[House Report 104-592]
[From the U.S. Government Publishing Office]



104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     104-592
_______________________________________________________________________


 
                              HOUSEPARENTS

                                _______


  May 23, 1996.--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

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 2531]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Economic and Educational Opportunities, to 
whom was referred the bill (H.R. 2531) to amend the Fair Labor 
Standards Act of 1938 to clarify the exemption for houseparents 
from the minimum wage and maximum hours requirements of that 
Act, 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. REFERENCE.

    Whenever in this Act an amendment is expressed in terms of an 
amendment to a section or other provision, the reference shall be 
considered made to a section or other provision of the Fair Labor 
Standards Act of 1938 (29 U.S.C. 201 et seq.).

SEC. 2. DEFINITION OF HOUSEPARENT.

    Section 3 (29 U.S.C. 203) is amended by adding at the end thereof 
the following:
    ``(y) `Houseparent' means any person employed by a private 
nonprofit institution as a child-care worker, either as a member of a 
married couple or as a single person (1) to serve as a substitute 
parent for children who do not live with their own families, and (2) to 
reside in a family like setting with such children.''.

SEC. 3. MINIMUM WAGE AND MAXIMUM HOURS EXEMPTION FOR HOUSEPARENTS.

    Section 13(a) (29 U.S.C. 213(a)) is amended by striking the period 
at the end of paragraph (16) and inserting ``; or'' and by adding at 
the end thereof the following:
          ``(17) any employee employed by a private nonprofit 
        institution to serve as a houseparent for abused, neglected, 
        delinquent, orphaned, homeless, or emotionally impaired 
        children, when--
                  ``(A) such children's primary residence is in the 
                residential facilities of such institution,
                  ``(B) such houseparent resides with such children in 
                the residential facilities of such institution for at 
                least 72 hours a week, and
                  ``(C) such houseparent receives, without cost, board 
                and lodging from such institution and is compensated, 
                on a cash basis, at an annual rate of not less than 
                $8,000.''.

SEC. 4. CONFORMING AMENDMENT.

    Subsection (b) of section 13 (29 U.S.C. 213) is amended by striking 
out paragraph (24).

                                Purpose

    The purpose of H.R. 2531 is to exempt qualifying 
houseparents from the minimum wage and maximum hours 
requirements of the Fair Labor Standards Act of 1938.

                            Committee Action

    H.R. 2531 was introduced by Representative Tim Hutchinson 
on October 25, 1995, with 27 original cosponsors. The 
Subcommittee on Workforce Protections held a hearing on H.R. 
2531 on November 1, 1995. Witnesses testified about the need 
for legislative changes to the Fair Labor Standards Act to 
exempt certain qualified houseparents from the minimum wage and 
overtime protections of the Act. Father Val Peter, the 
Executive Director of Father Flanagan's Boys' Home, and Mr. W. 
Thomas Siler, Jr., Attorney at Law, Pelps Dunbar, Jackson, 
Mississippi, testified in favor of changes to the Fair Labor 
Standards Act. There were no witnesses testifying in opposition 
to such a change.
    On December 13, 1995, the Subcommittee on Workforce 
Protections approved H.R. 2531, as amended, by voice vote and, 
ordered the bill favorably reported to the Full Committee. On 
March 21, 1996, the Committee on Economic and Educational 
Opportunities ordered the bill favorably reported with an 
Amendment in the Nature of a Substitute by a vote of 21 to 15.

                       Explanation of Amendments

    The Amendment in the Nature of a Substitute adopted in 
Committee is explained in this report.

                     Committee Statement and Views

                               background

    Many private, nonprofit, charitable institutions which 
serve neglected or abused children employ individuals as 
houseparents or substitute parents, on a twenty-four hour 
basis. The institutions maintain a family-based environment by 
providing continuous, consistent care to children from homes 
broken by divorce, desertion, death, and separation. Staff who 
function as houseparents live, eat, sleep and enjoy recreation 
in the home with the children under their care. However, as a 
result of the application of the Fair Labor Standards Act 
(FLSA) to houseparents, a number of these institutions have 
been forced to change the method in which they provide care to 
children who reside in the homes.
    The FLSA is the primary federal statute regulating the 
wages and hours of work. (29 U.S.C. Sec. 201-209). The Act 
covers employees who are (1) engaged in interstate commerce, or 
(2) engaged in the production of goods for travel of interstate 
commerce, or (3) employed in an enterprise engaged in commerce 
or the production of goods for commerce. For covered or non-
exempt employees, the FLSA sets a minimum wage of $4.25 per 
hour and a 40-hour per week overtime standard. The overtime 
requirement stipulates the payment of time-and-one-half wages 
for all hours worked in excess of 40 within a seven day period. 
In addition, the FLSA requires employers to maintain records 
reflecting employees' hours of work and wages received.
    The 1966 amendments to section 3(r) and 3(s) of the FLSA 
brought residential institutions which have on-site educational 
facilities under the minimum wage and overtime requirements. 
These provisions covered enterprises:

        * * * engaged in the operation of a hospital, an 
        institution primarily engaged in the care of the sick, 
        the aged, the mentally ill or defective who reside on 
        the premises of such institution, a school for mentally 
        or physically handicapped or gifted children, a 
        preschool; elementary or secondary school, or an 
        institution of higher education (regardless of whether 
        or not such hospital, institution, or school is public 
        or private or operated for profit or not for profit) * 
        * * (29 U.S.C. Sec. 213(24)(A) and (B)).

    The FLSA Amendments of 1974 excluded from overtime certain 
employees of institutions which operate residential schools 
serving children and youth. Section 13(b)(24) exempts:

          any employee who is employed with his spouse by a 
        nonprofit educational institution to serve as the 
        parents of children--
          (A) who are orphans or one of whose natural parents 
        is deceased, or (B) who are enrolled in such 
        institution and reside in residential facilities of the 
        institution, while such children are in residence at 
        such institution, if such employee and his spouse 
        reside in such facilities, receive, without cost, board 
        and lodging from such institution, and are together 
        compensated, on a cash basis, at an annual rate of not 
        less than $10,000; (29 U.S.C. Sec. 213(13)(b)(24)).

    In reality, there are likely to be few individuals, if any, 
who are able to qualify for this exemption. The language fails 
to recognize the types of individuals who are employed today as 
houseparents. There are many single individuals, as well as 
married couples, who ably serve as houseparents. An individual 
who serves as the substitute parent of children who are from 
broken homes where both parents are living, but no longer 
together, would not qualify for the exemption because only 
orphans or children with at least one parent deceased will meet 
the current law requirement. Furthermore, many houseparents do 
not qualify for the exemption because they are employed by 
institutions which only provide residential care, not 
educational programs, for abused or neglected children.
    Private, charitable, nonprofits providing residential care 
without educational programs for abused or neglected children 
may not be covered by the FLSA, provided that the institution 
is not operated in conjunction with a hospital, covered 
institution or school within the meaning of sections 3(r) and 
3(s) of the Act. However, the Department of Labor has 
interpreted the FLSA as covering some employees on an 
``individual'' basis, for example, employees who handle goods 
or materials which have been moved in commerce or produced for 
commerce (U.S. Department of Labor, Wage and Hour Division, 
Field Operations Handbook, 12g18, Institutions for neglected 
and dependent children).
    The Committee strongly believes that the success of these 
programs for abused or neglected children directly depends upon 
the institution's ability to provide a family-based home 
environment with continuous, consistent care by substitute 
parents. The Committee is aware that many of these institutions 
face tremendous uncertainty as to whether or not staff 
functioning as houseparents are covered by the FLSA. 
Furthermore, the Committee notes that the absence of clearly-
defined guidelines from the Department of Labor concerning the 
treatment of houseparents under the FLSA has resulted in 
confusion and costly litigation for some private, nonprofit 
institutions providing care for children.
    As Father Val Peter testified before the Subcommittee on 
Workforce Protections:

        * * * the interpretation of the law through regulation 
        and the Department of Labor (DOL) is confusing. 
        Programs that were thought to be in compliance with the 
        law have been found in violation and required to pay 
        large sums in back pay--sometimes to pay people while 
        they were asleep or taking children on a fully paid 
        vacation.

    Additionally, Mr. Siler testified before the Subcommittee 
on Workforce Protections that he had been involved in 
situations:

        * * * where the Department of Labor looked at such 
        matters as whether houseparents answered long distance 
        telephone calls, opened mail or took children on trips 
        that crossed state lines, to determine whether the 
        houseparents were entitled to minimum wage or overtime 
        pay. As a result of this type of investigation, even 
        small children's homes which are not operated in 
        conjunction with a hospital, school or other covered 
        institution will be required to meet minimum wage and 
        overtime requirements for houseparents.

    The Committee notes that a family-based environment is a 
mission which has been mandated by federal law. Public Law 96-
272, the Adoption Assistance and Child Welfare Act of 1980, 
stipulates that children in such homes should be served in a 
setting which is most closely identified with a family setting. 
Yet, children's homes attempting to provide a family-based 
setting using the houseparent model are then vulnerable to 
potentially enormous financial liability in defending 
themselves against employee lawsuits and Department of Labor 
actions. The present treatment of houseparents under the FLSA 
is an impediment to charitable, nonprofit organizations which 
attempt to provide necessary services in the proper environment 
for children who are greatly in need of this type of care.
    In order to comply with the FLSA, employers must maintain 
adequate records of employees, hours worked, and the wages 
received. The Committee recognizes the paperwork burdens, 
particularly on the smaller children's homes, which are 
inherently associated with keeping track of the hours worked by 
houseparents. Furthermore, the Committee acknowledges the 
difficulty that such institutions may have in determining the 
hours which a houseparent is considered to be working and thus 
eligible for compensation. Parenting involves such things as 
sitting with a sick child during the night or responding to a 
child who has had a nightmare. If each hour must be accounted 
for, it would be nearly impossible to delineate in statute or 
regulation all of the activities and circumstances which would 
be considered compensable work time.
    The Committee supports providing a specific exemption for 
qualifying houseparents from the minimum wage and overtime 
requirements of the FLSA. Without this exemption, many of these 
homes may be forced to abandon the use of the houseparent model 
in attempting to create a stable, family-based environment for 
the children of the home. In its place, the homes may be forced 
to, and some already do, implement a shift model system where 
individuals work eight-hour shifts, essentially supervising the 
children. As Father Val Peter testified:

          If the court rules in favor of the houseparents, Boys 
        Town would be forced to stop using the family-based 
        model and depending upon the damages in this case and 
        in subsequent cases that would probably ensue, we might 
        have to close our doors.

    By continuously rotating the staff who supervise the 
children, it is impossible to fulfill the mission of these 
homes; that is, to create a family-based environment for the 
children. In effect, the children could have a different set of 
substitute parents every eight hours. The Committee believes 
that a shift work system would be detrimental to the 
effectiveness of such programs.

                              legislation

    H.R. 2531 exempts from the FLSA's minimum wage and overtime 
requirements those individuals employed as houseparents who 
meet specific requirements. The bill adds a definition of a 
houseparent to section 3 (Definitions) of the FLSA. A 
``houseparent'' is defined as any person employed by a private, 
nonprofit institution as a child care worker, either as a 
member of a married couple or as a single person to serve as a 
substitute parent for children who do not live with their own 
families, and to reside in a family-based setting with the 
children.
    H.R. 2531 amends section 13(a) of the FLSA to exempt any 
employee employed by a private, nonprofit institution to serve 
as a houseparent for abused, neglected, delinquent, orphaned, 
homeless, or emotionally impaired children, when: (1) the 
children's primary residence is in the residential facilities 
of the institution; (2) the houseparent resides with the 
children at the home for a minimum of 72 hours a week; and (3) 
the houseparent receives, without cost, board and lodging and 
cash wages at an annual basis of not less than $8,000. H.R. 
2531 deletes the exemption for houseparents in current law 
under section 13(b)(24).
    The Committee recognizes that one of the most troubling 
issues for private, nonprofit homes under the FLSA today is the 
tremendous uncertainty in determining the coverage of 
houseparents under the Act. H.R. 2531 would clarify the FLSA's 
treatment of houseparents who are employed at private, 
nonprofit institutions providing care for abused and neglected 
children. The legislation would enable children's homes to 
continue providing a family-based environment using the 
houseparent model. This will foster a stable, home-like 
atmosphere and encourage the kinds of personal relationships 
which are so vital to a child's development. The Committee 
believes that H.R. 2531 will enable those homes which use the 
houseparent model to set up pay systems which meet the 
requirements of the FLSA. The Committee does not believe that 
such homes should have to spend precious time and limited 
resources defending themselves in investigations of this 
nature.

                                summary

    H.R. 2531, as amended, would exempt individuals employed by 
private, nonprofit institutions as houseparents from the 
minimum wage and overtime provisions of the Fair Labor 
Standards Act provided that the individual (1) receives room 
and board, without cost, (2) is compensated on an annual basis 
of not less than $8,000 and (3) resides in the home with the 
children for a minimum of 72 hours per week.

                      Section-by-Section Analysis

Section 1

    Specifies that whenever an amendment is expressed in terms 
of an amendment to a section or other provision, the reference 
shall be considered to be made to a section or other provision 
of the Fair Labor Standards Act.

Section 2

    A ``houseparent'' is defined as any person employed by a 
private, nonprofit institution as a child care worker, either 
as a member of a married couple or as a single person (1) to 
serve as a substitute parent for children who do not live with 
their own families, and (2) to reside in a family like setting 
with the children.

Section 3

    This section would exempt from the minimum wage and maximum 
hours requirements of the Fair Labor Standards Act any employee 
employed by a private, nonprofit institution to serve as a 
houseparent for abused, neglected, delinquent, orphaned, 
homeless, or emotionally impaired children, when (1) the 
children's primary residence is in the residential facilities 
of the private, nonprofit institution; (2) the houseparent 
resides with the children in the residential facilities of the 
institution for a minimum of 72 hours per week; and (3) the 
houseparent receives, without cost, board and lodging from the 
institution and is compensated, on a cash basis, at an annual 
rate of not less than $8,000.

Section 4

    This section would delete section 13(b)(24) of the Fair 
Labor Standards Act which provides an exemption from the 
minimum wage requirements for any employee who is employed with 
his spouse by a nonprofit educational institution to serve as 
the parents of children who are (1) orphans or one of whose 
natural parents is deceased, or (2) who are enrolled in the 
institution and reside in the residential facilities of the 
institution, if the employee and his spouse reside in the 
facilities, receive without cost, board and lodging from the 
institution, and are together compensated at a minimum annual 
rate of $10,000.

                  Oversight Findings 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. 2531 will have no significant 
inflationary impact on prices and costs in the operation of the 
national economy. It is the judgment of the Committee that the 
inflationary impact of this legislation as a component of the 
federal budget is negligible.

                    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. 2531.

                           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. 2531. 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 would exempt qualifying houseparents from the 
minimum wage and maximum hours requirements of the Fair Labor 
Standards Act of 1938. The bill does not prohibit legislative 
branch employees from otherwise being effected by these 
amendments.

                       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. The Committee also received a 
letter regarding unfunded mandates from the Director of the 
Congressional Budget Office. See infra.

    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. 2531 from the Director of the Congressional Budget 
Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, April 1, 1996.
Hon. William F. Goodling,
Chairman, Committee on Economic and Educational Opportunities, House of 
        Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
reviewed H.R. 2531, as ordered reported by the Committee on 
Economic and Educational Opportunities on March 21, 1996, and 
has determined that the bill would have no direct effect on the 
federal budget. The bill would amend the Fair Labor Standards 
Act by exempting houseparents from the minimum wage and maximum 
hours requirements of the act.
    A houseparent is defined by the bill as any person employed 
by a private, nonprofit institution as a child-care worker to 
serve as a substitute parent in a family-like setting with 
abused, neglected, delinquent, orphaned, homeless, or 
emotionally impaired children. In order to be exempt from the 
minimum wage and maximum hour requirements of the Fair Labor 
Standards Act, the houseparent must reside in the institution 
for at least 72 hours per week, receive free board and lodging, 
and be compensated at least $8000 on an annual basis.
    H.R. 2531 would affect only private nonprofit employers. 
The bill contains no intergovernmental or private sector 
mandates as defined in Public Law 104-4, and would impose no 
direct costs on state, local, or tribal governments.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Christi 
Hawley.
            Sincerely,
                                           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 italic, existing law in which no change is 
proposed is shown in roman):

                    FAIR LABOR STANDARDS ACT OF 1938

          * * * * * * *

                              definitions

    Sec. 3. As used in this Act--
    (a) ``Person'' means an individual, partnership, 
association, corporation, business trust, legal representative, 
or any organized group of persons.
          * * * * * * *
    (y) ``Houseparent'' means any person employed by a private 
nonprofit institution as a child-care worker, either as a 
member of a married couple or as a single person (1) to serve 
as a substitute parent for children who do not live with their 
own families, and (2) to reside in a family like setting with 
such children.
          * * * * * * *

                               exemptions

    Sec. 13. (a) The provisions of sections 6 (except section 
6(d) in the case of paragraph (1) of this subsection) and 7 
shall not apply with respect to--
          (1) * * *
          * * * * * * *
          (16) a criminal investigator who is paid availability 
        pay under section 5545a of title 5, United States 
        Code[.]; or
          (17) any employee employed by a private nonprofit 
        institution to serve as a houseparent for abused, 
        neglected, delinquent, orphaned, homeless, or 
        emotionally impaired children, when--
                  (A) such children's primary residence is in 
                the residential facilities of such institution,
                  (B) such houseparent resides with such 
                children in the residential facilities of such 
                institution for at least 72 hours a week, and
                  (C) such houseparent receives, without cost, 
                board and lodging from such institution and is 
                compensated, on a cash basis, at an annual rate 
                of not less than $8,000.
    (b) The provisions of section 7 shall not apply with 
respect to--
          (1) * * *
          * * * * * * *
          [(24) any employee who is employed with his spouse by 
        a nonprofit educational institution to serve as the 
        parents of children--
                  [(A) who are orphans or one of whose natural 
                parents is deceased, or
                  [(B) who are enrolled in such institution and 
                reside in residential facilities of the 
                institution.
        while such children are in residence at such 
        institution, if such employee an his spouse reside in 
        such facilities, receive, without cost, board and 
        lodging from such institution, and are together 
        compensated, on a cash basis, at an annual rate of not 
        less than $10,000; or]
          * * * * * * *
                             MINORITY VIEWS

    H.R. 2531 amends the Fair Labor Standards Act of 1938 
(FLSA) for the purpose of exempting a class of employees, 
houseparents, from both the minimum wage and the maximum hours 
requirements of that Act. This legislation legalizes the 
exploitation of workers who are changed with one of the most 
vital duties an individual can undertake, that of raising 
children. By the terms of the legislation, those employed by 
nonprofit child care institutions to act as surrogate parents 
for the children who reside in such institutions may be 
required to work an unlimited number of hours, for an unlimited 
number of days, for no more compensation than $8,000 a year, 
plus room and board.
    The proponents of this legislation claim that it is 
intended to protect the children for whom houseparents care. If 
our concern is truly for the children, we should be seeking to 
ensure that those who care for those children are adequately 
and fairly compensated. This legislation does the exact 
opposite. Under it, as long as houseparents employed by 
nonprofit child care institutions are provided room and board, 
are on the premises of the institution for 72 hours, and are 
paid $8,000 a year, those employees are entitled to neither 
minimum wages nor overtime.
    Testimony supporting this legislation described its intent 
as follows:

          What I want to make clear is that we are not trying 
        to shirk our responsibilities to our employees in terms 
        of a fair compensation package for their efforts. 
        Instead, we are trying to clarify an already existing 
        provision to exempt houseparents from the FLSA overtime 
        provision and remove them from minimum wage and maximum 
        hours requirements so that overtime provisions cannot 
        apply.\1\
---------------------------------------------------------------------------
    \1\ Prepared Statement of Father Val Peter, JCD, STD, Executive 
Director, Father Flanagan's Boys' Home, on behalf of the National 
Association of Homes and Services for Children. Oversight hearing on 
the Fair Labor Standards Act, H.R. 2391, H.R. 1227 and H.R. 2531; 
Subcommittee on Workplace Protections, November 1, 1995; transcript at 
pages 5-6.

    Were that, in fact, the sole effect of this legislation, 
many of us could support it. Regrettably, it is not.
    As part of the 1974 amendments to the FLSA, section 13(b) 
of the law was amended ``to provide an overtime exemption for 
(married) couples who serve as houseparents of children who was 
institutionalized in a nonprofit education institution by 
reason of being orphaned or having one deceased parent. To be 
covered by the overtime exemption, such couples must receive 
cash wages of not less than $10,000 annually, and reside on the 
premises of that institution and receive their board and 
lodging without cost.'' \2\
---------------------------------------------------------------------------
    \2\ Report No. 93-913, Fair Labor Standards Amendments of 1974 [to 
accompany H.R. 12435], House of Representatives, 93d Congress, 2d 
Session, March 15, 1974, at page 48.
---------------------------------------------------------------------------
    The current law exemption is limited to overtime, and 
houseparents are protected by the minimum wage requirements of 
the FLSA. Contrary to the witness' statement, it is not 
necessary to exempt houseparents from the minimum wage 
provisions ``so that overtime provisions cannot apply.''
    The current exemption from overtime was deemed to be 
necessary to facilitate the creation of a family-like 
atmosphere in child care institutions. Houseparents are to 
serve as surrogate parents for the children in their charge. As 
such, houseparents serve as the primary caregiver for those 
children and are expected to bond with them. It was anticipated 
that houseparents would be on call and may often by employed 
for more than 40 hours a week. Since it may otherwise to 
cheaper to hire another employee than to pay overtime to a 
houseparent, and since doing so would disrupt the bonding 
process, houseparents were exempted from the overtime 
requirements of the FLSA to ensure that the law did not serve 
to discourage the operators of child care institutions from 
employing couples to act as surrogate parents.
    We do not object to clarifying and even broadening the 
existing overtime exemption. There are aspects of the 1974 
amendment that, in restrospect, merit reconsideration. First, 
because the 1974 amendment failed to index the minimum annual 
cash earnings houseparents must receive to be exempt from 
overtime, the protections afforded workers by the amendment 
have been seriously eroded.\3\ Second, the 1974 amendment is 
limited in its application only to those who care for children 
``who are institutionalized * * * by reason of being orphaned 
or having one deceased parent.'' Arguably, if an exemption from 
overtime for those who care for orphans is merited, such an 
exemption is also merited for those who care for children who 
have been abandoned by parents who are still living.
---------------------------------------------------------------------------
    \3\ This shortcoming is discussed in more detail below.
---------------------------------------------------------------------------
    In fact, we Democrats unanimously supported an amendment 
offered by Representative Andrews (D-NJ), which proposed to 
expand the exemption in a reasonable fashion, while retaining 
essential minimum wage protections and providing other 
provisions to help ensure that houseparents are fairly 
compensated for their work. Unfortunately, as is so often the 
case in our Committee this Congress, our Republican allies on 
the Committee uniformly opposed our compromise.
    H.R. 2531 provides a blanket exemption from overtime and 
from the minimum wage for ``houseparents'' who care for any 
``abused, neglected, delinquent, orphaned, homeless, or 
emotionally impaired child,'' \4\ regardless of how physically 
or emotionally impaired that child may be. In this regard, we 
are concerned that the legislation is too broadly drafted. We 
can agree as a general matter that institutions should seek to 
provide a family-like atmosphere for children. We also agree 
that it is generally desirable for one or two employees to 
assume primary care-giving responsibilities for individual or 
small groups of children. We further agree that an exemption 
from the overtime provisions of the FLSA may be merited in such 
instances.
---------------------------------------------------------------------------
    \4\ H.R. 2531, Sec. 3. Minimum Wage and Maximum Hours Exemption for 
Houseparents.
---------------------------------------------------------------------------
    Elimination of the overtime and minimum wage requirements, 
however, provides an unquestionable economic incentive for an 
institution to hire fewer employees and to work them for longer 
hours. In circumstances where a child is severely emotionally 
or physically impaired, the burdens inherent in caring for such 
a child are such that, for the child's sake as well as the 
employee's, an employee's duties should not extend beyond eight 
hours a day. Even if one's sole concern is for the welfare of 
children and one is wholly indifferent to the rights and 
welfare of workers, eliminating the overtime requirement for 
workers who care for severely impaired children is bad policy. 
Regrettably, there is no evidence to date to indicate whether 
the sponsor or the proponents of H.R. 2531 intend the 
legislation to apply in such circumstances; nor does the 
definition of ``houseparent'' provided in the legislation 
indicate clearly whether this legislation is intended to apply 
to those who care for severely impaired children.\5\
---------------------------------------------------------------------------
    \5\ H.R. 2531 defines ``houseparent'' to mean ``any person employed 
by a private nonprofit institution as a child-care worker * * * (1) to 
serve as a substitute parent for children who do not live with their 
families.'' Therefore, in our view, children who are so severely 
mentally or physically impaired that their parents cannot physically 
care for them and must therefore be institutionalized, but whose 
parents do not otherwise surrender or abdicate their parental 
responsibilities, do not fall within purview of the legislation because 
it was not the intent of the parents to transfer parental 
responsibilities to the institution. However, the language of H.R. 2531 
is so imprecise as to invite litigation on this issue.
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    Another provision of the 1974 amendment that may merit 
reconsideration is the limitation of the overtime exemption to 
married couples. The justification for the exemption from 
overtime is that children's homes should strive to provide a 
family-like atmosphere for the children residing there. 
Encouraging institutions to hire married couples as 
houseparents, by limiting the application of the overtime 
exemption for houseparents only to married couples, clearly 
promotes the creation of a family-like atmosphere. No testimony 
was offered in the single hearing on this bill to justify 
eliminating the requirement that the exemption extend only to 
married couples. Indeed, testimony on H.R. 2531 spoke of a 
``specially trained married couple who have Tina and six other 
girls live with them in their Boys Town home.'' \6\ Apparently, 
however, the sponsor of this legislation has concluded that the 
presence of a married couple is not essential to the creation 
of a family like atmosphere.
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    \6\ Prepared statement of Father Val Peter, at page 9.
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    We hope that operators of children's homes would continue 
to seek to hire married couples as surrogate parents. However, 
in making their employment decisions, operators should 
ultimately be guided by the determination of who they believe 
will be able to provide the best care for the children. By 
limiting the overtime exemption to married couples, current law 
provides an economic incentive for operators to make employment 
decisions not on the basis of who will provide the best care, 
but on the basis of who is exempt from overtime. The fact of 
marriage, as important as it is, is not an absolute guarantee 
that a couple is necessarily best qualified to provide care for 
children. While it is, at best, extremely discomforting to 
eliminate the marriage requirement in the absence of any 
evidence in the record that the requirement is an unreasonable 
burden, there is at least a theoretical basis for reconsidering 
the provision.
    Current law exempts houseparents from the maximum hours 
requirements of FLSA on the condition that the houseparents 
reside in facilities in which the children reside. Considering 
that the justification for exempting houseparents from overtime 
is to facilitate the creation of a family-like atmosphere, such 
a requirement is both practical and reasonable. H.R. 2531 
requires houseparents ``to reside in a family like setting with 
such children,'' \7\ but strangely goes on to specify that the 
houseparent need only reside ``in the residential facilities of 
such institution for at least 72 hours a week.'' \8\
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    \7\ H.R. 2531, Sec. 2. Definition of Houseparent.
    \8\ H.R. 2531, Sec. 3. Minimum Wage and Maximum Hours Exemption for 
Houseparents.
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    If the intent of this legislation to promote the creation 
of a family-like atmosphere, why does the legislation require 
the houseparent to be in residence for only 72 hours? H.R. 2531 
does not require that a houseparent be ``on duty'' for 72 hours 
a week or even that a houseparent be ``on call'' for 72 hours a 
week. The requirement is only that the houseparent be living on 
the grounds for 72 hours a week, regardless of how little time 
is spent with a child during that period. Seventy-two hours is 
only three days. Even assuming that a parent spends eight hours 
a day, seven days a week outside the home, that parent still 
spends more than 110 hours a week in residence with his or her 
children. Most parents spend considerably more time than that.
    The purpose of the 72-hour requirement would appear to be 
to expand the existing exemption and apply it to workers who do 
not act as surrogate parents, but rather serve as relief 
workers for those who truly provide primary care for the 
children. Are we really trying to encourage a family-like 
atmosphere when the exempted employee is permitted to spend 
more time away from children than with them? Or are we simply 
trying to give employers a break at the expense of their 
workers?
    Under section 3 of H.R. 2531, a houseparent must receive 
board and lodging from the institution (without cost) and must 
be compensated on a cash basis at an annual rate of not less 
than $8,000 a year, per individual, in order to be exempt for 
the minimum wage and overtime provisions of the FLSA. In 1974, 
the Congress required that, to be exempt from overtime, 
houseparents must receive board and lodging (without cost) and 
must be compensated in cash at an annual rate of not less than 
$10,000 a year, per couple. Proponents of H.R. 2531 have been 
quick to point out that the legislation raises the pay of 
houseparents by $3,000 per individual. However, $10,000 in 1974 
was equivalent to $31,400 today. In effect, H.R. 2531 proposes 
a 50-percent reduction in the compensation of houseparents as 
compared to what the Congress deemed appropriate in 1974. This 
kind of disparity is driving increasing numbers of Americans 
out of the middle class. Further, by failing to index the 
minimum annual earnings of houseparents, this legislation 
invites even further erosion in their living standards.
    More importantly, unlike current law, H.R. 2531 seeks to 
exempt houseparents from the minimum wage provisions of the 
FLSA as well as its maximum hours provisions. For $8,000 a year 
and room and board, the houseparent can be required to work as 
many hours in the day, as many days in the week, and as many 
weeks in a year as it is humanly possible. An employee who was 
scheduled to have the weekend off can be required to take 
children on an outing that weekend for no additional 
compensation, whatsoever. Even though the burdens on the 
employee in terms of caring for the welfare of the children may 
be increased, and even though the employee is required to give 
up his or her own time, under H.R. 2531 the employee is not 
entitled to any additional compensation. No matter how many 
hours or days the employee is required to work, the employer is 
not required to pay a houseparent a penny more than $8,000 
dollars a year (plus room and board).
    It is ironic to us, in terms of dollars and cents, just how 
little value the Republican Majority places on ``parenting.'' 
At a time when the minimum wage is approaching its lowest value 
in 40 years, a full time minimum wage earner would still earn 
about $1,000 more in a year than a houseparent. The effect of 
this legislation is to enact a law that requires the employer 
to pay higher wages to all other workers (e.g., groundskeepers, 
custodial workers, and housekeepers) than to the houseparent 
who is principally charged with the welfare of the children of 
the institution. The paucity of the houseparent's compensation 
demonstrates low regard for those entrusted with the care of 
children.
    Finally, we are quite disappointed that the Republican 
Majority deliberately considers a bill that removes the 
protection of the minimum wage for an entire category of 
workers--in this case houseparents--while steadfastly refusing 
even to schedule a hearing on increasing the minimum wage for 
millions of hardworking Americans.
    In an effort to address that glaring distortion, our 
Ranking Member, Representative Clay (D-MO), offered an 
amendment to stay the applicability of the bill's houseparents 
exemption until such time as the minimum wage for all workers 
exceeds $5.14 an hour. By denying houseparents the minimum wage 
protections of the FLSA, the Republicans will leave them only 
the salary protections afforded by the market. It is unfair to 
expand exceptions to minimum wage protections--exceptions that 
will further lower wages for whole classes of workers--while, 
ignoring the eroding value of today's minimum wage.

                                   William L. Clay.
                                   Dale E. Kildee.
                                   Donald M. Payne.
                                   George Miller.
                                   Gene Green.
                                   Robert C. Scott.
                                   Tim Roemer.
                                   Patsy T. Mink.
                                   Chaka Fattah.
                                   Robert E. Andrews.
                                   Eliot L. Engel.
                                   Tom Sawyer.
                                   Xavier Becerra.
                                   Lynn Woolsey.
                                   Jack Reed.
                                   Major R. Owens.
                                   Pat Williams.
                                   Carlos Romero-Barcelo.

                                
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