is 
entitled to overtime compensation for work in excess of forty 
hours in a given work week.
    In addition to their in-court duties, court reporters are 
usually required, often by law, to prepare and certify 
transcripts of their records for attorneys, litigants, and 
others. Typically, the court reporter bills the entity for whom 
the transcript is prepared directly and collects a per page fee 
set by law or court rule for such work.
    The current payment system for official court reporters has 
been in place in most State and local courts since long before 
the Fair Labor Standards Act (FLSA) was extended to cover 
public employees. The ramifications of the extension of the 
overtime requirements of the FLSA to the relatively unique 
compensation system under which most court reporters operate 
were not considered by the Congress when it extended the Act to 
public employees. Indeed, until 1993, the obligations imposed 
by the FLSA with regard to court reporters while engaged in 
preparing transcripts of court proceedings were not generally 
understood.
    On March 18, 1993, and August 26, 1994, the Department of 
Labor expressed its view to State court administrators in 
Indiana and Oregon that the time court reporters spent 
preparing transcripts generally must be counted in calculating 
the employer's overtime obligation to the reporter. Since that 
time, both employers and associations representing court 
reporters have expressed the view that where reporters perform 
transcription preparation duties on their own time, and are 
compensated on a per-page basis for that work, that time should 
not be counted for purposes of determining the employer's 
overtime obligation to the reporter.
    The interest of employers in exempting certain 
transcription preparation duties from overtime calculations is 
self evident. That the ostensible beneficiaries of the policy, 
the court reporters, should also seek to exempt certain duties 
from the overtime calculation is more interesting. Though the 
amount of income an official reporter derives from per-page 
compensation for transcription services varies from 
jurisdiction to jurisdiction and from reporter to reporter, it 
can be substantial and is generally in excess of what the 
reporter would otherwise receive if compensated solely on a 
time-and-a-half basis. If the courts are required to include 
all time spent by a reporter in preparing transcripts for 
purposes of calculating overtime, notwithstanding the fact that 
the reporter is otherwise being compensated by the party for 
whom the transcript is prepared on a per-page basis, and must 
compensate the reporter accordingly, the courts have a powerful 
incentive to alter the traditional means by which reporters are 
compensated for transcription preparation duties.
    On May 22, 1995, the Department of Labor further elaborated 
its view in a letter from Maria Echaveste, Administrator of the 
Wage and Hour Division, to Mike Ochs, Manager of State 
Relations of the National Court Reporters Association.

          In our review, we considered it significant that 
        often the responsibility of the court reporter to 
        perform transcription services for third parties is 
        imposed by statute or ordinance, rather than the court 
        system. We believe a distinction should be drawn 
        between situations imposed by statute or ordinance and 
        situations where additionally the court exercises a 
        supervisory role. Even with such a distinction there 
        exist a number of different scenarios in which court 
        reporters could still be considered to be employees of 
        the court or judge when preparing transcripts for 
        outside or indigent parties.
          In summary, we conclude that transcription 
        preparation for outside private parties, not connected 
        with the state or local government that employs the 
        court reporter, may be considered ``independent 
        contractor'' work so long as the work is totally 
        divorced from the employment relationship. Thus none of 
        the private work may be performed during working hours. 
        The fact that the reporter is required by statute or 
        ordinance to perform the work would not by itself 
        render the court the employer. The court may continue 
        to perform the ministerial role of prescribing format 
        and certifying the accuracy of the completed 
        transcript, by may not be involved in setting fees, 
        approving the hiring of assistants, or disciplining the 
        reporter through the employment relationship if the 
        work is not properly or timely performed. (Emphasis in 
        the original, footnotes omitted.)

    Though in part acceding to the desire of reporters and 
their employers that time spent preparing transcripts not be 
included in the overtime calculation, a substantial amount of 
transcription preparation duties would remain subject to the 
requirements of FLSA. For example, where a public defender and 
the court reporter are employed by the same county government, 
transcription preparation duties performed on behalf and at the 
request of the public defender are performed at the request of 
the employer and, therefore, are part of the employment 
relationship. Further, distinguishing between transcription 
preparation duties that may be part of the employment 
relationship, and therefore subject to the overtime 
requirements of the FLSA, and those that are not may not be 
easy. The point at which the court's fulfillment of its 
ministerial function, for example, transgresses into something 
less than a total divorce from the employment relationship may 
not be readily recognizable.
    For the aforesaid reasons, both court reporters and their 
public employers have continued to seek legislation to clarify 
the applicability of the Fair Labor Standards Act to 
circumstances in which a court reporter performs transcription 
preparation duties on his or her own time and is compensated 
for such duties on a per-page basis. The Committee concurs 
that, given the historical methods of compensating reporters 
for such work and within the parameters established by ``The 
Court Reporter Fair Labor Amendments of 1995'' as reported, the 
protection afforded employees by Section 7(a) of the Fair Labor 
Standards Act (29 U.S.C. Section 207(a)) is, in this instance, 
unnecessary.
Legislative Remedy

    H.R. 1225, The Court Reporter Fair Labor Amendments of 
1995, introduced by Representative Harris Fawell, as amended, 
seeks to clarify that time spent by official court reporters 
preparing transcripts for a per-page fee during ``off hours'' 
shall not be considered ``hours worked'' for purposes of 
Section 7(a) of the Fair Labor Standards Act (FLSA). In 
particular, the legislation provides that where court reporters 
are being compensated on a per-page basis for transcription 
work performed on the court reporter's own time, the time spent 
on that work need not be counted as hours worked for purposes 
of determining the employer's overtime obligation to that 
reporter.
    The transcription preparation duties will not be considered 
``hours worked'' as long as the official court reporter is 
being paid a per-page rate which is either the maximum rate 
established by law in the jurisdiction, the maximum rate in 
effect July 1, 1995 if the rate is administratively established 
by judicial or administrative officer, or a rate freely 
negotiated between the court reporter and the party requesting 
the transcript.
    The per-page rates charged by official court reporters are 
generally set by law or regulation in each jurisdiction. 
Sometimes the rate is fixed, but many jurisdictions prescribe a 
maximum rate, allowing the court reporter and the party 
requesting the transcript to negotiate a lower amount. The bill 
enables the parties to do this as long as the court reporter is 
not constrained by the court or any other party in his or her 
ability to negotiate a rate that is acceptable to the official 
court reporter.
    Where the transcription is being prepared for the judge who 
presided over the proceedings being transcribed, the maximum 
per page rate must be paid for the bill's provisions to apply. 
If a rate lower than the maximum or no per page rate is being 
paid for a transcript prepared for the presiding judge, the 
time spent by the official court reporter preparing the 
transcript will continue to be considered hours worked for 
purposes of Section 7(a) of the Fair Labor Standards Act.
    To be clear, the legislation has no effect in situations 
where an official court reporter is not paid on a per-page 
basis for transcription preparation duties. The legislation 
only applies in cases where a per-page rate has been 
established by state law or local ordinance, or otherwise 
established by a judicial or administrative officer and in 
effect on July 1, 1995. Though court reporters may freely 
negotiate to be compensated for transcription preparation 
duties below the maximum rate otherwise permitted, where a 
jurisdiction acts administratively, and not by law or 
ordinance, to reduce rates below those in effect on July 1, 
1995, all transcription preparation duties must be counted for 
purposes of calculating overtime. In cases where there is no 
per-page rate in effect on July 1, 1995, and the court desires 
to establish one, the legislation provides that the per-page 
rate must be established by state law or local ordinance for 
the jurisdiction of such public agency in order for the 
provisions of this legislation to be applicable.
    Under Section 7(o)(6)(B) of the FLSA as amended by the 
bill, the exemption from ``hours worked'' only applies to 
situations where the official court reporter is preparing 
transcripts on his or her own time. If the work is being 
performed while the official court reporter's attendance at the 
courthouse or some other location is required as part of the 
employment relationship, the time spent preparing the 
transcript in that location will continue to be considered 
``hours worked'' for purposes of the Fair Labor Standards Act.
    In paying official court reporters the overtime premium of 
one-and-one-half times the court reporter's ``regular rate'' as 
required under Section 7 of the Fair Labor Standards Act, the 
public agency is not required to include within the ``regular 
rate'' any of the per-page fees described in Section 7(o)(6)(A) 
of the Act as amended by the bill. This exclusion applies 
regardless of whether the court reporter is performing the work 
during the hours described in Section 7(o)(6)(B) of the Act as 
amended by the bill.

Conclusion

    This legislation is necessary to head off large and costly 
disruptions in the state and local court systems. In 
particular, the legislation will preempt dramatic changes in 
the way official court reporters are paid and how they perform 
transcription work.

                                Summary

    H.R. 1225, as amended, would amend the Fair Labor Standards 
Act (FLSA) to clarify that time spent by official court 
reporters preparing transcripts for a per-page fee during ``off 
hours'' shall not be considered ``hours worked'' for the public 
agency at which such employee is employed. The bill is limited 
in its application to employees of a public agency who perform 
court reporting transcription duties.

                      Section-by-Section Analysis

Section 1

    Provides that the short title of the bill is ``The Court 
Reporter Fair Labor Amendments of 1995.''
Section 2

    Clarifies that the hours a court reporter spends performing 
transcript preparation duties for a per-page rate shall not be 
considered as hours worked for the public agency at which such 
employee is employed. The per-page rate cannot be less than 
either (1) the maximum rate established by State law or local 
ordinance; (2) the maximum rate otherwise established by 
judicial or administrative officer and in effect on July 1, 
1995; or (3) the rate freely negotiated and agreed to between 
the court reporter and the party requesting the transcript, 
other than the judge who presided over the proceedings. In 
addition, the transcription preparation work must be performed 
at a time when the employee is not required to be present 
pursuant to the employment relationship with the court.

Section 3

    Specifies that the provisions of the bill shall take effect 
on the date of enactment.

  Statement of Oversight Findings and Recommendations of the Committee

    In compliance with clause 2(l)(3)(A) of rule XI of the 
Rules of the House of Representatives and clause 2(b)(1) of 
rule X of the Rules of the House of Representatives, the 
Committee's oversight findings and recommendations are 
reflected in the body of this report.

                     Inflationary Impact Statement

    In compliance with clause 2(l)(4) of rule XI of the Rules 
of the House of Representatives, the Committee estimates that 
the enactment into law of H.R. 1225 will have no significant 
inflationary impact on prices and costs in the operation of the 
national economy.

                    Government Reform and Oversight

    With respect to the requirement of clause 2(l)(3)(D) of 
rule XI of the Rules of the House of Representatives, the 
Committee has received no report of oversight findings and 
recommendations from the Committee on Government Reform and 
Oversight on the subject of H.R. 1225.

                           Committee Estimate

    Clause 7 of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison by the 
Committee of the costs which would be incurred in carrying out 
H.R. 1225. However, clause 7(d) of that rule provides that this 
requirement does not apply when the Committee has included in 
its report a timely submitted cost estimate of the bill 
prepared by the Director of the Congressional Budget Office 
under section 403 of the Congressional Budget Act of 1974.

                Application of Law to Legislative Branch

    Section 102(b)(3) of Public Law 104-1 requires a 
description of the application of this bill to the legislative 
branch. This bill changes the Department of Labor 
interpretations of laws applying to State and local court 
reporters. The Department's interpretation and this bill do not 
affect legislative branch employees.

                       Unfunded Mandate Statement

    Section 423 of the Congressional Budget and Impoundment 
Control Act requires a statement of whether the provisions of 
the reported bill include unfunded mandates. The bill does not 
contain any unfunded mandates.

     Budget Authority and Congressional Budget Office Cost Estimate

    With respect to the requirement of clause 2(l)(3)(B) of 
rule XI of the House of Representatives and section 308(a) of 
the Congressional Budget Act of 1974 and with respect to 
requirements of clause 2(l)(3)(C) of rule XI of the House of 
Representatives and section 403 of the Congressional Budget Act 
of 1974, the Committee has received the following cost estimate 
for H.R. 1225 from the Director of the Congressional Budget 
Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 27, 1995.
Hon. William F. Goodling,
Chairman, Committee on Economic and Educational Opportunities, U.S. 
        House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
reviewed H.R. 1225, the Court Reporter Fair Labor Amendments of 
1995, as ordered reported by the Committee on Economic and 
Educational Opportunities on July 20, 1995. CBO estimates that 
enactment of H.R. 1225 would have no effect on the federal 
budget. Enactment of the bill could affect the budgets of state 
and local governments by limiting the instances in which they 
must provide compensation to court reporters for overtime work. 
Because enactment of H.R. 1225 would not affect direct spending 
or receipts of the federal government, pay-as-you-go procedures 
would not apply.
    H.R. 1225 would amend the Fair Labor Standards Act to 
limit, under certain conditions, the overtime compensation that 
courts must pay to court reporters. Specifically, the bill 
would allow that if a court reporter is paid at a per-page rate 
for preparing transcripts for parties other than the courts 
(such as litigants or lawyers), the hours spent preparing these 
transcripts would not be considered as hours spent working for 
the courts. Under current law, state and local courts are 
required to pay court reporters one-and-one half times their 
regular rate of pay for all hours worked overtime, even if that 
time is spent working for other parties. Federal courts are not 
covered by this provision.
    Most state and local courts currently are not incurring 
overtime costs in these situations because the Department of 
Labor is not enforcing the overtime provisions. These courts 
could be liable for such overtime costs, however, if a suit 
were brought against them. Some courts are paying the overtime 
compensation, but are limiting costs by restricting the court 
reporters' abilities to sell their transcripts at per-page 
rates. If courts are allowed to reduce the number of overtime 
hours they are required to pay, the bill could prevent the 
courts from being held liable for overtime pay in the future. 
CBO has no basis for judging the extent to which future suits 
on this issue would be forthcoming, and therefore we cannot 
estimate the extent to which state and local funds that would 
have been spent on overtime compensation would be saved as a 
result of this bill.
    Because federal courts are not covered by the provision 
that this legislation seeks to change, enactment of this bill 
would not affect federal spending.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Christina 
Hawley.
            Sincerely,
                                              James L. Blum
                                   (For June E. O'Neill, Director).
         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3 of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):

           SECTION 7 OF THE FAIR LABOR STANDARDS ACT OF 1938

                             maximum hours

    Sec. 7. (a) * * *
          * * * * * * *
    (o)(1) * * *
          * * * * * * *
    (6) The hours an employee of a public agency performs court 
reporting transcript preparation duties shall not be considered 
as hours worked for the purposes of subsection (a) if--
          (A) such employee is paid at a per-page rate which is 
        not less than--
                  (i) the maximum rate established by State law 
                or local ordinance for the jurisdiction of such 
                public agency,
                  (ii) the maximum rate otherwise established 
                by a judicial or administrative officer and in 
                effect on July 1, 1995, or
                  (iii) the rate freely negotiated between the 
                employee and the party requesting the 
                transcript, other than the judge who presided 
                over the proceedings being transcribed, and
          (B) the hours spent performing such duties are 
        outside of the hours such employee performs other work 
        (including hours for which the agency requires the 
        employee's attendance) pursuant to the employment 
        relationship with such public agency.
    For purposes of this section, the amount paid such employee 
in accordance with subparagraph (A) for the performance of 
court reporting transcript preparation duties, shall not be 
considered in the calculation of the regular rate at which such 
employee is employed.
    [(6)] (7) For purposes of this subsection--
          (A) the term ``overtime compensation'' means the 
        compensation required by subsection (a), and
          (B) the terms ``compensatory time'' and 
        ``compensatory time off'' mean hours during which an 
        employee is not working, which are not counted as hours 
        worked during the applicable workweek or other work 
        period for purposes of overtime compensation, and for 
        which the employee is compensated at the employee's 
        regular rate.
          * * * * * * *