[Senate Report 105-11]
[From the U.S. Government Publishing Office]



                                                        Calendar No. 32
105th Congress                                                   Report
                                 SENATE

 1st Session                                                     105-11
_______________________________________________________________________


 
                     FAMILY FRIENDLY WORKPLACE ACT

                                _______
                                

                 April 2, 1997.--Ordered to be printed

 Filed under the authority of the order of the Senate on March 27, 1997

_______________________________________________________________________


    Mr. Jeffords, from the Committee on Labor and Human Resources, 
                        submitted the following

                              R E P O R T

                             together with

                     ADDITIONAL AND MINORITY VIEWS

                          [To accompany S. 4]

    The Committee on Labor and Human Resources, to which was 
referred the bill (S. 4) to amend the Fair Labor Standards Act 
of 1938 to provide to private sector employees the same 
opportunities for time-and-a-half compensatory time off, 
biweekly work programs, and flexible credit hour programs as 
Federal employees currently enjoy to help balance the demands 
and needs of work and family, to clarify the provisions 
relating to exemptions of certain professionals from the 
minimum wage and overtime requirements of the Fair Labor 
Standards Act of 1938, and for other purposes, having 
considered the same, reports favorably thereon with amendments 
and recommends that the bill (as amended) do pass.

                                CONTENTS

                                                                   Page
  I. Introduction and purpose.........................................2
 II. Background and need for legislation..............................1
III. Legislative history and committee action.........................3
 IV. Explanation of bill and committee views.........................14
  V. Cost estimate...................................................26
 VI. Regulatory impact statement.....................................28
VII. Application of law to legislative branch........................29
VIII.Section-by-section analysis.....................................29

 IX. Additional views................................................34
  X. Minority views..................................................36
 XI. Changes in existing law.........................................57

                      I. Introduction and Purpose

    The purpose of S. 4, the Family Friendly Workplace Act, is 
to ensure that the evolving needs of America's work force are 
reflected in our Nation's laws. Today, there are more working, 
single parents and dual income families in America than ever 
before. S. 4 updates the Fair Labor Standards Act of 1938 in 
order to assist working people to balance the growing demands 
of the workplace with the needs of families. S. 4 provides men 
and women working in the private sector the opportunity to 
voluntarily choose compensatory time off in lieu of overtime 
pay, as well as to voluntarily participate in biweekly and 
flexible credit hour programs.
    The U.S. Congress has endorsed the benefits of flexible 
scheduling on numerous occasions. Unfortunately, public sector 
employees have thus far been thus far the only beneficiaries of 
this enlightenment. S. 4 is intended to change this by making 
flexible scheduling options available to 80 million employees 
working in America's private sector. This legislation will give 
hard working men and women the ability to design their work 
schedules around their family situations. Employers will 
benefit from more productive and satisfied employees.
    In recent polls, Americans have overwhelmingly supported 
amending the Fair Labor Standards Act to allow for more 
flexible scheduling options. The American people are not alone 
in their belief that it is time for a change. President Clinton 
acknowledged the importance of workplace flexibility, at least 
for Federal employees, in a July 11, 1994 Presidential 
Memorandum. The President decreed that ``Broad use of flexible 
work arrangements to enable Federal employees to better balance 
their work and family responsibilities can increase employee 
effectiveness and job satisfaction, while decreasing turnover 
rates and absenteeism.'' In his 1997 State of the Union 
Address, the President also recognized that it is time for 
broader change in the private sector when he proclaimed: ``We 
should pass flex-time, so workers can choose to be paid 
overtime in income, or trade it in for time off to be with 
their families.'' S. 4 is the impetus to that much needed 
change. This legislation will enable Americans to participate 
in flexible work schedules so that they can better cope with 
the challenges of the 21st century.

                II. Background and Need for Legislation

                             a. background

    The Fair Labor Standards Act (FLSA) \1\ was enacted in 
1938. It established standards for minimum wage, overtime, 
record keeping, child labor and other workplace issues. As 
originally passed, the FLSA did not extend to public sector 
employers. The FLSA was amended in 1966 to extend coverage to 
certain State and local employers and again in 1974 so as to 
cover all state and local government activities.
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    \1\ 29 U.S.C. Sec. Sec. 201-209.
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    The FLSA requires that when a nonexempt employee works more 
than 40 hours in a seven day period, that employee must be 
compensated at a rate of one and one half times the employee's 
regular rate of pay.\2\ Certain exceptions to the 40 hour 
workweek are permitted under sections 7 and 13 of the FLSA,\3\ 
for a variety of specific types and places of employment whose 
circumstances have led Congress, over the years, to enact 
specific provisions regarding maximum hours of work for those 
types of employment. In addition, the ``overtime pay'' 
requirement does not apply to employees who are exempt as 
``executive, administrative, or professional'' employees.\4\
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    \2\ 29 U.S.C. Sec. 207.
    \3\ 29 U.S.C. Sec. Sec. 207, 213.
    \4\ U.S.C. Sec. 213. In order to be exempted from the overtime 
provisions of the FLSA, an executive, professional or administrative 
employee must meet the duties test and be paid a salary on a salary 
basis. 29 C.F.R. Sec. 541.118 Under the salary basis test, an employee 
is considered to be paid on a salary basis if he or she regularly 
receives each pay period a predetermined amount constituting all or 
part of his compensation.
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    Under the overtime pay requirement in the FLSA, overtime 
pay for employees in the private sector must be in the form of 
cash wages paid to the employee in the employee's next 
paycheck. This is contrary to the overtime pay provisions 
applying to State and local government employees.\5\ Section 
7(o) \6\ provides that State and local governments may provide 
paid compensatory time off in lieu of overtime compensation, so 
long as the employee or his or her collective bargaining 
representative has agreed to this arrangement and the 
compensatory time is given at a rate of not less than one and 
one half hours for each hour of employment for which overtime 
is required.
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    \5\ The FLSA applies to any ``public agency'' which is a State, 
political subdivision of a State, or an interstate governmental agency. 
29 U.S.C. Sec. 207(o)(1).
    \6\ 29 U.S.C. Sec. 207(o).
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    The difference in the FLSA's treatment of private sector 
and state and local government employers in the FLSA is 
explained by the fact that provisions applying the FLSA to the 
public sector were amended in 1985 and therefore included a 
recognition that the workplace and the work force had changed 
greatly since the 1930's when the FLSA was first enacted. In 
1985, Congress recognized that changes in the work force and 
the workplace had led many employees in State and local 
governments to make compensatory time available and for their 
employees to choose compensatory time. As this committee 
explained in including compensatory time for State and local 
government employees in the 1985 amendments:

          The committee also is cognizant that many State and 
        local government employers and their employees 
        voluntarily have worked out arrangements providing for 
        compensatory time off in lieu of pay for hours worked 
        beyond the normally scheduled workweek. These 
        arrangements--frequently the result of collective 
        bargaining--reflect mutually satisfactory solutions 
        that are both fiscally and socially responsible. To the 
        extent practicable, we wish to accommodate such 
        arrangements.\7\

    \7\ Report on S. 1570, Senate Committee of Labor and Human 
Resources, 99th Congress, First Sess. S. Rep. No. 99-159, p. 8.
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    Prior to 1974, employees of the Federal government were 
covered solely by the Title V of the United States of Code.\8\ 
When Congress amended the FLSA in 1974, it also made the FLSA 
applicable to most employees of the Federal government.\9\ 
However, Congress simultaneously authorized the Civil Service 
Commission to administer provisions of the FLSA for employees 
of the Federal Government.\10\ Pursuant to that authority, the 
Civil Service Commission, which later became the Office of 
Personnel Management (OPM), promulgated regulations for Federal 
employees.\11\
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    \8\ Under Title V, Federal employees are entitled to overtime 
compensation. 5 U.S.C. Sec. 5542. In addition, Title V authorized the 
head of a Federal agency, at the request of an employee, to offer 
compensatory time off instead of overtime pay. 5 U.S.C. Sec. 5543.
    \9\ P.L. 93-259; see 29 U.S.C. Sec. 203(e)(2)(A).
    \10\ P.L. 93-259; see 29 U.S.C. Sec. 204(f). Note, however, that 
the Civil Service Commission was not authorized to administer the FLSA 
to individuals employed by Library of Congress, the U.S. Postal 
Service, the Postal Rate Commission and the Tennessee Valley Authority.
    \11\ C.F.R. Parts 550, 551. Although employees of the Federal 
Government are entitled to be compensated at a rate of one-and-one half 
times their regular rate of pay for overtime hours, if the employee 
selects compensatory time instead of overtime, that employee is given 
compensatory time at a rate of one hour for each hour of overtime 
worked unless that employee is a member of a union that has reached a 
different arrangement through a collective bargaining agreement. See 5 
C.F.R. Sec. 550.114; Sec. 551.531.
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    In 1978, Congress passed the Federal Employees' Flexible 
and Compressed Schedules Act.''\12\ The measure allowed Federal 
executive branch employees, along with employees of certain 
other agencies, to experiment with alternative work schedules 
that would meet their personal needs. During the following 3-
year period, the alternative works schedules program was 
monitored by OPM. Congress reauthorized the program in 
1982.\13\ The program was so successful that in 1985, the 
Federal Employees' Flexible and Compressed Schedules Act was 
made permanent.\14\
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    \12\ P.L. 95-390.
    \13\ P.O. 97-221.
    \14\ P.L. 99-196.
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    As a result of the Federal Employees' Flexible and 
Compressed Schedules Act, Federal agencies may offer compressed 
work schedules and flexible work schedules to better 
accommodate their employees' needs.\15\ Under a compressed work 
schedule, full-time employees may fulfill an 80 hour bi-weekly 
work requirement in less than 10 days by increasing the number 
of hours in a workday.\16\ For example, this allows Federal 
employees to work on a ``9/80 schedule'' wherein they work 9 
hours each day for 8 days, 8 hours for one day and get the 
tenth day off. As part of a flexible work schedule program, 
Federal employees may work ``credit hours'' in excess of their 
basic work requirement which they may use to shorten a future 
workweek or workday.\17\
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    \15\ U.S.C. Sec. 6120 et. seq.
    \16\ U.S.C. Sec. 6121(5) and Sec. 6127.
    \17\ U.S.C. Sec. 6121(4) and Sec. 6126.
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                        B. Need for Legislation

    Since the enactment of the Fair Labor Standards Act in 
1938, there have been considerable changes in our nation's 
economy, labor market conditions and labor-management 
relations. One of the greatest transformations has been in the 
composition of the United States' labor force. More women are 
working then ever before. According to the Bureau of Labor 
Statistics, women now account for 46 percent of the labor 
force. Between 1948 and 1995, women's labor participation rates 
almost doubled from 33 percent to 59 percent.
    The increase of women in the work force has had a 
significant impact on the day-to-day activities of the American 
family. The ``stay-at-home'' mom is now the exception rather 
than the rule. Indeed in 1995, only 5.2 percent of all American 
families mirrored the traditional ``Ozzie and Harriet'' family 
structure of a wage-earning father, nonworking mother and two 
children.\18\ According to the Bureau of Labor Statistics, 62 
percent of two parent families with children have both parents 
working outside the home.
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    \18\ Bureau of the Census, ``Money Income in the United States: 
1995,'' September 1996.
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    The markup of the American work force has changed 
dramatically yet few provisions of the FLSA have been updated 
to reflect those changes. The needs of today's work force are 
different than the needs of the work force of the 1930's. 
Although employees are demanding more flexible work schedules 
and compensation packages, the FLSA and its underlying 
regulations preclude employers from complying with employee 
demands.
    Because the FLSA prevents employers from accommodating 
employee requests for greater flexibility in scheduling, 
employees are being forced to make difficult choices between 
work and family, often at the expense of the latter. For 
example, a working mother may wish to modify her regular 
schedule by working extra hours over a 2-week period in order 
to take a day of to chaperone her son's field trip to the local 
zoo. Because the FLSA will not allow that mother to ``flex'' 
her schedule beyond a 40 hour work week, unless the mother is 
able to work four 10 hour days during the week of the field 
trip, she can not serve as a chaperone without using leave or 
losing pay. Senator Kay Bailey Hutchison discussed the grave 
need for change in the FLSA in a hearing before the committee:

          The time has come to give nonexempt employees the 
        same flexibility that salaried, or ``exempt'' employees 
        presently enjoy and that federal employees have enjoyed 
        since 1978. By untying the hands of employers and 
        employees who may wish to agree to mutually beneficial 
        scheduling arrangements, but who are prohibited from 
        doing so under existing law, the Family Friendly 
        Workplace Act will ensure that the Federal Government 
        will no longer stand in the way of achieving an optimal 
        work environment for each particular workplace and each 
        particular worker.\19\
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    \19\ Hearing on S. 4, the Family Friendly Workplace Act before the 
Senate Committee on Labor and Human Resources, Subcommittee on 
Employment and Training, 105th Cong., 1st Sess, February 4, 1997 (to be 
published).

    This demand for a change in the existing law was exhibited 
in a recent poll conducted by Penn + Schoen for the Employment 
Policy Foundation. The poll indicates that 88 percent of all 
workers want more flexibility through scheduling flexibility 
and/or the choice of compensatorytime.\20\ Another national 
poll revealed that 65 percent of Americans favor changes in labor law 
that would allow for more flexible work schedules.\21\ It is not 
surprising that the private sector is demanding a change. In a 1985 
survey of Federal employees participating with flexible work schedules, 
72 percent said that they had more flexibility to spend time with their 
families, and 74 percent said that having a flexible schedule had 
improved their morale.
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    \20\ Flexible Scheduling and Compensatory Time Poll,'' conducted by 
Penn + Schoen Associates, Inc. for the Employment Policy Foundation, 
October 27, 1995.
    \21\ Princeton Survey Research Associates, ``Worker Representation 
and Participation Survey, Top-Line Results,'' October, 1994.
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    Over the past several years, the committee has heard 
compelling testimony of individuals who are impacted by the 
FLSA and who believe that the time has come for Congress to 
change the law to better accommodate today's work force. Ms. 
Phyllis Diosey, a senior air quality specialist at Malcolm 
Pirnie in Westchester, NY, summed up the reason that hourly 
workers are demanding a change:

          Flexibility on the part of employers and employees is 
        critical in today's workplace. Any policy or regulation 
        that hinders this flexibility puts working parents, and 
        I really think especially working mothers, at risk 
        because their role as traditional caretakers will make 
        them less attractive and appear less productive as 
        employees.
          I hope that the changes that are made will truly 
        reflect work styles and lifestyles as they exist today 
        and as we enter the 21st century.\22\
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    \22\ Fair Labor Standards Act Oversight Hearing, Before the Senate 
Committee on Labor and Human Resources, 104th Cong., 2nd Sess. S. Doc. 
No. 104-39, p. 11.
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1. Compensatory time

    The committee is confident that giving hourly employees the 
ability to choose compensatory time instead of overtime pay for 
hours worked beyond 40 in a week will be extremely beneficial. 
Many employees who are covered by the overtime protections of 
the FLSA expressed their support for changing the law so as to 
allow employees to choose compensatory time in lieu of overtime 
pay. Ms. Christine Korzendorfer, an hourly employee at TRW who 
must balance the substantial overtime hours required by her job 
with caring for her two children, explained to the Labor and 
Human Resources Subcommittee on Employment and Training why 
having the ability to choose between compensatory time and 
overtime wages would be helpful:

          [Overtime] pay is important to me. However, the time 
        with my family is more important. If I had a choice 
        there are times when I would prefer to take comp time 
        in lieu of overtime. What makes this idea appealing is 
        that I would be able to choose which option best suits 
        my situation.
          Just recently, my son was ill and I had to stay at 
        home with him. I took a day of vacation which I would 
        have preferred to use for vacation. I did not want to 
        take unpaid leave * * * If I had had the choice, I 
        would have used comp time in lieu of overtime for that 
        day off from work. Besides, I would have only had to 
        use about five and one-half hours of comp time to cover 
        that 8 hour day.\23\
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    \23\ Hearing on S. 4, the Family Friendly Workplace Act before the 
Senate Committee on Labor and Human Resources, Subcommittee on 
Employment and Training, 105th Cong., 1st Sess, February 4, 1997 (to be 
published).

    Ms. Sandie Moneypenny, a process technician at the Timken 
Co.'s Asheboro, NC bearing plant and an hourly nonexempt 
employee, explained why having the option of selecting 
compensatory time would help her to meet the demands of 
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parenthood:

          Today, I can only use comp time in the week it 
        occurs, but as most of you know, life doesn't seem to 
        always work that way. If I could ``bank'' my overtime, 
        I wouldn't have to worry about missing work if my child 
        gets sick on a Monday or Tuesday. I also would only be 
        postponing valuable time off with my family when I have 
        a busy workweek, because I could always take time off 
        at a later date. We also have several people in our 
        plant that are trying to further their education. They 
        would work overtime during breaks in their school 
        schedule, and use their ``banked'' overtime during the 
        course of the school year, or during exam week.\24\
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    \24\ Hearing on S. 4, the Family Friendly Workplace Act before the 
Senate Committee on Labor and Human Resources, Subcommittee on 
Employment and Training, 105th Cong., 1st Sess, February 13, 1997 (to 
be published).

    There is ample support for concluding that today's work 
force would like the option of selecting compensatory time off 
rather than cash wages, for the overtime hours that they work. 
In its 1995 survey, Penn + Schoen Associates, Inc. found that 
75 percent of those surveyed favored a proposal to give workers 
the opportunity to choose time off in lieu of overtime wages. 
In fact, 57 percent of those responding speculated that they 
would choose paid time off more frequently than overtime 
wages.\25\
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    \25\ ``Flexible Scheduling and Compensatory Time Poll,'' conducted 
by Penn + Schoen Associates, Inc. for the Employment Policy Foundation, 
October 27, 1995.
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    Unfortunately, while the FLSA was intended to protect 
employees, many are finding it too restrictive. Nonexempt 
employees simply wish for the FLSA to be amended so that 
theymay enjoy the flexibility legally available to their exempt co-
workers and government workers. During the 104th Congress, the 
committee heard testimony from Ms. Arlyce Robinson, an administrative 
support coordinator for Computer Services Corp., who explained that she 
spent 20 years of her career in the public sector and that she misses 
the flexibility associated with compensatory time. Ms. Robinson 
observed that:

          While the laws was intended to protect us--and maybe 
        58 years ago it did--and in some cases, is still 
        protecting many, many people, but in today's world it 
        has had the effect of hurting many of the people that 
        it was originally designed to help * * * Again, when we 
        talk about the act, we do not want it replaced; we just 
        want it made a little more flexible.\26\
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    \26\ Fair Labor Standards Act Oversight Hearing before the Senate 
Committee on Labor and Human Resources, 104th Cong., 2nd Sess. S. Doc. 
No. 104-397, p.39.
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2. Bi-weekly schedules

    The witnesses also confirmed that it is extremely difficult 
for employers to institute flexible schedules for hourly 
employees without violating the FLSA. This is not the case in 
the public sector, where many workers have the ability to 
choose to work a ``9/80'' schedule which involves 80 hours over 
a 9 day period, such as working 45 hours the first week 
followed by 35 hours the next week, with a scheduled day off 
every other week. It is impracticable for hourly employees in 
the private sector to take advantage of bi-weekly scheduling 
options. Sallie Larsen, vice president, Human Resources and 
Communications, TRW Systems Integration Group, testified about 
TRW employees' frustration with the rigidity of the current 
law:

          In our business unit, we have a compelling business 
        need to better understand our employee work patterns 
        for bidding new work. In meeting the needs of these 
        employees, we saw an opportunity to add even more 
        flexibility for all of our salaried employees and 
        managers in scheduling work across a longer period of 
        time * * * The professional work schedule helps our 
        salaried employees with two week flexing, partial day 
        time off, and additional time off. However, we are 
        unable to extend this schedule to our hourly employees 
        because of the restrictions of the Fair Labor Standards 
        Act. These employees are amazed to learn that it is a 
        60-year old law that is substantially unchanged since 
        it was passed that stands in their way of becoming a 
        full member of the team. Their most common complaint: 
        ``Why am I treated as a second class citizen?'' Our 
        answer: it is the law, not the company's unwillingness 
        to offer the Professional Work Schedule to them.\27\
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    \27\ Hearing on S. 4, The Family Friendly Workplace Act before the 
Senate Committee on Labor and Human Resources, Subcommittee on 
Employment and Training, 105th Cong., 1st Sess, February 4, 1997 (to be 
published).

    Employers and employees ought to be free to ``flex'' the 
40-hour workweek when it is advantageous to both parties. Under 
the current law, however, private sector employers may offer 
the flextime option of bi-weekly scheduling only to exempt, 
salaried employees. This creates unnecessary tension between 
exempt and nonexempt employees. By confining employee's 
flexibility to the 40-hour workweek, the FLSA is making it more 
difficult for hourly employees to meet family, community, and 
personal needs.

3. Flexible credit hours

    It is not uncommon in the case of foreseeable future 
events, such as having a baby, assisting an elderly parent or 
studying for an exam, for an employee to exhaust his or her 
paid leave. Although employees may wish to work additional 
hours in order to ``bank'' that time for a future event, the 
FLSA strictly prohibits any type of flexible credit hour 
program. Jim Willms, executive vice president of Unicover 
Corp., of Cheyenne, WY, testified before the Labor and Human 
Resources Subcommittee on Employment and Training about an ill-
fated flexible credit hour program that was initiated and 
designed by Unicover employees:

          In 1980 our elected Employee Council representing all 
        departments of the Company asked that we adopt an 
        optional compensatory time policy. They wanted a policy 
        that would permit an employee at his or her sole option 
        to build up extra hours one-for-one instead of overtime 
        pay which could be used at a later time for additional 
        days off. Our employees told us this would be 
        advantageous to them and to the Company. They said they 
        were really more interested in having more time off to 
        spend with family and enjoying leisure than they were 
        being paid at overtime rates for working more than 40 
        hours in a week. * * * At the end of 1981, we were 
        advised by the U.S. Department of Labor that our new 
        policy, which had been implemented at the request of, 
        and which had the input of all of our employees, did 
        not comply with the overtime provisions of the Fair 
        Labor Standards Act. We rescinded the policy and paid 
        out all the compensatory time on the books at overtime 
        rates. We faced genuine outrage on the part of our 
        employees that something which they asked for and 
        received from the Company was rescinded because of a 40 
        year-old Federal law.\28\
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    \28\ Hearing on S. 4, The Family Friendly Workplace Act before the 
Senate Committee on Labor and Human Resources, Subcommittee on 
Employment and Training, 105th Cong., 1st Sess, February 13, 1997 (to 
be published).

    Allowing employees to ``bank'' hours would also provide the 
millions of Americans who do not work overtime hours with more 
flexibility because it would give them the ability to work 
additional hours so that they could use the flexible credit 
hours as paid time off when necessary. Under the FLSA, however, 
if an hourly employee sought to work additional hours, that 
employee would be unable to ``bank'' those hours. Rather, the 
employer would have to compensate the employee at an overtime 
rate for the additional hours. If an employer has no real need 
for overtime, it is less likely that employers will be willing 
to pay employees an overtime premium. In essence, there is a 
disincentive under the FLSA for employers to provide employees 
with the flexibility that they demand.

4. Salary basis test

    There is also a need to clarify the FLSA's salary basis 
test. Under the salary basis test, an employee is considered to 
be paid on a salary basis and thus exempt from the FLSA, if 
that employee regularly receives each pay period a 
predetermined amount constituting all or part of his or her 
compensation. This account cannot be subject to reduction for 
absences of less than a day. However, a number of court cases 
have interpreted this language to mean that the theoretical 
possibility of a salary being docked for an absence of less 
than a day is enough to destroy an employee's exemption, even 
if there has never been a deduction. William J. Kilberg 
testified on behalf of the Fair Labor Standards Act Reform 
Coalition and explained the confusion in this area:

          Most courts, in fact, have applied the ``subject to'' 
        principle as an ironclad rule, which unequivocally 
        mandates a loss of exemption if anyone can concoct a 
        theoretical circumstance under which existing employer 
        policies could allow improper deductions. Beginning 
        with the Ninth Circuit's 1990 decision in Abshire v. 
        County of Kern,\29\ and mushrooming in a series of 
        subsequent cases such as Martin v. Malcolm Pirnie, 
        Inc.,\30\ courts have demonstrated a willingness to 
        ignore all other facts in the case to deny exemptions 
        on nothing more than this draconian ``subject to'' 
        theory.
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    \29\ 908 F.2d 483 (9th Cir. 1990), cert. denied, 111 S. Ct. 785 
(1991).
    \30\ 949 F.2d. 611 (2d Cir. 1991), cert. denied, 113 S. Ct. 298 
(1992).
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          The consequences of this misinterpretation are 
        enormous. In Pirnie, for example, only a very small 
        handful of partial day deductions had occurred, which 
        the court itself labeled ``de minimis.'' Many of these 
        deductions were entirely understandable; one employee, 
        for example, had voluntarily directed that she did not 
        want to be paid for the portions of workdays she spent 
        working on her doctoral thesis * * * In Pirnie, 
        however, the court held that the employer's policy of 
        allowing such deductions caused an entire class of 
        highly paid engineering professionals to lose their 
        FLSA exemption.\31\
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    \31\ Hearing on S. 4, The Family Friendly Workplace Act before the 
Senate Committee on Labor and Human Resources, Subcommittee on 
Employment and Training, 105th Cong., 1st Sess, February 4, 1997 (to be 
published).

    The salary basis problem is particularly acute in the 
public sector. Because of the confusing application of the 
salary basis test, highly paid executive, administrative and 
professional employees are bringing actions against their State 
and local government employers at an alarming rate. The 
Honorable Paul Jadin, Mayor of Green Bay, Wisconsin, testified 
on behalf of the U.S. Conference of Mayors and the Public 
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Sector FLSA Coalition about this problem:

          While these [highly paid executive administrative and 
        professional State and local government employees] 
        employees were intended to be exempt from the overtime 
        pay requirements, recent court interpretations of how 
        the salary basis applies to the public sector have led 
        to enormous liability. High level management employees 
        earning between $40,000 and $100,000 annually have been 
        successful in winning back pay for the overtime hours 
        that they have worked. * * * Because the Labor 
        Department has failed to address many of the problems 
        that prevent our employees from qualifying for this 
        exemption, public employers continue to be exposed to 
        enormous liability. This only underscores the need for 
        passing legislation like the amendment included in S. 4 
        to correct a problem that Congress never intended to be 
        imposed on state and local governments.\32\
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    \32\ Hearing on S. 4, The Family Friendly Workplace Act before the 
Senate Committee on Labor and Human Resources, Subcommittee on 
Employment and Training, 105th Cong., 1st Sess, February 13, 1997 (to 
be published).

    In addition, when Congress enacted the Family Medical Leave 
Act, it recognized that an employee should be able to take 
unpaid leave for FMLA purposes without the reduction of pay 
affecting the exempt status of the employee.\33\
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    \33\ 29 U.S.C. Sec. 2612(c).
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5. Time for a change

    While the FLSA was enacted to protect workers, many of 
today's work force view certain of the FLSA's provisions as 
harmful rather than helpful. Given the overwhelming success of 
public sector programs, it is important that Congress now 
extend the same freedom and flexibility to private workers. 
Flexible work schedules would give employees more control over 
their lives by giving them a better tool to balance their 
family and work obligations. Employersand hourly employees must 
be given the ability to reach accord on flexible schedules beyond the 
standard 40 hour workweek and to bank compensatory time in lieu of cash 
overtime where such an arrangement is mutually beneficial. Salary basis 
reform for non-exempt employees would also increase flexibility 
options. The FLSA should be amended to assist workers in balancing the 
needs of an evolving work environment and quality family time.

             III. Legislative History and Committee Action

    On January 21, 1997, Senator Ashcroft along with Senators 
Hutchison, Lott, Nickles, Craig, Collins, DeWine, Allard, 
Brownback, Chafee, Coats, Domenici, Enzi, Faircloth, Gramm, 
Grams, Grassley, Hagel, Hatch, Helms, Hutchinson, Kyl, 
Murkowski, Roberts, Sessions, Thurmond, Warner, Coverdell, and 
Jeffords, introduced S. 4, the Family Friendly Workplace Act. 
S. 4 is also sponsored by Senators Mack, Smith of New 
Hampshire, McCain, Cochran, Burns, McConnell and Thomas.
    On February 4, 1997, the Labor Human Resources Subcommittee 
on Employment and Training held a hearing (S. Hrg. 105-__) on 
the Family Friendly Workplace Act. The following individuals 
provided testimony:
          The Honorable Kay Bailey Hutchison, U.S. Senator
          Sandra Boyd of the Labor Policy Association, Inc., 
        Washington, DC
          Michael Losey of the Society for Human Resource 
        Management, Alexandria, VA
          Sallie Larsen of TRW Systems Integration Group, 
        Fairfax, VA
          Christine Korzendorfer of TRW Systems Integration 
        Group, Fairfax, VA
          Mark Wilson of Heritage Foundation, Washington, DC
          William Kilberg of the Fair Labor Standards Act 
        Reform Coalition, Washington, DC
          Karen Nussbaum, Director of AFL-CIO Working Women's 
        Department, Washington, DC
          Edith Rasell, The Economic Policy Institute, 
        Washington, DC
    Additional statements and letters regarding S. 4 were also 
received and placed in the record.
    On February 13, 1997, the Labor and Human Resources 
Subcommittee on Employment and Training held a hearing (S. H.G. 
105-__) on the Family Friendly Workplace Act. The following 
individuals provided testimony:
          The Honorable John Ashcroft, U.S. Senator
          The Honorable Paul F. Jadin, Mayor, Green Bay, WI
          Marilyn Richter, Assistant Corporation Counsel, City 
        of New York, NY
          Jim Wilms of Unicover Corporation, Cheyenne, WY
          Donna Lenhoff, General Counsel, Women's Legal Defense 
        Fund, Washington, DC
          Sandy Moneypenny of the Timken Co., Randleman, NC
          Kathleen Fairall of the Timken Co., Randleman, NC
          Diana Thompson, Pullyup, Washington, DC
          William Stone of Louisville Plate Glass Co., 
        Louisville, KY
          Susan Eckerly of the National Federation of 
        Independent Business, Washington, DC
          David Silberman of Bredhoff & Kaiser, Washington, DC
    Additional statements and letters regarding S. 4 were also 
received and placed in the record.
    On March 13, 1997, the Senate Committee on Labor and Human 
Resources met in executive session to consider S. 4. A quorum 
being present, the committee voted on the following amendments:
    Senator DeWine offered an amendment to improve provisions 
relating to compensatory time, biweekly work programs, flexible 
credit hour programs and exemptions. The amendment was 
accepted.
        YEAS                          NAYS
Jeffords                            Kennedy
Coats                               Dodd
Gregg                               Harkin
Frist                               Mikulski
DeWine                              Bingaman
Enzi                                Wellstone
Hutchinson                          Murray
Collins                             Reed
Warner
McConnell
    Senator Wellstone offered an amendment that would permit 
the use of compensatory time for family and medical leave and 
that would further permit employees to use compensatory time 
for any reason so long as the employee provided two weeks 
notice and the leave would not cause ``substantial and grievous 
injury'' to the employers operations. The amendment was 
defeated.
        YEAS                          NAYS
Kennedy                             Jeffords
Dodd                                Coats
Harkin                              Gregg
Mikulski                            Frist
Bingaman                            DeWine
Wellstone                           Enzi
Murray                              Hutchinson
Reed                                Collins
                                    Warner
                                    McConnell
    On March 18, 1997, the Senate Committee on Labor and Human 
Resources met in executive session to consider S. 4. A quorum 
being present, the committee voted on the following amendments:
    Senator Murray offered an amendment mandating that an 
employer provide 24 hours per year of unpaid leave for parental 
involvement in school activities. The amendment was defeated.
        YEAS                          NAYS
Kennedy                             Jeffords
Dodd                                Coats
Harkin                              Gregg
Mikulski                            Frist
Bingaman                            DeWine
Wellstone                           Enzi
Murray                              Hutchinson
Reed                                Collins
                                    Warner
                                    McConnell
    Senator Dodd offered an amendment to expand the Family 
Medical Leave Act to cover employers with 25 or more employees. 
The amendment was defeated.
        YEAS                          NAYS
Kennedy                             Jeffords
Dodd                                Coats
Harkin                              Gregg
Mikulski                            Frist
Bingaman                            DeWine
Wellstone                           Enzi
Murray                              Hutchinson
Reed                                Collins
                                    Warner
                                    McConnell
    Senator Wellstone offered an amendment to exclude part-
time, seasonal, and temporary employees and to exempt employers 
in the garment business. The amendment was defeated.
        YEAS                          NAYS
Kennedy                             Jeffords
Dodd                                Coats
Harkin                              Gregg
Mikulski                            Frist
Bingaman                            DeWine
Wellstone                           Enzi
Murray                              Hutchinson
Reed                                Collins
                                    Warner
                                    McConnell
    Senator Wellstone offered an amendment to delay the 
effective date of the act until such time as the Department of 
Labor had resolved 90 percent of the wage and hour complaints. 
The amendment was defeated.
        YEAS                          NAYS
Kennedy                             Jeffords
Dodd                                Coats
Harkin                              Gregg
Mikulski                            Frist
Bingaman                            DeWine
Wellstone                           Enzi
Murray                              Hutchinson
Reed                                Collins
                                    Warner
                                    McConnell
    Senator Wellstone offered an amendment to require employers 
to treat compensatory time off as hours worked for the purpose 
of calculating overtime and employee benefits. The amendment 
was defeated.
        YEAS                          NAYS
Kennedy                             Jeffords
Dodd                                Coats
Harkin                              Gregg
Mikulski                            Frist
Bingaman                            DeWine
Wellstone                           Enzi
Murray                              Hutchinson
Reed                                Collins
                                    Warner
                                    McConnell
    Senator Kennedy offered an amendment to prohibit 
discrimination against employees who are eligible for 
compensatory time off and to expand the remedies available for 
violation of the compensatory time off requirements. The 
amendment was defeated.
        YEAS                          NAYS
Kennedy                             Jeffords
Dodd                                Coats
Harkin                              Gregg
Mikulski                            Frist
Bingaman                            DeWine
Wellstone                           Enzi
Murray                              Hutchinson
Reed                                Collins
                                    Warner
                                    McConnell
    The committee then voted to report S. 4 favorably.
        YEAS                          NAYS
Jeffords                            Kennedy
Coats                               Dodd
Gregg                               Harkin
Frist                               Mikulski
DeWine                              Bingaman
Enzi                                Wellstone
Hutchinson                          Murray
Collins                             Reed
Warner
McConnell

              IV. Explanation of Bill and Committee Views

    S. 4, The Family Friendly Workplace Act, provides private 
sector employers and employees with the same optional workplace 
flexibility benefits that public sector employees have enjoyed 
since 1978. They include earning compensatory time in lieu of 
traditional monetary overtime pay; and participating in 
biweekly work schedules and flexible credit hour programs. 
These options will allow employees to balance the heavy demands 
of the workplace with their growing obligations to family and 
education. Participation in these programs are entirely 
voluntary. This legislation does not mandate that employers 
offer these programs and employees are under no obligation to 
participate in them.

    a. compensatory time as an alternative to traditional overtime 
                             compensation.

1. The compensatory time option is 100 percent voluntary

    The cornerstone of the Family Friendly Workplace Act is 
that the various workplace flexibility options are completely 
voluntary. While the legislation gives employers the ability to 
provide compensatory time,\34\ the actual decision to choose 
compensatory time off in lieu of monetary compensation is up to 
the employee. The decision may not be a condition of 
employment.
---------------------------------------------------------------------------
    \34\ S. 4 Sec. 3(a)(1)-(r)(3).

          [N]o employee may be required under this subsection 
        to receive compensatory time off in lieu of monetary 
        overtime compensation. The acceptance of compensatory 
        time off in lieu of monetary overtime compensation may 
        not be a condition of employment.\35\
---------------------------------------------------------------------------
    \35\ S. 4 Sec. 3(a)(1)-(r)(1).

    Opponents of the legislation incorrectly claim that the 
bill allows employers to avoid providing overtime pay by 
forcing employees to accept compensatory time off instead. 
These claims are spurious. The bill takes careful and marked 
steps to ensure that it is the employee's decision to elect 
compensatory time off instead of overtime pay. Coercion, 
intimidation, and threats are expressly prohibited. No employer 
can force an employee to accept or deny compensatory time nor 
can an employer force an employee to use accrued compensatory 
time. Any attempt to do so is punishable by pecuniary measures 
including liquidated damages to the affected employee.\36\
---------------------------------------------------------------------------
    \36\ For a complete explanation of penalties please see ``Remedies 
and Sanctions.''
---------------------------------------------------------------------------

2. The legislation facilitates a workable compensatory time policy 
        while protecting employees' rights to remuneration for their 
        overtime services

    The nature of an employee's agreement to accept 
compensatory time in lieu of traditional monetary overtime 
compensation is dictated by whether the employee is represented 
by a union or not. Employees who are represented by a union 
will agree or disagree to a compensatory time option through 
the collective bargaining process.
    If nonunion employees choose to accept compensatory 
overtime in lieu of traditional overtime compensation, they 
must make that election before they actually perform the 
overtime work. The agreement may not be considered a condition 
of employment and must be ``entered into knowingly and 
voluntarily.'' \37\ The decision to elect compensatory time is 
generally made each workweek. This underscores the idea that 
any overtime compensation in the form of compensatory time is 
not a condition of employment, but rather a renewable benefit 
whose election rests solely with the employee. Furthermore, a 
nonunion employee's agreement must be written ``or otherwise 
verifiable'' and kept pursuant to the record keeping terms of 
the FLSA.\38\
---------------------------------------------------------------------------
    \37\ S. 4 Sec. (a)(1)-(r)(3)(A)(ii).
    \38\ Every employer subject to any provision of this chapter * * * 
shall make, keep, and preserve such records of the persons employed by 
him and of the wages, hours, and other conditions and practices of 
employment maintained by him, and shall preserve such records for such 
periods of time, and shall make such reports therefrom to the 
Administrator as he shall prescribe by regulation or order as necessary 
or appropriate for the enforcement of the provisions of this chapter or 
the regulations or the orders thereunder.'' 29 U.S.C. Sec. 211(c).
---------------------------------------------------------------------------
    Contrary to the claim's of the bill's detractors, the 
``otherwise verifiable'' language will not allow employers to 
coerce, intimidate, or threaten an employee based on any lack 
of recorded consent. The term ``otherwise verifiable'' simply 
allows employees to provide consent in forms other than 
writing, for example, video recording, tape recording or 
electronic mail transmissions. This is consistent with FLSA 
regulations which state that there is no prescribed form of 
record.\39\
---------------------------------------------------------------------------
    \39\ 20 C.F.R. Sec. 516.1.
---------------------------------------------------------------------------
    The legislation permits an employee to accrue up to 240 
hours of compensatory time during a calendar year or other 12-
month period established by the employer. Employees may not 
carry over accrued compensatory time from one year to the next. 
Therefore, the legislation mandates that employees are paid 
monetary compensation at the end of the calendar year or 12-
month period, which helps guarantee that employees receive 
compensation for their overtime work in a timely manner. To 
ensure that the employee is adequately compensated, the 
employer must pay the employee no less than the employee's 
overtime rate at the time the compensatory overtime was earned 
or the employee's final pay rate, whichever is greater.\40\ In 
addition, the employer must provide the employee with 30 days 
written notice of its intention to issue monetary compensation 
for all accrued compensatory time off in excess of 80 
hours.\41\
---------------------------------------------------------------------------
    \40\ An employee's final rate of pay is not necessarily the rate of 
pay at the time of termination or resignation. It may also be an 
employee's current rate of pay subsequent to a raise.
    \41\ An employer may want to make an early remittance of accrued 
compensatory time because the end of the calendar year or 12 month 
period is approaching and the employer wants to avoid a large payout to 
several employees who have accrued hundreds of hours.
---------------------------------------------------------------------------
    While opponents of the legislation fear that employers will 
control when an employee will be able to use accrued 
compensatory time off, their concern is unfounded. The bill 
clearly states that an employee must be allowed to use his or 
her accrued compensatory time off within a ``reasonable 
period'' of time provided that the time off will not ``unduly 
disrupt'' the workplace. This portion of the bill mirrors what 
is already firmly established, strongly recognized, and upheld 
in the FLSA and relevant regulations as they pertain to the 
public sector. The law states:

          An employee of a public agency which is a State, 
        political subdivision of a State, or an inter-state 
        governmental agency who has accrued compensatory time 
        off * * * and who has requested the use of such 
        compensatory time, shall be permitted * * * to use such 
        time within a reasonable period after making the 
        request if the use of the compensatory time does not 
        unduly disrupt the operations of the public agency.\42\
---------------------------------------------------------------------------
    \42\ 29 U.S.C. Sec. 207(o)(5)(A)-(B).

    The current regulations resolve any remaining issues of 
ambiguity surrounding an employee's ability to take accrued 
compensatory time. First, they delineate factors to determine 
what is a reasonable period of time within which an employer 
must honor an employee's request to use compensatory time. The 
factors will vary based on the employer's ``customary work 
practices'' \43\ and include but are not limited to: ``the 
normal schedule of work, anticipated peak workloads based on 
past experience, emergency requirements for staff and services, 
and the availability of qualified substitute staff.'' \44\ In 
addition, in the union setting, the issue of reasonableness 
would be resolved in the collective bargaining process.
---------------------------------------------------------------------------
    \43\ 29 C.F.R. Sec. 553.25 (c)(1).
    \44\ Ibid.
---------------------------------------------------------------------------
    Second, the regulations define ``unduly disrupt'' by 
stating:

          Mere inconvenience to the employer is an insufficient 
        basis for the denial of a request * * * For an agency 
        to turn down a request from an employee for 
        compensatory time off requires that it should 
        reasonably and in good faith anticipate that the [time 
        off] would impose an unreasonable burden on the 
        agency's ability to provide acceptable quality and 
        quantity for the public during the time requested 
        without the use of the employee's services.\45\
---------------------------------------------------------------------------
    \45\ 29 C.F.R. Sec. 553.25(d).

In interpreting the ``unduly disrupt'' standard, the courts 
have repeatedly held that it is a narrow test and that a mere 
inconvenience to the employer is not enough for an employer to 
deny an employee the use of compensatory time. For example, one 
court held that, ``[Compensatory time] essentially is the 
property of the employee'' \46\ and the ``unduly disrupt'' 
standard was not enough to allow an employer to dictate how an 
employee used his property. Indeed, another court even found 
that an employer's practice of forcing employees to use their 
accrued compensatory time to reduce the employer's compensatory 
time balances was illegal.\47\
---------------------------------------------------------------------------
    \46\ Heaton v. Missouri Department of Corrections, 43 F.3d 1176, 
1180 (8th Cir. 1994).
    \47\ Moreau v. Harris County, No. 94-1427 (D. S. Texas Nov. 25, 
1996).
---------------------------------------------------------------------------
    Additionally, this portion of the bill is strikingly 
similar to the provisions of the Family Medical Leave Act and 
the relevant regulations. That law provides that an employee 
requiring medical leave based on planned medical treatment, 
``shall make a reasonable effort to schedule the treatment so 
as not to disrupt unduly the operations of the employer.'' \48\ 
The regulations contain veritably the same language.\49\
---------------------------------------------------------------------------
    \48\ 29 U.S.C. Sec. 2612(e)(2)(A).
    \49\ 29 C.F.R. Sec. 825.302(e).
---------------------------------------------------------------------------
    Reinforcing the employees' ability to control how they are 
compensated for overtime, the legislation gives nonunion 
employees the ability to withdraw from a compensatory time 
program at any time by submitting a written notice to their 
employer. An employer has 30 days from its receipt of such a 
request to remit the monetary compensation. The employer's 
remittance will not be less than the greater of the employee's 
overtime rate at the time the compensatory time was earned or 
the employee's final pay rate.\50\ An employee's termination or 
resignation has the same effect as a withdrawal. If an employer 
wishes to discontinue offering the compensatory time option, it 
may do so upon giving 30 days written notice to all 
participating employees.
---------------------------------------------------------------------------
    \50\ See note 40.
---------------------------------------------------------------------------
    The bill treats unused or owned compensatory time as unpaid 
monetary compensation. Specifically, it provides that, ``the 
terms `monetary overtime compensation' and `compensatory time 
off' shall have the meaning given the terms `overtime 
compensation' and `compensatory time', respectively, by 
subsection (o)(7).'' \51\ This provision has the effect of 
guaranteeing that unused compensatory time will be given the 
same priority that unpaid wages would be given in a bankruptcy 
proceeding. Thus, unused or owed compensatory time will be 
categorized as a third priority asset for the purposes of 
bankruptcy proceedings.
---------------------------------------------------------------------------
    \51\ S. 4 Sec. (a)(1)-(r)(10).
---------------------------------------------------------------------------
    Overtime hours compensated with compensatory time off are 
no different than overtime hours compensated with traditional 
monetary overtime pay. Overtime hours compensated with 
compensatory time off are still hours ``for which the employee 
is paid or entitled to pay for the performance of duties for 
the employer.'' They are therefore ``hours of service'' 
according to the Employee Retirement Income Security Act.\52\ 
Accordingly, the bill's detractors, who insist that payment in 
compensatory time rather than money will reduce the number of 
hours and employee works and consequently the employee's 
pension benefits, are mistaken. It is the intention of the 
committee that any hours an employee works overtime, whether 
they are compensated by monetary overtime pay or compensatory 
time off, are to be credited for the purpose of accrual, 
participation, and vesting benefits.
---------------------------------------------------------------------------
    \52\ 29 C.F.R. Sec. 2530.200b-2.
---------------------------------------------------------------------------
    Obviously, an employee who takes advantage of the 
compensatory time option as opposed to collecting monetary 
compensation for overtime will realize a reduction in monetary 
income. A reduction in monetary income will naturally reduce an 
employee's credits for benefits. This is no different, however, 
than any other decision an employee makes to lessen the number 
of actual hours worked; for example, refusing to work offered 
optional overtime hours or taking leave without pay. There is 
no detriment to the employee who knowingly and voluntarily 
makes such a decision. There is, however, an inherent advantage 
in accruing additional paid time off because it enables an 
employee to do other things with that time.
    Opponents' concerns that compensation in the form of 
compensatory time will affect an employee's opportunity for 
unemployment benefits is unfounded. Compensation as 
compensatory time is no different than compensation as monetary 
overtime pay. They are even awarded on the same scale. This 
committee intends to treat compensatory time paid to an 
employee for overtime hours worked as wages. It does not matter 
whether an employee accrues the compensatory time, uses the 
compensatory time, or cashes out the compensatory time.\53\
---------------------------------------------------------------------------
    \53\ In some states, payment of accrued compensatory time to a 
terminated employee will become ``disqualifying income.'' This, 
however, only will defer the payment of unemployment benefits. It will 
not affect the amount to which the employee is entitled.
---------------------------------------------------------------------------

3. Severe penalties have been included

    Between the prohibitions and penalties already provided for 
in the FLSA and S. 4's additional measures, employees will be 
protected from potential employer misconduct.
    The FLSA currently makes it unlawful to violate the 
existing provisions of section 7.\54\ Because the legislation 
will become a part of section 7, it will enjoy the same 
protection. The FLSA also makes it is unlawful to ``discharge 
or in any other manner discriminate against an employee because 
such employee has filed any complaint or instituted or caused 
to be instituted any proceeding under or related to ``the 
employee's rights.'' \55\ The FLSA authorizes an employee to 
file suit in either Federal or State court for a violation of 
section 7. In addition, an employee may file a complaint with 
the Department of Labor. The Department of Labor, in turn, may 
sue the employer for damages or injunctive relief on behalf of 
the complaining employee.\56\ The Secretary of Labor also may 
seek civil penalties up to $1,000 for willful and repeated 
violations of section 7.\57\ In an action for wrongfully denied 
overtime compensation, an employee may be entitled to damages 
equal to the amount of unpaid compensation and another equal 
amount as liquidated damages.\58\ (Liquidated damages may be 
reduced if an employer has acted in good faith.\59\) Finally, 
where an employee brings suit, he or she may be entitled to 
recover his costs and attorney's fees.\60\
---------------------------------------------------------------------------
    \54\ 29 U.S.C. Sec. 215(a)(2).
    \55\ 29 U.S.C. Sec. 215(a)(3).
    \56\ 29 U.S.C. Sec. 217.
    \57\ 29 U.S.C. Sec. 216(e).
    \58\ 29 U.S.C. Sec. 216(b).
    \59\ 29 U.S.C. Sec. 260.
    \60\ 29 U.S.C. Sec. 216(b).
---------------------------------------------------------------------------
    The legislation adds a provision making it unlawful to 
``directly or indirectly intimidate, threaten, or coerce, or 
attempt to intimidate, threaten, or coerce any employee'' to 
request or not request compensatory time off in lieu of 
monetary overtime pay or to use accrued compensatory time 
off.\61\ The terms ``intimidate, threaten, or coerce'' are 
defined as including a ``promise to confer or conferring any 
benefit (such as an appointment, promotion, or compensation) or 
effecting or threatening to effect any reprisal (such as 
deprivation of appointment, promotion, or compensation).\62\ 
Thus, for example, an employer may not force an employee to 
accept compensatory time off rather than monetary overtime pay 
by promising to promote the employee nor may an employer punish 
failure to accept compensatory time by failing to promote that 
employee.
---------------------------------------------------------------------------
    \61\ S.4 Sec. 3(a)(1)-(r)(6)(A).
    \62\ Ibid.
---------------------------------------------------------------------------
    The legislation also adds additional remedies to section 16 
of the FLSA. It provides for penalties for violations of its 
anti-coercion language. An employer who violates S. 4's anti-
coercion provision shall be liable to the affected employee for 
an amount equal to the total of the employee's rate of 
compensation multiplied by ``number of hours of compensatory 
time off involved in the violation that was initially used by 
the employee; less the number of such hours accrued by the 
employee.'' \63\ Furthermore, the affected employee will be 
entitled to liquidated damages equivalent to the employee's 
rate of compensation multiplied by ``the number of hours of 
compensatory time off involved in the violation that was 
initially accrued by the employee.'' \64\ In addition, other 
remedies are also available including criminal penalties and 
any additional civil penalties.\65\
---------------------------------------------------------------------------
    \63\ S. 4 Sec. 3(a)(2).
    \64\ Ibid.
    \65\ Ibid.
---------------------------------------------------------------------------

                 b. flexibility for today's work force

    The reality of today's work force is that only 20 percent 
of hourly workers reportedly work more than 40 hours in a 
typical week.\66\ Of those workers, nearly 3 out of 4 are men, 
primarily married men.\67\ Due to the social changes that have 
occurred over the past five decades, more women are entering 
the work force. While these individuals would like greater 
flexibility in their work schedules, compensatory time will be 
of little assistance because many workers do not work overtime. 
Given the demands of today, all workers need more flexibility, 
not just those who work overtime. It is for this reason that 
the committee included the biweekly work schedule and flexible 
credit hour programs in the Family Friendly Workplace Act.
---------------------------------------------------------------------------
    \66\ Anita U. Hattiangadi, Patterns of Overtime Work: The Case for 
Greater Workplace Flexibility, Employment Policy Foundation, 1997, at 
7.
    \67\ Ibid., Employment Policy Foundation tabulations, Current 
Population Survey data, 1996.
---------------------------------------------------------------------------

1. Biweekly work schedules

    Biweekly work schedule programs will allow employers and 
employees to decide, either through collective bargaining or 
agreement at the outset of each biweekly work period, how an 
employee will schedule an 80 hour work period. Employers and 
employees are free to agree to any arrangement so long as the 
total number of hours worked over the 2-week period does not 
exceed 80. All hours which an employer requires an employee to 
work that are in excess of the biweekly schedule, are 
considered overtime and the employee must be compensated 
accordingly, either by monetary overtime pay or compensatory 
time off.
    Just as the election of compensatory time is voluntary so, 
too, is the election of biweekly work schedules. Employers do 
not have to offer biweekly schedules and employees are under no 
obligation to participate in them. In addition, an employee's 
participation in a biweekly work schedule may not be a 
condition of employment.
    Under S. 4's biweekly work schedule provisions, employees 
enjoy the preexisting safeguards of the FLSA. Employees will 
also benefit from S. 4's own provisions prohibiting an employer 
from ``directly or indirectly intimidat[ing], threaten[ing], or 
coerc[ing]'' an employee to participate a biweekly schedule 
program. Naturally, the FLSA's preexisting remedies and 
sanctions as well as S. 4's remedies and sanctions apply to any 
violation involving a biweekly work schedule program.
    Federal employees have enjoyed the benefit of biweekly work 
schedules since 1978. Because of the success of biweekly 
scheduling programs in the public sector, the committee 
believes that this opportunity should be available to private 
sector employees as well. Amending the FLSA so as to allow for 
biweekly work schedules will provide greater scheduling 
flexibility to more employers and employees.
    For union employees, the particulars of a biweekly work 
schedule, such as hours to be worked and methods of withdrawal, 
will be set forth in a collective bargaining agreement. In the 
non-union setting, the agreement between an employee and 
employer, wherein the employee elects to participate in the 
program, will be individualized. The employee must enter into 
an agreement for a biweekly schedule prior to the biweekly 
period and the agreement must set forth the actual schedule of 
hours that the employee shall work during that period. As with 
the compensatory time agreement, the employee must enter into 
the biweekly schedule agreement knowingly and voluntarily, and 
the agreement must be evidenced by a written affirmation or 
otherwise verifiable \68\ assertion on the part of the 
participating employee. Under no circumstances is it to be a 
condition of employment. All such agreements must be preserved 
according to the requirements of the FLSA's recording keeping 
provision.\69\
---------------------------------------------------------------------------
    \68\ The term ``otherwise verifiable'' simply allows employees to 
provide consent in forms other than writing, for example, video 
recording, tape recording, electronic mail transmissions, or verbal 
consent that falls within an accepted exception to the hearsay rule. 
The regulations pertaining to the FLSA state that there is no 
prescribed form of record. 29 C.F.R. Sec. 516.1.
    \69\ 29 U.S.C. Sec. 211(c).
---------------------------------------------------------------------------
    Because biweekly work schedule programs are voluntary, 
nonunion employees may withdraw their agreement to participate 
by providing written notice to the employer. Similarly, an 
employer may discontinue a biweekly work schedule program upon 
thirty days notice to all participating employees.
    An example of a biweekly work schedule is:

          (1) During week one, an employee works 5 days from 
        8:30 a.m. to 6 p.m. with a half hour for lunch each 
        day. The total amount of hours worked during week one 
        therefore equals 45. No overtime is paid for time 
        worked beyond 40 hours during week one. (2) During week 
        two, an employee works Monday from 8:30 a.m. to 5 p.m. 
        and Tuesday through Thursday from 8:30 a.m. to 6 p.m. 
        Each day during week two allows a half hour for lunch. 
        The employee is able to take Friday of week two off. 
        The total number of hoursworked during week two equals 
35. The total number of hours worked during the two week period equals 
80.

Any hours that an employer requests the employee to work beyond 
the predeteremined 80 scheduled hours are considered overtime 
and the employee must be compensated for this overtime 
accordingly. In the example above, working until 6 p.m. on the 
second Monday would result in an hour of overtime even if the 
hour were eliminated from the Tuesday through Thursday 
schedule.
    The biweekly schedule provides the employer with 80 hours 
of an employee's labor or expertise over a 2-week period. While 
this is presumably the same number of hours the employee would 
have worked, the flexibility and the additional day off gives 
employees the ability to tailor their schedules to meet their 
needs and is likely to engender a more contented, healthier, 
more balanced, and more productive employee; an asset to any 
employer. The biweekly schedule provides employees with the 
flexibility they desire and allows them to spend more time with 
family, pursuing leisure activities, or continuing education.

2. Flexible credit hour program

    Like biweekly schedules, flexible credit hours provide 
flexibility to employees who may not traditionally work a great 
deal of overtime. A flexible credit hour program will give more 
employees a greater ability to balance work with family. The 
bill's language that provides for and governs this option is 
quite similar to the compensatory time provision.
    A flexible credit hour program would allow an employee to 
request to work up to 50 hours over his or her regularly 
scheduled hours. Flexible credit hours are awarded on a one to 
one ratio: one credit hour for one hour over an employee's 
regular schedule. Each hour is a ``flexible credit hour'' which 
is then ``banked'' for future use. The employee may use those 
banked hours at any future date to reduce a workday or a 
workweek. When used, flexible credit hours represent time off 
from work at the employee's regular rate of pay.
    As with compensatory time and biweekly programs, an 
employer has the initial decision of whether to offer the 
flexible credit hour program. Participation in a flexible 
credit hour program is, of course, voluntary. An interested 
employee must elect to participate. The legislation provides 
that:

          [A]t the election of the employee, the employer and 
        the employee jointly designate hours for the employee 
        to work that are in excess of the basic work 
        requirement of the employee so that the employee can 
        accrue flexible credit hours to reduce the hours worked 
        in a week or day subsequent to the day on which the 
        flexible credit hours are worked.\70\
---------------------------------------------------------------------------
    \70\ S. 4 Sec. Sec. 3(b)(1)-13A(c)(1).

The legislation defines election as ``at the initiative of, and 
at the request of the employee'' \71\ thereby reinforcing the 
voluntary nature of the bill. An employee's choice to 
participate pursuant to this legislation's pervasive policy of 
employee choice, is made under the same guidelines established 
for agreements to participate in compensatory time and biweekly 
work schedule programs. Union employees perform according to 
their collective bargaining agreements and nonunion employees 
must submit a written or ``otherwise verifiable'' \72\ 
statement acknowledging his participation in the program. The 
anti-coercion, remedy, and sanction provisions applicable to 
compensatory time off options and biweekly work schedule 
programs apply to the flexible credit programs as well.
---------------------------------------------------------------------------
    \71\ S. 4 Sec. Sec. 3(b)(1)-13A(e)(4).
    \72\ The term ``otherwise verifiable'' simply allows employees to 
provide consent in forms other than writing, for example, video 
recording, tape recording, electronic mail transmissions, or verbal 
consent that falls within an accepted exception to the hearsay rule.
---------------------------------------------------------------------------
    Compensation for unused accrued credit hours is handled in 
much the same way that compensation for unused compensatory 
time is handled. If, after a calendar year or other 12 month 
period established by an employer, an employee participating in 
a flexible credit hour program has not used all his or her 
credit hours, the employer is required to cash out the 
employee's remaining credit hours at the employee's normal 
rate. The employer has until January 31 of the following year 
or 31 days following the end of the employer's 12 month period 
to provide this compensation.
    An employee must be allowed to use accrued credit hours 
within a reasonable period of time following the request so 
long as doing so will not unduly disrupt the workplace. The 
discussion above of the proper construction of the standard of 
``unduly disrupt'' in the context of unused compensatory time 
applies equally to the use of flexible credit hours.
    A nonunion employee may withdraw at any time by submitting 
a written notice to his or her employer and requesting monetary 
compensation for the balance of unused accrued credit hours. 
Such compensation is paid at a rate equal to the employee's 
normal rate and an employer has 30 days from receiving the 
request to remit the monies due. An employer may discontinue a 
flexible credit hour program by providing 30 days written 
notice to participating employees that it intends to 
discontinue the program.

         C. Correcting Confusion Over the ``Salary Basis'' Test

    The final portion of this legislation helps clarify an 
ambiguity that has arisen under the ``salary basis'' test. 
Recent judicial interpretations of the ``subject to'' language 
contained in the FLSA regulations have clouded the salary basis 
test and caused unnecessary litigation and windfall awards for 
highly paid employees. This portion of the legislation is 
merely intended to clarify who is and who is not an exempt 
employee and avoid any further inequitable payments of overtime 
back-pay.
    For more than five decades, the ``subject to'' language 
generated little or no controversy. In recent years, however, 
courts began to reinterpret the salary basis standard. Seizing 
upon the ``subject to'' language, large groups of employees 
have won multimillion dollar judgments. These awards have been 
awarded in spite of the fact that many of the plaintiff-
employees have never actually experienced a pay deduction of 
any kind and have never expected to receive overtime pay in 
addition to their ``executive, administrative, or 
professional'' salaries.
    The committee wishes to clarify that an employee will not 
lose their exempt status because his or her employer has a 
policy on the books that provides for a reduction in pay for 
absences of less than a full day or less than a full pay 
period. However, the legislation would not affect the outcome 
as to a particular employee if that employee experienced an 
actual reduction in the compensation. Therefore, an employee 
whose salary was reduced could still lose his or her exempt 
status.
    In a recent case, Auer v. Robbins,\73\ the U.S. Supreme 
Court attempted to clarify the ``subject to'' language. 
However, the Court's decision did not go far enough so as to 
eliminate the notion that employees could lose their exemption 
status based solely on the fact that their employer had a 
personnel policy on the books. Therefore, it is up to Congress 
to define the test once and for all. S. 4 clarifies that being 
``subject to'' a reduction in pay for an employee's absence 
from work for less than a full day or less than a full pay 
period (depending on how the employee's pay structure is 
organized) does not destroy an employee's exempt status.
---------------------------------------------------------------------------
    \73\ No. 95-897; 65 U.S.L.W. 4136 (1997).
---------------------------------------------------------------------------
    The committee has included this clarification, in part, to 
stop the deluge of cases that are being brought against state 
and local governments. The committee recognizes that the 
Department of Labor attempted to solve this problem through 
regulations, as it applies to State and local employees in 
1992.\74\ This legislation in no way preempts those 
regulations. Therefore, a reduction in pay of an employee of a 
public agency for absences of less than a day pursuant to 
principles of public accountability shall not be considered in 
making a determination as to employment status. Further, it is 
the committee's intention that a reduction in pay of an 
employee of a public agency for absences due to a budget 
required furlough shall not considered in making a 
determination as to employment status, except in the workweek 
in which the furlough occurs.
---------------------------------------------------------------------------
    \74\ 29 C.F.R. Sec. 541.5d.
---------------------------------------------------------------------------
    As an additional clarifying point, S. 4 provides that 
additions to an exempt employee's salary, such as overtime 
premiums or an end-of-the-year bonus will not destroy an 
exemption. Last, S. 4 provides that the salary basis 
clarification be retroactively applied to all such actions in 
which final judgment has not been made as of the effective 
date.
    In addition to clarifying the law and avoiding inequitable 
judgements, this committee intends to foster a more family 
friendly workplace. If an employer is to be encouraged to 
foster a family friendly workplace it can not be hindered by 
the concern that granting bonuses or providing needed unpaid 
time off to salaried employees may become a crushing liability.

                                Summary

    There are more single parents and dual income families in 
our work force than ever before and their numbers are growing. 
In today's society employees are faced with the difficult task 
of balancing their obligations at work with their obligations 
to family, school, and other needs. For many years, Federal, 
State, and local governments have enjoyed the benefit of 
statutory options creating a flexible work schedule and 
allowing their employees an opportunity for more leisure time, 
time with family, or time to continue an education. S. 4, The 
Family Friendly Workplace Act, will amend the Fair Labor 
Standards Act to finally provide employers and employees in the 
private sector with the same benefits public sector employees 
have enjoyed.
    S. 4 provides three options: 1) compensatory time off in 
lieu of monetary overtime pay, 2) biweekly work schedules, and 
3) flexible credit hours. Participation is voluntary; employers 
do not have to offer these programs and employees do not have 
to participate in them. Under no circumstances will 
participation ever be a condition of employment.

Compensatory time

    Compensation as compensatory time off is paid out at the 
same rate as an employee's normal rate of overtime pay, one and 
a half hours of compensatory time off for every hour of 
overtime worked. Compensatory time off is treated as any other 
wage for the purposes of bankruptcy, pension, and unemployment 
benefits.
    Employers and employees must agree to provide and receive 
respectively, compensatory time in lieu of monetary overtime 
pay. Union employees do so through the collective bargaining 
process. Nonunion employees must do so by agreement prior to 
the performance of overtime work. The employee must enter this 
agreement ``knowingly and voluntarily.'' Furthermore, a 
nonunion employee's decision to participate in a 
compensatorytime off program must be in writing or be ``otherwise 
verifiable'' and kept by the employer according to the Fair Labor 
Standards Act's record keeping provision.
    An employer may withdraw from his decision to provide a 
compensatory time off program by providing 30 days written 
notice to the participating employees. Similarly, nonunion 
employees may withdraw by providing written notice to his or 
her employer. The terms of the union employee's withdrawal will 
be reflected in the collective bargaining agreement. Upon an 
employer's discontinuance of a compensatory time off policy or 
an employee's withdrawal, resignation, or termination, an 
employee is entitled to the cash equivalent of any unused 
compensatory hours. The employer's remittance must not be less 
than the greater of the employee's overtime rate or the 
employee's final rate of pay.
    An employee may accrue up to 240 hours of compensatory time 
during a 12 month period. If, after the 12 month period, an 
employee has not used his accrued time, the employer has 31 
days to remit the cash equivalent of those hours. If an 
employee has accrued over 80 hours at any time, an employer may 
remit the cash equivalent of those excess hours.
    An employee must be allowed to use any accrued compensatory 
time within a ``reasonable period'' of time of a request to do 
so provided that it does not ``unduly disrupt'' the workplace. 
Under a compensatory time off program, an employee enjoys the 
preexisting protections of the Fair Labor Standards Act, 
including prohibitions against violations of section 7 and 
FLSA's discrimination provision, as well as S. 4's anti-
coercion provision. No employee may be coerced, intimidated or 
threatened to accept or deny participation in any of the bill's 
flexible workplace options. Violation of any of these 
provisions submits an employer to pecuniary liability including 
liquidated damages and any other viable remedy at law or 
equity.

Biweekly work schedules

    Biweekly work schedule programs are simply another 
alternative to providing a more flexible workplace. Biweekly 
work schedules enable employees to craft schedules that 
coordinate their work obligations with their personal 
obligations.
    If an employer chooses to offer a biweekly scheduling 
option and an employee elects to participate, prior to each 2-
week work period the employer and employee will arrange a 
schedule for the 2-week period. Regardless of how the hours are 
divided, the employee will not be required to work past 80 
hours during the 2-week period. Employees will be entitled to 
overtime for all hours worked which are outside the 
predetermined biweekly schedule.
    The parameters of the program are practically 
interchangeable with those facilitating compensatory time off 
programs. A participating employee enjoys the same protections 
and may utilize the identical remedies. A biweekly work program 
provides employers and employees flexibility to address other 
demands.

Flexible credit hours

    Flexible credit hour programs are a third scheduling 
alternative. An employee may choose to work additional hours 
(more than 40 hours) in a week in order to ``bank'' those hours 
and use them to shorten a work week at a later date. An 
employee may accrue up to 50 credit hours annually. As with the 
other options, the employee's participation is completely 
voluntary.
    The program's particulars also trace those of the 
compensatory time off option and the biweekly work schedule 
program. Employees remain entitled to the same protections and 
remedies, agreement, accrual, withdrawal, and notice 
requirements. The program is similar to both the compensatory 
time off and the biweekly works schedules because the policy 
behind it is the same: namely to give workers more flexibility 
by providing alternatives to the traditional 40 hour work week 
and existing overtime procedures.

Salary basis employees

    Finally, S. 4 clarifies the ``subject to'' language in the 
regulations delineating the salary basis test. S. 4 clarifies 
that the fact that a particular employee is subject to a 
deduction in pay for absence of less than a full work day or 
less than a full pay period may not be considered in 
determining whether that employee enjoys exempt status. Only 
actual reductions in pay may be considered. The legislation 
also clarifies that employers may give bonuses and overtime 
payments to salaried employees without destroying their 
exemption from the FLSA.

                            V. Cost Estimate

                                      U.S. Congress
                               Congressional Budget Office,
                                     Washington, DC, April 2, 1997.
Hon. James M. Jeffords,
Chairman, Committee on Labor and Human Resources,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has prepared the 
enclosed cost estimate for S. 4, the Family Friendly Workplace Act. If 
you wish further details on this estimate, we will be pleased to 
provide them. The CBO staff contacts are Christina Hawley Sadoti and 
Mary Maginniss for federal costs, John Patterson for state and local 
impacts, and Kathyrn Rarick for private sector impacts.
            Sincerely,
                                              James L. Blum
                                   (For June E. O'Neill, Director.)
S. 4--Family Friendly Workplace Act
    Summary: CBO estimates that enactment of S. 4 would result in a 
small savings to the federal government. S. 4 would not affect direct 
spending or receipts; therefore, pay-as-you-go procedures would not 
apply. The bill would impose no new intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act of 1955 (UMRA), 
and could result in savings for state, local, and tribal governments.
    S. 4 would amend the Fair Labor Standards Act (FLSA) to allow 
employers to establish more flexible compensation systems, so long as 
such arrangements are in accordance with a collective bargaining 
agreement or both the employer and the employee agree. The bill would 
allow employers to provide compensatory time off in lieu of monetary 
overtime compensation for private employees, pay overtime to employees 
who work more than 80 hours in a two-week period (rather than 40 hours 
in a single week), and provide flexible credit-hour programs whereby 
hourly credits beyond the basic schedule can be exchanged for time off 
at a subsequent date. Under current law, private-sector employers may 
not offer these types of arrangements. Employees of the federal 
government (excluding most employees of the legislative branch) 
currently may receive time-and-a-half compensatory time in lieu of 
time-and-a-half overtime pay, and may have flexible work schedules 
under conditions similar to those specified in S. 4.
    Finally, S. 4 would change the salary test used to determine if an 
employee is exempt from the FLSA's overtime requirements. Under current 
law, an employee is defined as an hourly worker and entitled to 
overtime pay if it is theoretically possible that the employee's pay 
could reduced for an absence of less than a day or a week. The bill 
would change the salary test from a theoretical loss of pay to an 
actual loss of pay, and would allow employers to provide overtime pay 
and other compensation without making an employee an hourly worker who 
would be automatically entitled to overtime pay.

    Estimated cost to the Federal Government: Enacting S. 4 
would save about $1 million annually, assuming that 
appropriations are reduced accordingly.
    Basis of estimate: Enactment of S. 4 would probably have a 
minor impact on the legislative branch of the federal 
government. Within the legislative branch, employees who are 
not exempt from the FLSA may receive compensatory time in lieu 
of overtime pay under limited conditions governed, for the most 
part, by regulations that implement the Congressional 
Accountability Act. If S. 4 were enacted, it is likely that 
these regulations would be rewritten to reflect more closely 
the options available to the private sector, thus giving the 
legislative branch greater flexibility in compensating 
employees for overtime hours worked. As a consequence, some 
legislative branch employees would opt for and employers would 
provide compensatory time instead of overtime pay. CBO 
estimates that the resulting savings would amount to about $1 
million annually, beginning in fiscal year 1998.
    Accordingly, S. 4 would require the Secretary of Labor to 
revise the materials that explain the Fair Labor Standards Act 
to employees to reflect the changes made by the Family Friendly 
Workplace Act. These requirements are provided for in current 
law, and therefore would pose no additional costs to the 
Department of Labor.
    The budgetary impact of this legislation falls within 
budget subfunction 801 (Legislative Branch).
    Pay-as-you-go considerations: None.
    Estimated impact on State, local, and tribal governments: 
S. 4 would impose no new intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act of 1995 (UMRA) and could 
result in savings for state, local, and tribal governments.
    The wage provisions of the FLSA apply to tribal governments 
on a case-by-case basis. Under current law, in the cases where 
the FLSA applies (for example, when employees of tribal 
governments are not members of the tribe), tribal governments 
cannot provide compensatory time in lieu of overtime pay, deny 
overtime pay to employees who work more than 40 hours in a week 
but less than 80 hours in a two-week period, or give hourly 
credits for work carried out beyond the basic work 
requirements, which can then be exchanged for additional time 
off at a later date. The bill could reduce the employment costs 
of tribal governments by allowing such procedures when the 
affected employees agree to them. (Because state and local 
governments would be excluded from these amendments to the 
FLSA, the amendments would have no impact on them.) At the same 
time, the bill would increase the cost of another FLSA mandate 
that requires tribal governments to post a notice explaining 
the FLSA to their employees. CBO estimates that any additional 
posting costs would be insignificant.
    In addition, S. 4 would change the salary test used to 
determine whether an employee is exempt from the FLSA's 
overtime pay requirements. This change could reduce future 
compensation costs of state, local, and tribal governments and 
eliminate a number of pending liability claims for a variety of 
pay practices.
    Estimated impact on the private sector: The bill contains 
no new private-sector mandates as defined in UMRA. By relaxing 
existing mandates related to the payment of overtime, the bill 
would reduce employment costs for some employers. At the same 
time, the bill would increase slightly the cost of an existing 
mandate on employers that requires them to post a notice 
explaining the Fair Labor Standards Act to their employees. CBO 
estimates that any added cost to employers would be well under 
the $100 million annual threshold specified in UMRA and that 
the bill would most likely result in net savings for employers.
    Previous CBO estimate: On March 6, 1997, the Congressional 
Budget Office prepared an estimate for H.R. 1, the Working 
Families Flexibility Act of 1997. H.R. 1 also would allow 
private employers to offer compensatory time off in lieu of 
overtime pay, but it would not allow employers to offer bi-
weekly work programs or flexible credit hours. The estimated 
effects of H.R. 1 and S. 4 on the federal budget are identical.
    Estimate prepared by: Federal Cost--Christina Hawley Sadoti 
and Mary Maginniss; impact on State, local, and tribal 
governments--John Patterson; impact on the private sector--
Kathryn Rarick.
    Estimate approved by: Robert A. Sunshine, Deputy Assistant 
Director for Budget Analysis.

                    VI. Regulatory Impact Statement

    The committee has determined that the bill would result in 
some additional paperwork, time and costs to the Department of 
Labor, which would be entrusted with implementation and 
enforcement of the Act. It is difficult to estimate the volume 
of additional paperwork necessitated by the Act, but the 
committee does not believe it will be significant.

             VII. Application of Law to Legislative Branch

    Section 102(b)(3) of Public Law 104-1, the Congressional 
Accountability Act (CAA), requires a description of the 
application of this bill to the legislative branch. S. 4 amends 
the Fair Labor Standards Act of 1938 to provide compensatory 
time, biweekly schedules and flexible credit hours for all 
employees. S. 4 also amends the Fair Labor Standards Act to 
clarify that a salaried employee, who has not incurred an 
actual reduction in pay, shall not lose his or her exempt 
status due to the fact that the employee is subject to 
deductions in pay for absences of employment of less than a day 
or less than a full-pay period. Section 203(a) of the CAA 
applies the rights and protections of subsections (a)(1) and 
(d) of section 6, section 7, and section 12(c) of the Fair 
Labor Standards Act \75\ to covered employees and employing 
offices of the legislative branch. Section 225(f)(1) of the CAA 
applies to the exemptions of these laws and section 13 of the 
Fair Labor Standards Act is such an exemption. S. 4 amends 
section 13 of the Fair Labor Standards Act by adding a new 
subsection (m). Therefore, the changes made by S. 4 to section 
7 and section 13 of the Fair Labor Standards Act \76\ apply to 
the legislative branch.
---------------------------------------------------------------------------
    \75\ 29 U.S.C. Sec. Sec. 206(a)(1) and (d); 207; 212(c).
    \76\ 29 U.S.C. Sec. 207.
---------------------------------------------------------------------------

                   VIII. Section-by-Section Analysis

    Sec. 1. Short Title.--The bill may be referred to as the 
``Family Friendly Workplace Act.''
    Sec. 2. Purposes--The legislation will amend the Fair Labor 
Standards Act to provide employees in the private sector the 
benefits and advantages of compensatory time, biweekly work 
schedules, and flexible credit hours that Federal government 
employees have enjoyed since 1978. Private sector employees 
will be able to choose, based on their personal situations and 
requirements, whether to accept compensatory time in place of 
overtime pay and whether to participate in biweekly work 
programs and flexible credit hour programs.
    Sec. 3(a)(1). Workplace Flexibility Options.--The 
legislation amends Section 7 of the Fair Labor Standards Act of 
1938. The amendment provides an opportunity for employees who 
work overtime hours to choose compensatory time rather than the 
traditional time and a half monetary compensation. The 
compensatory time option does not delete traditional overtime 
pay, it simply offers an alternative. Furthermore, the 
legislation allows an employee who no longer wants compensatory 
time, to exchange the balance of any accrued time for 
traditional monetary compensation. Specifically, the 
legislation adds the following provisions to the end of the 
Fair Labor Standard Act, Section 7:
    (r)(1). Voluntary Participation.--The employee's decision 
to accept compensatory time is entirely voluntary and may not 
be a condition of employment. Unless a collective bargaining 
agreement says otherwise, no employee is required to accept 
compensatory time in lieu of traditional overtime pay. An 
employer may not intimidate, threaten, or coerce an employee to 
accept or deny the compensatory time option or to use 
compensatory time or accrued time off.
    When a nonunion employee enters into an agreement or 
understanding with an employer, the agreement must allow the 
employee to choose either monetary overtime pay or the accrual 
of compensatory time in lieu of overtime pay for each workweek 
overtime is offered.
    (r)(2). General Rule.--An employee may elect to receive 
compensatory time in lieu of monetary overtime compensation. An 
employee must accrue at least 1.5 hours of compensatory time 
for every hour of overtime pay to which he or she would 
otherwise be entitled. Public agencies are expressly excluded 
from the provisions regarding compensatory time.
    (r)(3). Conditions.--Where an employee is represented by a 
union that has been recognized under Sec. 9(a) of the NLRA, 
compensatory time may be provided pursuant to a collective 
bargaining agreement. Where an employee is not represented by a 
union that has been recognized under Sec. 9(a) of the NLRA, 
compensatory time may be provided pursuant to an agreement or 
understanding that an employee has entered into, knowingly and 
voluntarily, prior to the performance of work but such an 
agreement may not be a condition of employment. In order to 
receive compensatory time an employee must provide written or 
otherwise verifiable consent which the employer must maintain 
in accordance with section 11(c).
    (r)(4). Hour Limit.--An employee may accrue up to 240 hours 
of compensatory time during a calendar year or other 12 month 
period designated and communicated by the employer. An employee 
may not carry over compensatory hours from one 12 month period 
to the next. If an employee has unused compensatory time by the 
last day of the 12th month, his or her employer must provide 
monetary compensation for unused hours by the last day of the 
13th month. Any time an employee has accrued more than 80 hours 
of compensatory time, the employer may provide the employee 
with 30 days written notice of its intention to issue monetary 
compensation for all accrued compensatory time in excess of 80 
hours.
    (r)(5). Discontinuance of Policy or Withdrawal.--An 
employer may discontinue a compensatory time policy by 
providing those employees who are accruing compensatory time in 
lieu of overtime with 30 days written notice. An employee may 
provide an employer with written notice at any time that he or 
she is withdrawing the agreement or understanding to receive 
compensatory time in lieu of overtime pay. An employee may 
provide an employer with written notice at any time that his or 
her unused compensatory time be returned as monetary 
compensation. An employer must remit the monetary compensation 
within 30 days from the date it receives the written request.
    Sec. 3(a)(2). Remedies and Sanctions.--The legislation 
amends Section 16 of the Fair Labor Standards Act of 1938 to 
include pecuniary remedies for violations of the prohibition 
against intimidation, threats, and coercion. Specifically the 
legislation adds the following to Section 16:
    (f)(1) An employer who violates the prohibition is liable 
for the employee's rate of compensation multiplied by the 
number of hours of compensatory time involved minus 
anycompensatory hours used by the employee. Furthermore, the employer 
is liable for liquidated damages equaling the employee's rate of 
compensation times the number of compensatory hours initially accrued.
    (f)(2). These penalties are not substitutes for any other 
viable remedies including civil and criminal remedies.
    Sec. 3(a)(3). Calculations and Special Rules.--The 
legislation amends the Fair Labor Standards Act of 1938 by 
continuing Section 7(r), introduced above. This portion of 
section 7(r) outlines how and according to what rate an 
employee is compensated for relinquishing accrued compensatory 
time. Specifically the legislation offers the following:
    (r)(5). Termination of Employment.--Upon termination, an 
employee who has accrued compensatory time according to a 
prescribed rate.
    (r)(6). Rate of Compensation for Compensatory Time Off.--
When an employee relinquishes accrued compensatory time in 
exchange for traditional pay, the rate will not be less than 
the greater of the employee's normal overtime rate when the 
compensatory time was earned or the employee's final pay rate.
    (r)(7). Use of Time.--An employee who chooses to use earned 
compensatory time must be allowed to do so within a reasonable 
period of time after making a request provided that such use 
does not unduly disrupt the workplace.
    (r)(8). Definitions.--Monetary Overtime Compensation and 
Compensatory Time Off have the same meanings given to Overtime 
Compensation and Compensatory Time respectively outlined in 
subsection (o)(7).
    Sec. 3(a)(4). Notice to Employees.--The Secretary of Labor 
will provide revised materials no later than 30 days following 
the enactment of this act explaining the revisions and 
notifying employees of the amendments to the Fair Labor 
Standards Act of 1938.
    Sec. 3(b)(1). Biweekly Work Programs And Flexible Credit 
Hour Programs.--The legislation amends the Fair Labor Standards 
Act of 1938 by creating two optional programs for private 
sector employers and employees. First, biweekly work programs 
will allow employees to select how many hours they want to work 
in a given week during a 2 week 80 hour work period. Second, 
flexible credit hour programs will allow employers and 
employees to agree what hours and how many hours an employee 
will work overtime. The overtime hours are ``flexible credit 
hours'' that the employee can accrue and use whenever necessary 
to shorten a typical workday or work week. Specifically, the 
legislation inserts the following language before Section 13 of 
the Fair Labor Standards Act of 1938:

   Sec. 13A. Biweekly Work Programs And Flexible Credit Hour Programs

    13A(a)(1). Voluntary Participation.--Neither biweekly 
programs nor flexible credit hour programs may be conditions of 
employment. Both are entirely voluntary.
    13A(a)(2). Collective Bargaining Agreement.--An employee 
may only be required to participate in a biweekly work schedule 
program, a flexible credit hour program, or both in accordance 
with the terms of the collective bargaining agreement.
    13A(b)(1). Biweekly Work Programs.--An employer may 
establish biweekly work schedules. Under a biweekly work 
schedule an employee may work up to 80 hours in any combination 
over a two week period.
    13A(b)(2). Conditions.--An employer may only establish a 
biweekly work program if the program comports with relevant 
collective bargaining agreements or, in the case on non-union 
workers, with any relevant agreements or understandings. 
Employees who wish to participate in a biweekly program must 
provide written or otherwise verifiable consent of their 
participation which the employer must retain in accordance with 
section 11(c).
    13A(b)(3). Compensation for Hours in Schedule.--
Participating employees must be compensated at a rate that is 
no less than their regular rate of compensation.
    13A(b)(4). Computation of Overtime.--If an employer 
requests that an employee work hours in excess of the biweekly 
schedule or in excess 80 hours in the 2 week period, then the 
excess hours shall be considered overtime hours.
    13A(b)(5). Overtime Compensation Provision.--Any employee 
working overtime hours during a biweekly work schedule shall 
receive compensation at 1.5 times their normal rate of 
compensation or compensatory time.
    13A(b)(6). Discontinuance of Program.--An employer may 
discontinue a biweekly work program by providing its 
participating employees with 30 days written notice. A nonunion 
employee participating in a biweekly work program may withdraw 
his/her agreement or understanding to participate in the 
program at the end of any 2-week period by providing written 
notice to the employer.
    13A(c)(1). Flexible Credit Hour Programs.--An employer may 
establish flexible credit hour programs. Once an employee 
elects to participate, the employer and employee agree on the 
hours to be worked in excess of the normal schedule, 
designating those additional hours as flexible credit hours.
    13A(c)(2). Conditions.--An employer may establish a 
flexible credit hour program only if the program comports with 
any relevant collective bargaining agreements or, in the case 
of non-union workers, with any relevant agreements or 
understandings. Employees who wish to participate in a flexible 
credit hour program must provide written or otherwise 
verifiable consent of their participation which the employer 
must retain in accordance with section 11(c). Non-union 
agreements or understandings must state that the employer and 
employee will jointly designate, for any applicable workweek, 
the flexible credit hours.
    13A(c)(3). Hour Limit.--An employee may accrue up to 50 
hours of flexible credit hours during a calendar year. If an 
employee has not used his or her accrued hours by December 31, 
his or her employer has until January 31 to provide monetary 
compensation for the unused hours.
    13A(c)(4). Compensation for Flexible Credit Hours.--An 
employee shall be compensated for flexible credit hours at a 
rate no less than his or her normal compensation.
    13A(c)(5). Computation of Overtime.--If an employer 
requests that an employee, who has elected to participate in 
the flexible credit hour program, work hours, which are in 
excess of 40 hours in a given week and which have not been 
previously designated as flexible credit hours, those hours 
shall be considered overtime hours.
    13A(c)(6). Overtime Compensation Provision.--For each 
overtime hour earned under a flexible credit hour program, an 
employee will be compensated either 1.5 times his or her normal 
rate or receive compensatory time.
    13A(c)(7). Use of Time.--An employee who chooses to use 
flexible credit hours must be allowed to do so within a 
reasonable period of time after making a request provided that 
such use does not unduly disrupt the workplace.
    13A(c)(8). Discontinuance of Program or Withdrawal.--An 
employer may discontinue an established flexible credit hour 
program by providing its participating employees with 30 days 
written notice. An employee may provide an employer with 
written notice at any time that he or she is withdrawing the 
agreement or understanding to participate in a flexible credit 
hour program. An employee may provide an employer with written 
notice at any time that his/her unused flexible credit hours be 
returned as monetary compensation. An employer must remit the 
monetary compensation within 30 days of receiving the 
employee's request.
    13A(d)(1). Prohibition of Coercion.--An employer may not 
intimidate, threaten, or coerce an employee to: participate in 
either a biweekly work schedule program or a flexible credit 
hour program, to work flexible credit hours, or to use accrued 
flexible credit hours. Furthermore, the term ``intimidate, 
threaten, or coerce'' includes a promise to confer a benefit 
and the threat to effect a reprisal.
    13A(e). Definitions.--This section defines key terms used 
in the bill: Basic Work Requirement, Collective Bargaining, 
Collective Bargaining Agreement, Election, Employee, Employer, 
Flexible Credit Hours, Overtime Hours, and Regular Rate.
    Sec. 3(b)(2). Prohibitions.--Section 15(a)(3) of the Fair 
Labor Standards Act of 1938 is amended to include only minor 
changes.
    Sec. 3(c)(1). Limitations On Salary Practices Relating To 
Exempt Employees.--The legislation amends the Fair Labor 
Standards Act to include factors used to determine whether an 
employee has an exempt status. Specifically, the following is 
added to section 13:
    (m)(1). In General.--The fact that a particular employee is 
subject to a deduction in pay for absence of less than a full 
work day or less than a full pay period may not be considered 
in determining whether that employee enjoys exempt status, only 
actual reductions in pay may be considered. In addition, the 
fact that an employer compensates an exempt employee with 
overtime pay or other additional compensation shall not be 
considered in the determination of that employee's status.
    (m)(2). Effective Date.--The effective date of this 
amendment will be on the date of enactment and will apply to 
any relevant civil action in which final judgment has not been 
rendered prior to such date.
                          IX. ADDITIONAL VIEWS

    I am proud to be an original cosponsor of S. 4, the Family-
Friendly Workplace Act, which amends the Fair Labor Standards 
Act of 1938. I am a strong supporter of both employee and 
employer rights--always have been. Providing employees with 
flexible work schedules and increasing choices and options for 
their time at work--and quality time with their families--makes 
good common sense.
    The Fair Labor Standards Act of 1938 has been beneficial. 
Our society, however, has braved a storm of changes since this 
act was passed 59 years ago. Our Nation's work environment has 
changed since 1938 through the introduction of personal 
computers, high speed modems, cellular phones, pagers and fax 
machines. American suburbanization has created audio and video 
conferencing, satellite offices, and most importantly, 
``telecommuting.'' There has also been an influx of women into 
our Nation's workforce since 1938. According to the Bureau of 
Labor Statistics, 76 percent of mothers with school-age 
children now work. Moreover, 63 percent of mother and father 
households now see both parents working outside of the home--
one works to pay the bills, while the other works to pay the 
taxes. Despite such demographic and technological advancements, 
American employers and employees remain tethered to a 59-year-
old Act that forbids them from crossing that ``bridge to the 
21st century.'' This is why the Fair Labor Standards Act of 
1938 yearns for a modern-day fix.
    Some people are now working two jobs to make ends meet--the 
second at less pay than the first since labor costs are being 
held down by avoiding overtime. These jobs are generally 
inflexible and provide the employee with little or no family-
time. In addition, a large portion of these jobs are ``temp'' 
positions--which, once again, drive down the cost of paying 
overtime wages. The Family-Friendly Workplace Act provides the 
time off employees desire, while keeping the option of overtime 
wages open. It is often the case, however, that people can bank 
time easier than money. Once they get the money--they spend it. 
The average worker never sees the money anyway. I can tell you 
from experience that this generation isn't interested in 
overtime--they want the time off. The Family-Friendly Workplace 
Act goes the extra mile by giving them the ability to choose 
either one.
    Federal employees have enjoyed flexible work schedules 
since 1978--19 years! I have never ``bought into'' the notion 
that federal employees should somehow be blessed with greater 
flexibility in the workplace than private sector employees. I 
am fully confident that the provisions in S. 4 will not only 
grant our nation's workforce with choices and options that are 
family-friendly, but safeguard both employers and employees 
from the possibility of abuse. We must take action now to help 
employees balance the demands of work and family lives. I 
believe that S. 4, the Family Friendly Workplace Act, is an 
important first step in helping our Nation's working parents do 
just that.
                                                   Michael B. Enzi.
                           X. MINORITY VIEWS

                              introduction

    The majority report goes to great lengths to make the case 
that employees want more control over their work schedules. In 
the second sentence, the majority correctly points out: 
``Today, there are more working, single parents and dual 
families in America than ever before.'' The report goes on to 
note that women now account for 46% of the labor force, and 
that in 62% of the two parent families with children, both 
parents are working outside the home. These workers need more 
opportunity to take time off from their work to be with their 
children.
    We agree wholeheartedly with that description of the needs 
of today's workforce. In fact, this portion of the report makes 
a compelling case for expansion of the Family and Medical Leave 
Act (FMLA). However, when Senator Dodd and Senator Murray 
offered amendments to expand the number of employees covered by 
the FMLA and to increase the leave opportunities provided for 
by the Act, the majority unanimously voted against them. These 
amendments would have provided workers with a genuine choice to 
take time off when they needed it the most.
    The very employee witnesses whom the majority cites in its 
report--Christine Korzendorfer and Sandie Moneypenny--
emphasized the importance of employee choice in their 
testimony. Ms. Korzendorfer told the Employment and Training 
Subcommittee: ``What makes this idea appealing is that I would 
be able to choose which option best suits my situation.'' But 
those who brought Ms. Korzendorfer to testify failed to advise 
her that, under S. 4, it is her employer alone who will 
determine what scheduling flexibility is available in her 
workplace.
    Similarly, Ms. Moneypenny testified that ``if I could 
`bank' my overtime, I wouldn't have to worry about missing work 
if my child gets sick on a Monday or Tuesday.'' The problem is 
that S. 4 will not assure her that opportunity. Her employer 
will have no obligation to let her use the accrued comp time on 
the days when her child becomes ill.
    It is for these reasons that the minority opposes S. 4--it 
offers only the appearance of employee choice, not the reality. 
A close reading of the bill reveals the flaws at its heart. 
Although the minority offered amendments that highlighted these 
deficiencies, the majority refused to adopt a single one. Smoke 
and mirrors may be acceptable to the proponents of this bill, 
but not to the minority on this Committee. We unanimously 
oppose this legislation, applaud the President's promise to 
veto it, and urge our colleagues in the Senate to reject it 
outright.
No real employee choice
    There is significant interest in the idea of legislation 
that would allow an employee to make a truly voluntary choice 
to be compensated for overtime work in time off rather than in 
pay. The essence of a genuine comp time bill is the creation of 
new options for employees, not employers. This is not such a 
bill. S. 4 contains four major provisions, each of which is 
designed not to help employees, but to allow employers to 
reduce the amount of money they must pay their workers.
    While the legislation purports to let employees make the 
choice between overtime pay and comp time, it does not contain 
the protections that are necessary to insure that employees are 
free to choose and are free from reprisal.
    Under S. 4, it is the employer, not the employee, who 
decides what forms of comp time and flex time will be available 
at the workplace. There is no freedom of choice for the worker.
    There is nothing in this bill that prevents an employer 
from discriminating against a worker who refuses to take comp 
time instead of overtime pay. Under S. 4, an employer could 
lawfully deny all overtime work to those employees who want to 
be paid and give overtime exclusively to workers who will 
accept comp time in lieu of pay. This is not freedom of choice 
for the worker.
    An employee may want a particular day off so that she can 
accompany her child to a special school event or to an 
appointment with the pediatrician. However, nothing in this 
legislation requires the employer to give the employee the day 
she requests. This bill gives the employer virtually 
unreviewable discretion to determine when a worker can use her 
accrued comp time. Here, too, there is no freedom of choice for 
the worker.
    The failure of the Majority's bill to provide freedom of 
choice for the worker on these crucial issues cannot be excused 
an unintentional. Senator Kennedy offered an amendment which 
would have expressly made it unlawful for an employer to 
discriminate in awarding overtime based upon an employee's 
willingness to accept compensatory time instead of overtime 
pay. It was defeated 8 to 10 on a party line vote. Senator 
Wellstone offered an amendment affording employees the right to 
determine when they would take the time off which they had 
earned. It would have required an employer to permit employees 
to use accrued compensatory time for any of the reasons set 
forth in the FMLA, and for any other reason if the time off was 
requested more than two weeks in advance and the absence would 
not cause substantial and grievous injury to the employer's 
business. This, too, was rejected 8 to10 on a party line vote. 
On these critical points, S. 4 does not empower workers to decide, it 
empowers their bosses.
    S. 4 contains much more than a badly flawed comp time 
provision. It contains a section entitled ``Biweekly Work 
Program'' which abolishes the 40 hour workweek. The bill 
substitutes a provision that would allow an employer to work 
employees up to 80 hours in a single week without paying a cent 
of overtime as long as the employer gave them the next week 
off. Similarly, the employer could schedule employees for 60 
hours one week and 20 the next--all paid at the employee's 
regular hourly rate. This provision gives workers nothing extra 
for overtime hours. Moreover, irregular and shifting schedules 
are the antithesis of a family-friendly proposal. Obviously the 
majority has not considered the difficulties of arranging child 
care for such an erratic schedule.
    The bill also contains a provision entitled ``Flexible 
Credit Hours.'' Under this provision, an employee who works 
hours that are ``in excess of the basic work requirement'' 
would no longer be entitled to overtime. Instead, the employee 
would get an equivalent amount of hours off at a later 
unspecified time. Under existing law, the employee would be 
paid time and a half for such excess hours. Under comp time, 
the employee would at least receive one and one half hours of 
time off for every excess hour worked. However, ``flexible 
credit hours'' purports to offer the employee a new 
alternative--work the extra hours but receive only one hour off 
for each such hour worked. It is difficult to believe that any 
employee would choose to participate in such a plan unless he 
or she was given no alternative.
    The last feature of this bill applies to salaried 
employees. Under current law, they do not receive overtime when 
they work extra hours and their pay cannot be cut for an 
absence of less than a full day. S. 4 proposes to change that 
rule. Salaried employees would still receive no overtime, but 
they could be subject to deductions in their pay if they were 
absent. The fact that such an employee could have pay deducted 
if he missed five hours of work in one week could no longer be 
used to prove that he was an hourly employee entitled to 
overtime if he worked 5 hours extra another week. This is 
patently unfair, and in no way enhances workers' freedom of 
choice.
    A careful analysis of S. 4 demonstrates that its title 
ought to be ``The Pay Reduction Act of 1997.'' The inevitable 
result of its enactment would be to require employees to work 
longer hours for less pay. As the acting Secretary of Labor has 
stated, S. 4 would ``obliterate the principle of time-and-a-
half for overtime'' and would ``destroy the 40 hour workweek.''
    Under this bill, employers would no longer be required to 
pay time and a half to hourly employees who work overtime. In 
fact, employers would no longer be required to pay anything for 
overtime work. Instead, employers could simply give an hourly 
employee who works overtime an IOU, promising the employee 
additional time off at some indeterminate time in the future. 
Employers would even be allowed to allocate time off at the 
straight time rate: an hour off for each overtime hour worked. 
This is not family friendly--it is a pay cut, pure and simple.

Those who earn overtime include the most vulnerable workers

    The majority claims that none of these potential abuses 
will occur because employees must consent to any of the 
flexible arrangements provided in S. 4. This assertion ignores 
the reality that, in many workplace, employees lack of any 
bargaining power. They can be discharged at will by their 
employers and easily replaced. Employees in such workplaces--
and there are millions of them across the country--cannot say 
``no'' when they are asked to accept comp time in place of 
overtime pay. Indeed, the very workers who currently rely most 
heavily on overtime pay are the employees most vulnerable to 
coercion and retaliation by their employer.
    Thus, to understand the real world impact of this bill, we 
must look at the workers who are currently depending on 
overtime pay to make ends meet. Overwhelmingly, they are 
working for low wages. Department of Labor statistics reveal 
that one-fourth of workers earning overtime earn under $12,000 
per year. 44 percent of workers who depend on overtime earn 
$16,000 per year or less, and 61 percent earn $20,000 per year 
or less. More than 80 percent of overtime recipients have 
annual earnings of less than $28,000 per year. And, according 
to the Bureau of Labor Statistics, nearly 8 million of them are 
already holding more than one job just to make ends meet. 
400,000 Americans, more than half of them women, are working 
two jobs in the food service industry. Nearly 200,000 men and 
women with multiple jobs work in cleaning and maintaining 
buildings. These are classic low-wage jobs, where workers need 
every dollar of pay they can earn. Furthermore, overtime pay 
makes up a significant percentage of many hourly workers' take-
home pay. When they work overtime, manufacturing workers find 
that an average of nearly 15 percent of their take-home pay is 
attributable to the extra hours.
    The workers who will be affected by this bill are hard-
working, productive members of American families. They are also 
among the least-educated workers in the country. 43 percent of 
workers earning overtime have only a high school diploma.An 
additional 14 percent have not graduated from high school. These are 
people who need every dollar they can earn just to survive in today's 
economy. They are men and women who are supporting families. If this 
bill becomes law, many of them will lose overtime pay that they depend 
on to pay the rent, buy food, and provide clothing for their children. 
If this bill passes, employers will give all the overtime work to 
employees who agree to take comp time instead of overtime pay. There 
will be no overtime work for those who insist on being paid. Under S. 
4, such discrimination in awarding overtime is perfectly legal.
    Millions of those who rely on overtime earn only the 
minimum wage. By and large, these are not teenagers working 
jobs after school for pocket money. About 60 percent of minimum 
wage workers are married. They earn an average of 51 percent of 
their families' earnings. One-third of minimum wage earners are 
the sole breadwinners in their families. 60 percent are women. 
2.3 million children rely on parents who earn the minimum 
wage--parents who hope their children don't get sick because 
they can't afford a doctor.
    The vulnerable nature of workers who earn overtime is not a 
theoretical or patronizing concept. Employers violate current 
overtime provisions at an alarming rate. The Department of 
Labor conducted over 42,000 investigations under the Fair Labor 
Standards Act in 1996. One-third of those investigations, 
13,687, disclosed overtime violations. The Department ordered 
over $100 million in back pay for 170,000 workers who were 
victims of these overtime violations. These figures do not even 
take into account a backlog of 16,000 unexamined complaints 
pending at the Department at the end of 1996.
    In testimony before the Employment and Training 
Subcommittee on February 13, 1997, the President of the United 
States Chamber of Commerce characterized these 170,000 
victimized employees as a ``microdot'' on the economy. In 
contrast, most of us, Republicans and Democrats alike, were 
shocked at the magnitude of these numbers, and the suffering 
they represent.
    The comp time provisions of S. 4 will apply to industries 
where these noncompliance problems have become endemic, but S. 
4 authorizes no additional funds for wage and hour enforcement. 
Garment workers, seasonal employees and temporary workers are 
all covered by this bill. Yet Department of Labor enforcement 
efforts find that more than half of the garment shops in the 
United States unlawfully pay less than the minimum wage, fail 
to pay overtime, or use child labor. If S. 4 becomes law, 
employers in these industries will use its provisions to coerce 
workers into accepting compensatory time instead of overtime 
wages.
    Abuse of the overtime provisions is not restricted to fly-
by-night garment shops and undocumented workers. The Employment 
Policy Foundation, an employer-supported research group, 
estimates that workers would receive an additional $19 billion 
each year if all employers complied with the law. The resources 
of the Department of Labor are already inadequate to police all 
the violations. Those resources certainly are not equal to the 
task of ensuring compliance with a far more complex set of comp 
time provisions.

Current law permits many flexible work schedules

    According to the majority, the FLSA itself ``prevents 
employers from accommodating employee requests for greater 
flexibility in scheduling.'' In fact, however, it is American 
employers, and not the law, which prevents flexible scheduling.
    If employers want to provide family-friendly work 
schedules, they can do so today. The key is the 40-hour 
workweek. While employees normally work five eight-hour days a 
week, many more flexible arrangements are possible. A February 
11, 1997 letter from the Department of Labor to Senator Kennedy 
provides compelling evidence of the many flexible arrangements 
available under current law. For example, the FLSA permits 
employers to schedule workers for four ten hours days a week 
with the fifth day off, and pay them the regular hourly rate 
for each hour. Under these circumstances, according to the 
Department of Labor, ``no overtime premium pay would be due for 
that week.'' Similarly, employers can arrange a work schedule 
of four nine-hour days plus a four-hour day on the fifth day. 
Once again, states the Department of Labor, ``the FLSA would 
not require payment of any overtime premium pay for that 
workweek.'' In addition, under current law, some employees 
could choose to vary their hours enough to have a three day 
weekend every week or every other week.
    Employers also can offer genuine ``flex time.'' This allows 
employers to schedule an 8-hour day around ``core'' hours of 
10:00 A.M. to 3:00 P.M., and let employees decide whether they 
want to work 7:00 A.M. to 3:00 P.M. or 10:00 A.M. to 6:00 P.M. 
This too, costs employers not a penny more.
    But the record is clear. Only a tiny fraction of employers 
use these or the many other flexible arrangements available 
under current law. A 1991 study conducted by the Bureau of 
Labor Statistics found that only 10% of hourly employees are 
permittedto use flexible schedules. Current law offers a host 
of family-friendly, flexible schedules--yet few employers provide them. 
It is not the FLSA that prevents employers from offering employee 
flexibility. The problem workers confront lies not in the inflexibility 
of the law, but rather in the inflexibility of too many employers.

The false analogy to the public sector

    To buttress their claim that S. 4 would simply enhance 
employee free choice, the majority relies on a supposed analogy 
to the public sector, where comp time has been permitted for 
more than a decade. The majority asserts that comp time has 
worked well for public employees, and then assumes that the 
same would be true in the private sector.
    There is no evidence before this Committee as to how comp 
time is working in the public sector. A recent report by 
Professor Lonnie Golden for the Economic Policy Institute finds 
that, in fact, ``many [public] employees carry a large number 
of banked comp time hours'' and ``have difficulty obtaining 
their employers' permission to use their comp time hours when 
they need them.'' As a result, Professor Golden concludes, 
public employees are `` `loaning' hours to their employers 
interest free.'' \1\
---------------------------------------------------------------------------
    \1\ Golden, Family Friend or Foe? Working Time, Flexibility and the 
Fair Labor Standards Act at 2 (1997).
---------------------------------------------------------------------------
    But even if the majority's premise were sound, it would not 
follow that extending comp time and flexible credit hours to 
the private sector makes sense. For as then-Governor John 
Ashcroft explained in 1985, when the Senate was considering 
whether to permit comp time in the public sector, ``State and 
local governments are qualitatively different in structure and 
in function from private business.'' \2\ He continued, ``A key 
distinction is that state governments do not compete with each 
other or the private sector. State and local government workers 
also are set off from their private-sector colleagues by the 
protection they enjoy through the government process itself. * 
* * An inherent distinction exists between state and local 
governments and private business with regard to the vital 
public functions state and local governments serve and the 
legal constraints under which they operate.'' Senate Labor 
Subcommittee Hearings at 57, 64.
---------------------------------------------------------------------------
    \2\ Hearings Before the Subcommittee on Labor of the Senate 
Committee on Labor and Human Resources on the Fair Labor Standards 
Amendments of 1985, 99th Cong. 1st Sess. 51 (1985).
---------------------------------------------------------------------------
    Most public sector employees have some form of civil 
service protection, and can only be discharged or demoted for 
cause established at an adversarial hearing. The job security 
they enjoy is far greater than an employee in the private 
sector, who can be terminated at will by his or her employer. 
In addition, some 60% of public sector employees are protected 
by the dispute resolution procedures of collective bargaining 
agreements, while only about 14% of private sector workers 
enjoy such benefits.
    Thus, even if it were true that comp time is working 
successfully in the public sector--and that is far from clear--
it would not follow that the same would be true in the public 
sector.

The real motivation

    Further, the FLSA was amended in 1985 to allow public 
sector comp time principally to allow state and local 
governments to avoid the costs of overtime pay. Historically, 
state and local governments had not been subject to the 
overtime provisions of the Fair Labor Standards Act. When that 
was reversed by a Supreme Court decision, those governments 
were faced with substantial new costs. They immediately sought 
relief from Congress so that they could avoid the costs of 
overtime pay. For example, the National League of Cities 
claimed at the time that, without relief, ``the cost of 
complying with the overtime provisions of the FLSA * * * will 
be in excess of $1 billion for local governments.'' \3\ The 
National Association of Counties reported that ``It will cost 
States and localities in the billions of dollars to maintain 
current service levels under this ruling. * * * We need 
flexibility to use compensatory time and volunteers as 
alternatives to meeting the public's demand for increased 
services when we are faced with budget shortfalls.'' Id. at 204 
(emphasis added). That estimate--and similar dire warnings from 
the States and counties--led to the enactment of comp time 
legislation in order, as Senator Hatch put it, ``to prevent the 
taxpayers in every single city in America from suffering 
reduced services and higher taxes.'' \4\ These candid remarks 
belie the pious claims now being heard that comp time is being 
extended to the private sector to benefit employees' families, 
rather than employers' balance sheets.
---------------------------------------------------------------------------
    \3\ Hearing Before the Subcommittee on Labor Standards of the House 
Committee on Education and Labor on the Fair Labor Standards Act, 99th 
Cong. 1st Sess. at 83 (testimony of then-Mayor Voinovich) (1985).
    \4\ ____ Cong. Rec. 28988 (Oct. 24, 1985).
---------------------------------------------------------------------------
    The real impetus for S. 4 was inadvertently betrayed by a 
representative of the National Federation of Independent 
Businesses in testimony at the Employment andTraining 
Subcommittee hearing on February 13, 1997: ``Real small businesses * * 
* our members cannot afford to pay their employees overtime. This is 
something that they can offer in exchange that gives them a benefit.'' 
Once more, the intended beneficiary is the employer, not the employee.

                      section-by-section analysis

    The majority argues that our opposition to the comp time 
provisions of S. 4 is unreasonable. They argue that most 
employers get along well with their employees, and that 
employers will work in a spirit of cooperation to implement a 
positive and non-discriminatory comp time program, even if this 
bill provides no explicit protections for employees rights. We 
agree that many employers get along well with their employees. 
Further, we assume that many employers desire flexible 
scheduling options in order to help their employees meet family 
obligations without putting careers at risk.
    However, Congress must not make major changes in the 
nations' labor laws without considering their impact on all 
workers. Our first duty is to protect the sizable minority of 
employees whose rights are threatened with violation. A careful 
analysis of S. 4 shows that it is unacceptable because it fails 
to include a full range of critically important protections.

                               comp time

No guarantee that comp time will be voluntary

    Supporters of S. 4 claim that the bill provides a truly 
voluntary system of compensatory time: a system in which comp 
time can only be provided when an employee agrees to accept 
time off instead of overtime pay. But the bill in fact provides 
very few safeguards to ensure that comp time programs will be 
truly voluntary, no language protecting employees against 
discrimination on the basis of their decision to earn overtime 
pay instead of comp time, and inadequate provisions giving 
employees a right to use their comp time when they actually 
need it.
    The bill states that, for workers not represented by a 
union pursuant to section 9(a) of the National Labor Relations 
Act,\5\ comp time can only be offered pursuant to ``an 
agreement or understanding arrived at between the employer and 
employee,'' if this agreement or understanding was entered into 
``knowingly and voluntarily'' by the employee. The bill further 
states that the employee must affirm in a ``written or 
otherwise verifiable statement'' that he or she has chosen to 
receive comp time in lieu of overtime pay.
---------------------------------------------------------------------------
    \5\ As drafted, S. 4 permits employers to offer comp time programs 
even when doing so conflicts with existing collective bargaining 
agreements. See section entitled ``No exemption for airline, railroad 
or construction unions.''
---------------------------------------------------------------------------
    However, the bill does not require that a comp time 
agreement must be provided to employees in writing, and it does 
not require that an employee's voluntary request to earn comp 
time must also be in writing. The absence of a requirement for 
written documentation opens a real possibility for abuse. 
First, if comp time agreements are not written down, employees 
will not be able to enforce them. The agreements will become 
``moving targets'' that can be reinterpreted at the employer's 
convenience, and applied inconsistently to different employees 
who have substantially the same duties. Second, if an 
employee's voluntary request for comp time does not have to be 
documented in writing, then an employer can claim that an 
employee has requested comp time, even if the employee prefers 
overtime pay.
    This bill is unacceptable because it cannot provide even 
minimal assurances that employees will enter into comp time 
agreements only with a complete understanding of their terms 
and an honest willingness to do so. At a minimum, written 
documentation of comp time requests and agreements must be 
required. Better still, the Department of Labor should be given 
the authority to issue regulations specifying the content of 
written comp time agreements. In the absence of either 
protective mechanism, the majority's construct is totally 
inadequate.

No exemption for airline, railroad or construction union contracts

    As drafted, S. 4 does not apply to workforces represented 
by ``a labor organization recognized as provided in section 
9(a) of the National Labor Relations Act.'' This exclusion 
applies to many unionized workplaces, but fails to acknowledge 
the existence of collective bargaining relationships in many 
others. For example, employees in the railroad and airline 
industries are heavily organized--but they are covered by the 
Railway Labor Act, 45 U.S.C. sections 151 (railroad employees) 
and 182 (airline employees), and therefore are expressly 
excluded from coverage under the National Labor Relations Act. 
See 29 U.S.C. section 152(3) (excluding ``any individual 
employed by an employer subject to the Railway Labor Act'' from 
definition of ``employee'' covered under National Labor 
Relations Act).
    Similary, workers in the construction industry have a long 
tradition of unionization. However, building trades unions do 
not typically seek or obtain recognition under section 9(a) of 
the National Labor Relations Act. Instead, such unions 
negotiate contracts with employers under section 8(f) of the 
NLRA, 29 U.S.C. section 158(f) (entitled ``Agreement covering 
employees in the building andconstruction industry'').
    By its terms, this bill would permit an employer 
unilaterally to impose a comp time program on workers in the 
airline, railroad and construction industries--even if those 
workers were represented by a union that had negotiated a 
collective bargaining agreement on their behalf. An employer 
could bypass the union, create and implement a comp time system 
for employees whose collective bargaining agreement expressly 
prohibited such a system, and nothing in S. 4 would make this 
unlawful. The hundreds of thousands of workers represented by 
unions in these sectors should not be subjected to inconsistent 
and inequitable treatment, yet that is precisely what S. 4 
would permit.

No bar on discriminatory practices

    The bill does not include a bar on such discriminatory 
practices as assigning overtime work only to employees who 
choose comp time off instead of time-and-a-half pay. Absent a 
strong statutory deterrent against discrimination, many 
employers will distribute overtime hours only to workers who 
agree to take comp time instead of insisting on overtime pay. 
Even assuming, arguendo, that those employees who choose comp 
time do so voluntarily, many other employees who desire 
overtime pay will never get the opportunity to earn it. They 
will lose the overtime that they are currently earning and 
relying upon to support their families. For them, the freedom 
of choice allegedly offered by S. 4 will be in fact a cruel 
joke.

No exemption for vulnerable workforces

    The bill does not exempt classes of employees, occupations, 
or industries that have the highest incidences of, and are most 
susceptible to, overtime violations. Nor does it allow the 
Government to exempt specific employers from the bill who are 
guilty of violating the law. This is a major flaw.
    In certain industries, such as the garment industry, abuse 
is entrenched. The Labor Department has found that over half of 
the garment shops in the U.S. fail to pay overtime, use child 
labor, or pay less than the minimum wage. In just six months in 
1996, the Labor Department assessed more than $1.5 million in 
back wages for labor law violations by garment firms. More than 
$345,000 in civil damages were also assessed during this 
period. No one would reasonably suggest that the garment 
industry is ready for the flexibilities provided by this bill. 
Why isn't this industry exempted?
    The National Federation of Independent Businesses testified 
before the Employment and Training Subcommittee that America's 
small businesses ``can't afford to pay overtime,'' but that S. 
4 ``is something they can offer in exchange that gives 
[employees] a benefit.'' The inference could not be clearer: 
small business owners will pressure their employees to accept 
comp time instead of overtime pay. This is not an employee 
benefit, but rather a way for employers to cut costs.
    The bill does not even exclude the most notorious 
employers--those with records of serious and repeated FLSA 
violations--from offering comp time. For those employers, S. 4 
will constitute an open invitation to enage in new forms of 
employee abuse. This is shameful public policy.

No right to use comp time when employees need it

    S. 4 provides that an employee who requests the use of comp 
time off shall be permitted to use the comp time ``within a 
reasonable period,'' if it ``does not unduly disrupt the 
operations of the employer.'' Nowhere in the bill are the terms 
``reasonable period'' and ``unduly disrupt'' defined. In 
practice, an employee could give his employer two weeks notice 
of his intent to take comp time off to see his daughter's 
school play, and have his request denied on grounds of 
insufficient notice. Similarly, if an employee plans to take 
her child to a dentist appointment during a school vacation, 
her employer could claim that her use of comp time would 
``unduly disrupt'' business operations, without even explaining 
why.
    Compensatory time is a form of earned, accrued 
compensation. Employees should be able to use it on demand with 
a reasonable period of notification, unless its use would cause 
substantial and grievous injury to the employer's operations. 
Clearly, an employee should be able to use comp time for any of 
the same reasons that qualify for leave under the Family and 
Medical Leave Act.
    This bill establishes a comp time program for hourly wage 
workers, who typically have little bargaining power vis-a-vis 
their employers. The bill fails to acknowledge this critical 
fact, and fails to vest employees with an express right to use 
comp time that they have earned at the time of their choice. 
The bill does not even provide that employee requests made with 
reasonable notice shall be granted by employers. In practice, 
S. 4 will result in time off being scheduled at the employer's 
convenience, not the employee's.
    The majority clearly errs in stating that ``this portion of 
the bill is strikingly similar to the provisions of the FMLA 
and the relevant regulations.'' The FMLA recognizes two types 
of medical leave--unforeseen, serious illnesses for which the 
employee need make no effort to accommodate the employer, and 
foreseeablemedical treatment. In the latter situation, the 
employee must make a ``reasonable effort'' to schedule treatment at a 
time that doesn't ``unduly disrupt'' the employer's operations. If the 
employee's reasonable efforts fail, he or she can still take the leave 
despite the resulting inconvenience to the employer. The employer is 
expressly prohibited from taking any punitive action against the 
employee based upon the leave.
    Under the FMLA, the ultimate decision on the timing of the 
leave rests with the employee. In marked contrast, under S. 4, 
the decision rests with the employer. Management determines 
what is ``reasonable'' and when time off would be ``unduly 
disruptive.'' The employee has little recourse. To claim that 
S. 4 is ``strikingly similar'' to the FMLA is grossly 
inaccurate.

No penalties for denying comp time

    Under S. 4, if an employee gives reasonable notice that he 
or she intends to use comp time, and if the comp time would not 
disrupt the employer's operations, the employer is supposed to 
allow the comp time to be used. Unfortunately, the bill 
provides no penalties to ensure that an employer will honor 
reasonable requests for comp time. An employer can deny comp 
time for any reason, and there is nothing that the employee can 
do about it--even though the comp time belongs exclusively to 
the employee.
    This is irrational, and it is inconsistent with the 
enforcement provisions of laws such as the Family and Medical 
Leave Act. If an employer denies an employee's reasonable 
request to take FMLA leave, the employee can recover damages, 
including money expended on child care and compensatory 
damages. The FMLA improves employee morale and productivity 
only because it is both credible and enforceable. This bill, by 
contrast, is misleading and non-enforceable.

Too many hours of comp time can be accrued

    Given the danger of employer insolvency, a ceiling of 240 
hours is far too high. That is six full weeks of work. For an 
employee earning $10 an hour, 240 hours means $2,400. That 
would constitute some fifteen percent of the employee's annual 
earnings. Even the Republicans in the House of Representatives 
recognized that 240 hours was unacceptably high, when they 
amended H.R. 1 to provide a cap of 160 hours of bankable comp 
time. The administration has proposed a limit of 80 hours for 
accrued comp time. Given the wholly inadequate safeguards in S. 
4, the level of financial risk to employees must be minimized 
to the greatest extent possible.

No protection of accrued comp time during business failure or job loss

    Accumulated compensatory time is an earned benefit, 
accepted instead of overtime pay. It belongs exclusively to the 
employee. But S. 4 does not contain sufficient protections to 
ensure that workers whose employers go bankrupt will have some 
claim on their unpaid comp time.
    In 994, 845,300 American businesses filed for bankruptcy, 
according to the Administrative Office of the U.S. Courts. In 
each of the three preceding years, the number of bankruptcies 
was even higher: 918,700 in 1993; 972,500 in 1992; and 880,400 
in 1991. Some industries are unusually susceptible to business 
failure. In 1994, the rate of business failure in the garment 
industry was 146 per 10,000 firms: twice the national average. 
In construction, the rate of business failure was 91 per 10,000 
firms.
    Since S. 4 allows employees to ``bank'' up to 240 hours of 
comp time, some workers could lose up to six weeks of pay when 
their companies go out of business. That's $1,440 for a worker 
earning $6 per hour: money for rent, food, and school clothing 
for the children. If a financial institution goes out of 
business, its customers' accounts are protected by Federal 
Depositors' Insurance. People who deposit their overtime 
earnings into a ``comp time bank'' deserve the same level of 
protection when their companies go out of business. It is 
unacceptable not to treat employees' accumulated compensatory 
time as unpaid wages during a bankruptcy.

            biweekly work programs and flexible credit hours

    Under S. 4, it is up to the employer to decide whether to 
offer comp time to employees. Many will opt not to do so, given 
that the bill also authorizes employers, in lieu of paying for 
overtime, to offer ``biweekly work programs'' and ``flexible 
credit hour programs.''
    Like the comp time sections, the provisions authorizing 
biweekly work programs and flexible credit hours would free 
employers from any obligation to pay employees who work 
overtime. Like comp time, these programs would permit employers 
to substitute IOUs instead, promising time off the following 
week (in the case of a biweekly work program) or at some future 
point in time (in the case of flexible credit hour programs). 
But unlike comp time, employees who work overtime as part of a 
biweekly work program or a flexible credit hour program would 
earn only one hour of future time off for each overtime hour 
worked. In other words, these sections would effectively repeal 
the guarantee of premium pay--time and one-half--for overtime 
work. A clearer provision for cutting worker pay is difficult 
to imagine.
    The threat that these provisions pose to the 40 hour 
workweek--and to stablework hours--is self-evident. The 
biweekly work program would permit an employer to work an employee 50, 
60 or even 70 or more hours in a single week without paying a dime in 
overtime. The employer's only obligation would be, for every extra hour 
worked, to give the employee an hour off the following week. The 
flexible credit hour program would permit the same sort of variability 
in hours, and require the employer only to promise a future hour off 
for each overtime hour worked. There are few employees anywhere who 
will view such on-again, off-again work schedules as advantageous--or 
family friendly.
    To be sure, the biweekly work programs and flexible credit 
hour programs purport to require employee agreement, just as 
comp time does. But the provisions supposedly protecting free 
choice suffer from all of the flaws of the provisions relating 
to comp time.
    It bears repeating that under S. 4 it is up to the employer 
to decide in the first instance which types of so-called 
``family friendly'' policies to implement. And it is difficult 
to understand why any employer would offer comptime--with the 
requirement of time-and-a-one-half off--when the employer can 
offer biweekly work weeks and flexible credit hours and provide 
only one hour off for each overtime hour worked. Thus, these 
provisions of the bill would, in practice, trump the comp time 
provisons--and trump the requirement of time and one half for 
overtime work.

                   pay docking for salaried employees

    The FLSA requires overtime pay only for covered (``non-
exempt'') employees. The Act exempts workers employed in a 
``bona fide executive, administrative or professional 
capacity.'' 29 U.S.C. 213(a)(1). As of 1990, the Labor 
Department estimated that there were 21.9 million exempt 
workers.\6\
---------------------------------------------------------------------------
    \6\ Employment Standards Administration, supra n. ____, at Table 7.
---------------------------------------------------------------------------
    For at least four decades, the Department of Labor--through 
Republican and Democratic administrations alike--has held the 
view that the FLSA exemption excludes only salaried, as 
distinguished from hourly, employees. The Department has 
likewise held the view, for over 40 years, that a salaried 
employee is, by definition, one who ``regularly receives * * * 
a predetermined amount * * * which amount is not subject to 
reduction because of variations in the * * * quantity of the 
work performed.''
    In practical terms, this means that while salaried 
employees do not receive overtime when they work extra hours, 
they are entitled to take part of a day off, without loss of 
pay, when pressing family needs arise. Just a few weeks ago, 
the United States Supreme Court sustained the DOL's regulations 
and held that employees are not exempt if their pay is subject 
to reduction for missing part of a day's work.\7\ Under current 
law, then, salaried employees--in lieu of receiving overtime 
pay--at least enjoy the flexibility that the majority claims to 
value so highly as a means of balancing work and family.
---------------------------------------------------------------------------
    \7\ Auer v. Robbins, 65 U.S. L.W. 4136 (Feb. 19, 1997).
---------------------------------------------------------------------------
    Remarkably, however, this so-called Family Friendly 
Workplace Act would take away this very flexibility for these 
salaried employees. S. 4 would create a new ``heads-I-win, 
tails-you-lose'' world in which a salaried employee would have 
no right to overtime for extra work, but could be subject to 
having her pay docked if the employee took an hour off to bring 
her child to the doctor, or to meet with the child's teacher. 
Indeed, under the majority's bill, an employee who worked 60, 
70 or even 80 hours in a week could still suffer a pay 
reduction if on one day in that week the employee worked less 
than a full day.
    Once again, then, the majority's bill turns out to be 
employer-friendly, but family-hostile.

                         democratic amendments

Family and Medical Leave Act amendments--Senators Dodd and Murray

    S. 4 does not solve the problems of working families. 
Although it purports to offer more time for employees to spend 
time with their families, it would actually help only a small 
group of employees who would qualify for compensatory time: 
employees who are not exempt from the FLSA; who work overtime; 
whose employers voluntarily agree to offer comp time; and who 
themselves agree to participate in the comp time program. Most 
importantly, S. 4 offers no guarantees to employees: it 
provides no meaningful penalty for employers who deny 
employees' requests for comp time, and it fails to ensure that 
employees can use comp time when they need it.
    Unlike S. 4, the FMLA expansion amendments offered by 
Senators Dodd and Murray would guarantee more employees more 
time to spend with their families. Senator Dodd's amendment 
would lower the threshold of the FMLA to apply to employers of 
at least 25 employees. Senator Murray's amendment would provide 
24 hours leave per year, within the 12 weeks currently 
guaranteed by the FMLA, for employees to participate in 
children's schools activities or literacy training under a 
family literacy program.
    Since its enactment in 1993, the FMLA has proven by a 
successful track recordthat it provides real flexibility to 
American employees. The FMLA guarantees covered employees 12 weeks 
unpaid leave each year to care for a newborn or newly adopted child or 
a seriously ill family member, or to recover from their own serious 
health conditions. It applies to employers of at least 50 employees, 
covering more than 57% of this country's private workforce, or more 
than 55 million private employees, and 66% of the entire workforce, 
including government employees. More than 12 million working Americans 
have taken family or medical leave since the FMLA became law.
    Businesses have found it easy and inexpensive to comply 
with the FMLA. According to the bipartisan Family Leave 
Commission, 93.3% of covered worksites experienced no or only 
small increases in benefit costs; 94.8% experienced no or only 
small increases in hiring and training costs; 89.2% experienced 
no or small increases in administrative costs; and 98.5% 
experienced no or only small increases in other costs. In 
addition, 92% of covered worksites found it very or somewhat 
easy to determine employee eligibility; 76% found it very or 
somewhat easy to maintain additional records. The FMLA's 
success for both employees and employers is reflected in the 
overwhelming bipartisan support the law has received: according 
to the LA Times, 82% of Americans support the FMLA. However, 
the FMLA is not working for everyone: due to the 50-employee 
threshold, more than 41 million private employees--almost 43% 
of the private workforce--are not protected by FMLA.
    By lowering the threshold to 25 employees, Senator Dodd's 
amendment would cover 71% of the private workforce, adding more 
than 13 million private employees for a total of more than 68 
million private employees across the United States.
    This amendment, which would provide a job-guaranteed leave 
to more working Americans, would not hurt businesses. The FMLA 
already covers small worksites that have fewer than 50 
employees if those worksites are part of a larger company with 
at least 50 employees within a 75-mile radius. In fact, 
according to the Family Leave Commission, the majority of the 
58,000 covered worksites of 25-49 employees found it easier to 
comply with the FMLA than larger employers. 93% of these 
worksites found it very or somewhat easy to determine worksite 
coverage, and 98% of these worksites found it very or somewhat 
easy to determine employee eligibility.
    Senator Murray's amendment, which would allow employees to 
take leave to participate in children's school activities or 
literacy training under a family literacy program, would give 
employees the time they need to spend with their children, 
regardless of hours worked overtime or agreements between 
employers and employees. Attending to children's education is 
critical to their development. Studies show that attending 
parent-teacher conferences may significantly influence 
children's academic performance. Parental involvement is more 
important than family education level or income in determining 
student success. Under current law, however, working parents 
have to risk losing their jobs if they take time off to do the 
right thing. 28% of employed parents report that they have 
problems getting time off to attend school activities; 23% of 
employed parents report problems getting time off to meet with 
their children's teachers. Not surprisingly, in light of those 
statistics, 40% of employed parents believe they aren't 
devoting enough time to their children's education. Further, 
89% of company executives--the very groups now supporting S. 
4--identified the biggest obstacle to school reform as the lack 
of parental involvement. Senator Murray's amendment would give 
parents the flexibility they need to change those sobering 
statistics.
    A large majority--86%--of American voters support expansion 
of the FMLA. Yet this Committee rejected Senators Dodd's and 
Murray's amendments to do just that by party-line votes of 8 to 
10.

Guaranteeing real employee choice--Senator Wellstone's amendment

    S. 4 contains sections that are totally unacceptable in 
concept, such as those creating an 80-hour, biweekly work 
period and so-called ``flexible credit hours''. Those changes 
would cut workers' pay and undercut the basic principle of a 
regular 40-hour work-week, turning back the clock on essential 
labor protections. But the compensatory time provisions of the 
bill are also fundamentally flawed. Minority members of the 
Committee offered a number of amendments aimed at improving S. 
4 in an effort to highlight these critical deficiencies, taking 
majority members at their word that flexibility and increased 
control over work schedule for employees is a desirable goal. 
Unfortunately, each amendment was defeated on a party-line 
vote, despite acknowledgement by majority members of legitimate 
concerns raised during debate of the amendments.
    Senator Wellstone offered the first such amendment, a 
provision to ensure that an employee could actually use earned 
comp time when he or she really wants or needs to use it. With 
reasonable exceptions, employees should be able to use comp 
time at their discretion. After all, comp time is earned 
compensation, not vacation time or a gift from the employer. 
First, the amendment would have given an employee the right to 
use accumulated comp time for any of the reasons enumerated in 
the Family and Medical Leave Act, such as a serious family 
illness or a new child in the family.Second, the amendment 
would have required employers to meet a much higher standard in order 
to deny an employee's request to use earned comp time when the employee 
gives at least two weeks' notice. If the employee gave two weeks' 
notice, an employer could only deny the request if the employer could 
show that the requested time off would cause ``substantial and 
grievous'' injury to the business. Finally, if an employee gave less 
than two weeks' notice of an intent to use comp time, the amendment 
permitted an employer to deny that request if granting it would 
``unduly disrupt'' the employer's operation.
    The majority rejected this amendment, which goes to the 
heart of whether comp time is actually intended to provide 
flexibility to employees, on a party-line vote. The majority 
thereby demonstrated that S. 4 apparently is not intended to 
allow employees real flexibility. If an employee cannot take 
earned time off on short notice in case of a family illness, 
and cannot plan in advance to use earned comp time, then where 
is the choice and flexibility for employees and their families 
which the bill purports to offer? If an employer can decide 
when the employee can use earned comp time, the bill not only 
reserves flexibility exclusively for employers, it creates a 
new ability for employers actually to delay providing earned 
compensation for hours previously worked by denying use of 
earned comp time for non-substantial reasons.

Ensuring nondiscrimination--Senator Kennedy's amendment

    Senator Ashcroft, the principal sponsor of S. 4, testified 
before the Subcommittee on Employment and Job Training on 
February 13, 1997 that ``to safeguard against abuse, this bill 
would prohibit an employer from forcing employees to accept 
compensatory time off in lieu of financial compensation. * * * 
This bill in no way alters the 40 hour work week [because] no 
employee can be forced to work such a [flexible] schedule nor 
could working flexible schedules be made a condition of 
employment.''
    Senator Ashcroft also conceded that abuses of flexible 
schedules can only be deterred by strong enforcement provisions 
in the bill itself. Accordingly, in the same hearing, he called 
for quadruple damages for employers who violate the provisions 
of S. 4: ``If the employee says, No thanks; I like 40 hours a 
week, and if you intimidate me into doing this, there are 
quadruple penalties for you * * * ''
    But the actual text of S. 4 provides no quadruple damages 
for violators, despite Senator Ashcroft's stated preference for 
them. Worst of all, the bill fails to prohibit employers from 
discriminating against workers for their choice of overtime pay 
instead of comp time. As drafted, the bill gives an employer 
the option to assign overtime hours only to workers who express 
a preference for comp time, and cut off all overtime hours for 
workers who would prefer to earn overtime pay. Since it is 
predominantly low-wage workers who rely on overtime to make 
ends meet, this bill is, in effect, a pay cut for low-wage 
workers. Employers can tell their workers, ``from now on, all 
the overtime hours will go to people who choose comp time. 
Overtime pay no longer exists.'' Unfortunately, under S. 4, 
such conduct would not be illegal.
    Senator Kennedy's amendment would have accomplished what 
the Republican leadership said they wanted their bill to do--
prevent discrimination and deter violations of the labor law. 
The amendment would have prohibited employers from distributing 
overtime hours solely to employees who express a preference for 
comp time. Further, the amendment actually provided for 
quadruple damages for violations. Despite Senator Ashcroft's 
representations, his bill in fact did not. Notwithstanding 
their self-righteous rhetoric, the members of the Committee 
majority refused in a party-line vote to provide either genuine 
protection against discrimination or true quadruple damages.

Comp time hours constitute hours worked--Senator Wellstone's amendment

    Senator Wellstone offered a second amendment, intended like 
his first one to make the bill's comp time provisions operate 
in a way that would be beneficial to employees--not just to 
employers. The amendment sought to ensure that comp time would 
be treated as ``hours worked'' for the purpose of calculating 
an employee's entitlement both to overtime and to certain 
employee benefits that are tied to the number of hours worked. 
The need for such an amendment is obvious, if the intent of 
comp time is not to cut workers' pay or reduce their benefits. 
Take the example of a worker who decides to use eight 
accumulated hours of comp time in order to enjoy a 3-day 
weekend by taking a Monday off. Without the amendment, no 
provision in the bill or in law would prevent an employer from 
requiring that employee to work 10-hour days Tuesday through 
Friday without paying overtime because only 40 hours would have 
been counted as worked. The employee would have been denied 
what should be considered earned overtime, as well as the 
``flexibility'' promised by supporters of the bill. The 
supposedly previously-earned comp day off would have served 
only to increase the employee's hours worked on other days in 
the same week.
    The need to count comp time when used as hours worked for 
the purpose of calculating employee benefits is equally clear. 
In many industries, employers andemployees make contributions 
to an employee's pension plan for each hour that the employee works. 
Such arrangements are particularly common in industries characterized 
by multi-employer pension plans, such as the construction industry. 
Overtime hours are considered hours worked for purposes of making 
contributions under such plans. If S. 4 becomes law, however, comp time 
hours when used will not be counted toward such employees' pension 
benefit. In short, workers taking comp time not only will lose overtime 
pay, but they will suffer a reduction in pension benefits as well.
    The majority argues weakly that, under current law, 
vacation time is not counted as hours worked when calculating 
overtime and other employee benefits. This is both irrelevant 
and insulting. Comp time off is not vacation time. It is earned 
compensation. The majority's equation of the two reflects 
either a fundamental misunderstanding of their own bill, or yet 
another disingenuous attempt to reduce employees' compensation. 
Regardless of the motive, the outcome was the same: another 
partyline vote against the amendment.

Excluding vulnerable employees--Senator Wellstone's amendment

    The third Wellstone amendment was yet another effort to 
improve the employee protections in the bill. It would have 
excluded from coverage under S. 4 workers who would be 
particularly vulnerable to exploitation should comp time be 
offered as a tool to their employers. It would have excluded 
part-time, seasonal and temporary employees, as well as 
employees in the garment industry. Workers in these sectors 
generally do not enjoy a relationship of equal power with their 
employers. The voluntariness of the comp time ``option'' would 
be extremely questionable. Unscrupulous employers would gain 
too many new opportunities to exploit or deny earned pay and 
benefits to workers in these sectors.
    The garment industry is particularly illustrative. In 1996, 
the Department of Labor's Wage and Hour Division undertook a 
compliance survey among garment contractor shops in the Los 
Angeles area. The survey found that 55 percent of the shops 
were failing to honor current overtime requirements. The 
Department of Labor reports that overtime violations in the 
garment industry have totalled nearly $12 million since 1992, 
affecting over 32,000 garment workers and averaging roughly 
$375 in lost wages per worker. These are cases that have been 
identified and remedied. The Department of Labor estimates that 
minimum wage and overtime violations prevail in more than 50 
percent of the 22,000 American apparel industries. It would be 
unconscionable to give employers in this industry another 
opportunity to deny hard-earned pay to their employees--yet 
that is precisely what the majority did, in still another 
party-line vote.

Delay implementation until enforcement resources available--Senator 
        Wellstone's amendment

    Senator Ashcroft admitted to the Employment and Training 
Subcommittee that adequate enforcement resources were essential 
in order to implement his bill properly. The fourth Wellstone 
amendment, also defeated, took this representation seriously. 
Noting that the current backlog of complaints in the Department 
of Labor's Wage and Hour Division is approximately 40 percent 
of the annual number of complaints, Senator Wellstone proposed 
delaying implementation of the bill until the backlog could be 
reduced to 10 percent. The Wage and Hour Division is 
responsible for investigating and remedying most reported 
violations of the FLSA. It receives approximately 40,000 
complaints annually, and managed in 1996 to reduce its backlog 
to approximately 16,000. Assuming that complaints would likely 
increase with new opportunities for disputes regarding earned 
comp time, and noting that justice delayed can often be justice 
denied for employees in such cases, minority members found it 
reasonable to require that adequate enforcement resources be in 
place before the bill could be implemented. Once again, 
however, the majority failed to conform its actions to its 
words. The amendment was defeated along straight party lines.

                               conclusion

    This bill is totally unacceptable, for all the reasons 
described above. Even those who believe that a genuine comp 
time bill is an appropriate legislative goal must stand in 
opposition to this bill. President Clinton, for one, has 
endorsed the concept of comp time. However, he has stated that 
he would be forced to veto S. 4. The Department of Labor 
effectively conveyed the President's views on the failings of 
this legislation in a letter sent to the Committee Chairman 
before the markup of S. 4. While its full text is appended to 
this report, the following excerpt succinctly identifies the 
bill's deficiencies:

          Any comp time legislation must effectively and 
        satisfactorily address three fundamental principles: 
        real choice for employees; real protection against 
        employer abuse; and preservation of basic worker 
        rights, including the 40-hour work week. President 
        Clinton will veto any bill that does not meet these 
        fundamental principles. . . . While the President has 
        called for and strongly supports enactment of 
        responsible comp time legislation, he will not sign any 
        bill--including S. 4--that obliterates the principle of 
        time-and-a-half for overtime or that destroys the 40-
        hour workweek. Workers--not employers--must be able to 
        decide how best to meet the current needs of their 
        family.
    For these and all the foregoing reasons, we urge our 
colleagues to oppose this legislation.

                                   Edward M. Kennedy.
                                   Chris Dodd.
                                   Tom Harkin.
                                   Barbara A. Mikulski.
                                   Jeff Bingaman.
                                   Paul D. Wellstone.
                                   Patty Murray.
                                   Jack Reed.
                     Appendix To S.4 Minority Views

                          U.S. Department of Labor,
                                        Secretary of Labor,
                                 Washington, DC, February 26, 1997.
Hon. James M. Jeffords,
Chairman, Committee on Labor and Human Resources,
Washington, DC.
    Dear Chairman Jeffords: We understand that your Committee 
will consider S. 4, the ``Family Friendly Workplace Act,'' on 
Wednesday, February 26. I am writing to emphasize the 
Administration's strong opposition to S. 4, and to urge your 
Committee not to order the bill reported.
    The Administration believes strongly that any legislation 
to authorize compensatory time--``comp time,'' or paid time-
off--under the Fair Labor Standards Act (FLSA) should be linked 
to expansion of the Family and Medical Leave Act (FMLA), as the 
President proposed during the last Congress. The FMLA provides 
important benefits to working families and has proved effective 
in meeting the needs of both families and businesses. And, 
unlike comp time which would be optional, family and medical 
leave is a right that covered employers may not deny to 
eligible employees. Expanding FMLA to give working families the 
flexibility they need for greater involvement in the education 
of their children and elder care will go a long way toward 
achieving the stated goals of S. 4. The bill before your 
Committee does not include FMLA expansion, and it should.
    Any comp time legislation must effectively and 
satisfactorily address three fundamental principles: real 
choice for employees; real protection against employer abuse; 
and preservation of basic worker rights, including the 40-hour 
workweek.
    Real choice for employees must include the right to choose 
whether to earn comp time or overtime premium pay; the right to 
take comp time when needed for FMLA purposes; the right to 
choose to use comp time for any purpose with two weeks notice 
unless its use would cause substantial injury to the employer; 
and the right to ``cash out'' accrued comp time for pay on 15 
days notice, as well as a prohibition against giving employers 
the unilateral right to cash out an employee's accrued comp 
time at their discretion. Real protection against employer 
abuse must include a number of protections that are entirely 
absent from S. 4, such as the exclusion of vulnerable workers; 
special protection in cases where the employer goes bankrupt or 
out-of-business; prohibitions against employers' substituting 
comp time for paid vacation or sick leave benefits, or 
penalizing employees who choose overtime premium pay instead of 
comp time; damages that allow an employee to obtain adequate 
relief if denied the use of comp time or denied overtime 
assignments; and strong effective provisions for enforcement. 
Preservation of worker rights requires preserving the 40-hour 
workweek, the right to receive premium pay for overtime work, 
and the cardinal FLSA principle that overtime is earned 
whenever an employer knows or has reason to know that overtime 
is being worked. Several provisions of S. 4., including the 80-
hour biweekly work program and the flexible credit hour 
program, could effectively eliminate these rights.
    President Clinton will veto any bill that does not meet 
these fundamental principles. While the President has called 
for and strongly supports enactment of responsible comp time 
legislation, he will not sign any bill--including S. 4--that 
obliterates the principle of time-and-a-half for overtime or 
that destroys the 40-hour workweek. Workers--not employers--
must be able to decide how best to meet the current needs of 
their family.
    The Office of Management and Budget advises that there is 
no objection to the submission of this report.
            Sincerely,
                                        Cynthia A. Metzler,
                                         Acting Secretary of Labor.
                      XI. Changes in Existing Law

    In compliance with rule XXVI paragraph 12 of the Standing 
Rules of the Senate, the following provides a print of the 
statute or the part or section thereof to be amended or 
replaced (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):

                     FAMILY FRIENDLY WORKPLACE ACT

          * * * * * * *

                      TITLE 29--UNITED STATES CODE

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SEC. 13. POWERS AND DUTIES OF BUREAU.

    It shall * * *
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SEC. 13A. BIWEEKLY WORK PROGRAMS AND FLEXIBLE CREDIT HOUR PROGRAMS.

    (a) Voluntary Participation.--
          (1) In general.--Except as provided in paragraph (2), 
        no employee may be required to participate in a program 
        described in this section. Participation in a program 
        described in this section may not be a condition of 
        employment.
          (2) Collective bargaining agreement.--In a case in 
        which a valid collective bargaining agreement exists, 
        an employee may only be required to participate in such 
        a program in accordance with the agreement.
    (b) Biweekly Work Programs.--
          (1) In general.--Notwithstanding section 7, an 
        employer may establish biweekly work programs that 
        allow the use of a biweekly work schedule--
                  (A) that consists of a basic work requirement 
                of not more than 80 hours, over a 2-week 
                period; and
                  (B) in which more than 40 hours of the work 
                requirement may occur in a week of the period.
          (2) Conditions.--An employer may carry out a biweekly 
        work program described in paragraph (1) for employees 
        only pursuant to the following:
                  (A) Agreement or understanding.--The program 
                may be carried out only in accordance with--
                          (i) applicable provisions of a 
                        collective bargaining agreement between 
                        the employer and the representative of 
                        the employees that is recognized as 
                        provided for in section 9(a) of the 
                        National Labor Relations Act (29 U.S.C. 
                        159(a)); or
                          (ii) in the case of an employee who 
                        is not represented by a labor 
                        organization that is recognized as 
                        provided for in section 9(a) of the 
                        National Labor Relations Act, an 
                        agreement or understanding arrived at 
                        between the employer and employee 
                        before the performance of the work 
                        involved if the agreement or 
                        understanding was entered into 
                        knowingly and voluntarily by such 
                        employee and was not a condition of 
                        employment.
                  (B) Statement.--The program shall apply to an 
                employee described in subparagraph (A)(ii) if 
                such employee has affirmed, in a written or 
                otherwise verifiable statement that is made, 
                kept, and preserved in accordance with section 
                11(c), that the employee has chosen to 
                participate in the program.
          (3) Compensation for hours in schedule.--
        Notwithstanding section 7, in the case of an employee 
        participating in such a biweekly work program, the 
        employee shall be compensated for each hour in such a 
        biweekly work schedule at a rate not less than the 
        regular rate at which the employee is employed.
          (4) Computation of overtime.--All hours worked by the 
        employee in excess of such a biweekly work schedule or 
        in excess of 80 hours in the 2-week period, that are 
        requested in advance by the employer, shall be overtime 
        hours.
          (5) Overtime compensation provision.--The employee 
        shall be compensated for each such overtime hour at a 
        rate not less than one and one-half times the regular 
        rate at which the employee is employed, in accordance 
        with section 7(a)(1), or receive compensatory time off 
        in accordance with section 7(r) for each such overtime 
        hour.
          (6) Discontinuance of program or withdrawal.--
                  (A) Discontinuance of program.--An employer 
                that has established a biweekly work program 
                under paragraph (1) may discontinue the program 
                for employees described in paragraph (2)(A)(ii) 
                after providing 30 days' written notice to the 
                employees who are subject to an agreement or 
                understanding described in paragraph 
                (2)(A)(ii).
                  (B) Withdrawal.--An employee may withdraw an 
                agreement or understanding described in 
                paragraph (2)(A)(ii) at the end of any 2-week 
                period described in paragraph (1)(A), by 
                submitting a written notice of withdrawal to 
                the employer of the employee.
  (c) Flexible Credit Hour Programs.--
          (1) In general.--Notwithstanding section 7, an 
        employer may establish flexible credit hour programs, 
        under which, at the election of an employee, the 
        employer and the employee jointly designate hours for 
        the employee to work that are in excess of the basic 
        work requirement of the employee so that the employee 
        can accrue flexible credit hours to reduce the hours 
        worked in a week or a day subsequent to the day on 
        which the flexible credit hours are worked.
          (2) Conditions.--An employer may carry out a flexible 
        credit hour program described in paragraph (1) for 
        employees only pursuant to the following:
                  (A) Agreement or understanding.--The program 
                may be carried out only in accordance with--
                          (i) applicable provisions of a 
                        collective bargaining agreement between 
                        the employer and the representative of 
                        the employees that is recognized as 
                        provided for in section 9(a) of the 
                        National Labor Relations Act (29 U.S.C. 
                        159(a)); or
                          (ii) in the case of an employee who 
                        is not represented by a labor 
                        organization that is recognized as 
                        provided for in section 9(a) of the 
                        National Labor Relations Act, an 
                        agreement or understanding arrived at 
                        between the employer and employee 
                        before the performance of the work 
                        involved if the agreement or 
                        understanding was entered into 
                        knowingly and voluntarily by such 
                        employee and was not a condition of 
                        employment.
                  (B) Statement.--The program shall apply to an 
                employee described in subparagraph (A)(ii) if 
                such employee has affirmed, in a written or 
                otherwise verifiable statement that is made, 
                kept, and preserved in accordance with section 
                11(c), that the employee has chosen to 
                participate in the program.
                  (C) Hours.--An agreement or understanding 
                that is entered into under subparagraph (A) 
                shall provide that, at the election of an 
                employee, the employer and the employee will 
                jointly designate, for an applicable workweek, 
                flexible credit hours for the employee to work.
                  (D) Limit.--An employee shall be eligible to 
                accrue flexible credit hours if the employee 
                has not accrued flexible credit hours in excess 
                of the limit applicable to the employee 
                prescribed by paragraph (3).
          (3) Hour limit.--
                  (A) Maximum hours.--An employee who is 
                participating in such a flexible credit hour 
                program may accrue not more than 50 flexible 
                credit hours.
                  (B) Compensation date.--Not later than 
                January 31 of each calendar year, the employer 
                of an employee who is participating in such a 
                flexible credit hour program shall provide 
                monetary compensation for any flexible credit 
                hours accrued during the preceding calendar 
                year that were not used prior to December 31 of 
                the preceding calendar year at a rate not less 
                than the regular rate at which the employee is 
                employed on the date the employee receives the 
                compensation. An employer may designate and 
                communicate to the employees of the employer a 
                12-month period other than the calendar year, 
                in which case the compensation shall be 
                provided not later than 31 days after the end 
                of the 12-month period.
          (4) Compensation for flexible credit hours.--
        Notwithstanding section 7, in the case of an employee 
        participating in such a flexible credit hour program, 
        the employee shall be compensated for each flexible 
        credit hour at a rate not less than the regular rate at 
        which the employee is employed.
          (5) Computation of overtime.--All hours worked by the 
        employee in excess of 40 hours in a week that are 
        requested in advance by the employer, other than 
        flexible credit hours, shall be overtime hours.
          (6) Overtime compensation provision.--The employee 
        shall be compensated for each such overtime hour at a 
        rate not less than one and one-half times the regular 
        rate at which the employee is employed, in accordance 
        with section 7(a)(1), or receive compensatory time off 
        in accordance with section 7(r) for each such overtime 
        hour.
          (7) Use of time.--An employee--
                  (A) who has accrued flexible credit hours; 
                and
                  (B) who has requested the use of the accrued 
                flexible credit hours,
        shall be permitted by the employer of the employee to 
        use the accrued flexible credit hours within a 
        reasonable period after making the request if the use 
        of the accrued flexible credit hours does not unduly 
        disrupt the operations of the employer.
          (8) Discontinuance of program or withdrawal.--
                  (A) Discontinuance of program.--An employer 
                that has established a flexible credit hour 
                program under paragraph (1) may discontinue the 
                program for employees described in paragraph 
                (2)(A)(ii) after providing 30 days' written 
                notice to the employees who are subject to an 
                agreement or understanding described in 
                paragraph (2)(A)(ii).
                  (B) Withdrawal.--An employee may withdraw an 
                agreement or understanding described in 
                paragraph (2)(A)(ii) at any time, by submitting 
                a written notice of withdrawal to the employer 
                of the employee. An employee may also request 
                in writing that monetary compensation be 
                provided, at any time, for all flexible credit 
                hours accrued that have not been used. Within 
                30 days after receiving the written request, 
                the employer shall provide the employee the 
                monetary compensation due at a rate not less 
                than the regular rate at which the employee is 
                employed on the date the employee receives the 
                compensation.
    (d) Prohibition of Coercion.--
          (1) In general.--An employer shall not directly or 
        indirectly intimidate, threaten, or coerce, or attempt 
        to intimidate, threaten, or coerce, any employee for 
        the purpose of--
                  (A) interfering with the rights of the 
                employee under this section to elect or not to 
                elect to work a biweekly work schedule;
                  (B) interfering with the rights of the 
                employee under this section to elect or not to 
                elect to participate in a flexible credit hour 
                program, or to elect or not to elect to work 
                flexible credit hours (including working 
                flexible credit hours in lieu of overtime 
                hours);
                  (C) interfering with the rights of the 
                employee under this section to use accrued 
                flexible credit hours in accordance with 
                subsection (c)(7); or
                  (D) requiring the employee to use the 
                flexible credit hours.
          (2) Definition.--In paragraph (1), the term 
        ``intimidate, threaten, or coerce'' includes promising 
        to confer or conferring any benefit (such as 
        appointment, promotion, or compensation) or effecting 
        or threatening to effect any reprisal (such as 
        deprivation of appointment, promotion, or 
        compensation).
  (e) Definitions.--In this section:
          (1) Basic work requirement.--The term ``basic work 
        requirement'' means the number of hours, excluding 
        overtime hours, that an employee is required to work or 
        is required to account for by leave or otherwise.
          (2) Collective bargaining.--The term ``collective 
        bargaining'' means the performance of the mutual 
        obligation of the representative of an employer and the 
        representative of employees of the employer that is 
        recognized as provided for in section 9(a) of the 
        National Labor Relations Act (29 U.S.C. 159(a)) to meet 
        at reasonable times and to consult and bargain in a 
        good-faith effort to reach agreement with respect to 
        the conditions of employment affecting such employees 
        and to execute, if requested by either party, a written 
        document incorporating any collective bargaining 
        agreement reached, but the obligation referred to in 
        this paragraph shall not compel either party to agree 
        to a proposal or to make a concession.
          (3) Collective bargaining agreement.--The term 
        ``collective bargaining agreement'' means an agreement 
        entered into as a result of collective bargaining.
          (4) Election.--The term ``at the election of '', used 
        with respect to an employee, means at the initiative 
        of, and at the request of, the employee.
          (5) Employee.--The term ``employee'' does not include 
        an employee of a public agency.
          (6) Employer.--The term ``employer'' does not include 
        a public agency.
          (7) Flexible credit hours.--The term ``flexible 
        credit hours'' means any hours, within a flexible 
        credit hour program established under subsection (c), 
        that are in excess of the basic work requirement of an 
        employee and that, at the election of the employee, the 
        employer and the employee jointly designate for the 
        employee to work so as to reduce the hours worked in a 
        week or a day subsequent to the day on which the 
        flexible credit hours are worked.
          (8) Overtime hours.--The term ``overtime hours''--
                  (A) when used with respect to biweekly work 
                programs under subsection (b), means all hours 
                worked in excess of the biweekly work schedule 
                involved or in excess of 80 hours in the 2-week 
                period involved, that are requested in advance 
                by an employer; or
                  (B) when used with respect to flexible credit 
                hour programs under subsection (c), means all 
                hours worked in excess of 40 hours in a week 
                that are requested in advance by an employer, 
                but does not include flexible credit hours.
          (9) Regular rate.--The term ``regular rate'' has the 
        meaning given the term in section 7(e).
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SEC. 207. MAXIMUM HOURS.

    (a) Employees Engaged in Interstate Commerce; Additional 
Applicability to Employees Pursuant to Subsequent Amendatory 
Provisions.--
          (1) Except * * *
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  (r) Compensatory Time Off for Private Employees.--
          (1) Voluntary participation.--
                  (A) In general.--Except as provided in 
                subparagraph (B), no employee may be required 
                under this subsection to receive compensatory 
                time off in lieu of monetary overtime 
                compensation. The acceptance of compensatory 
                time off in lieu of monetary overtime 
                compensation may not be a condition of 
                employment.
                  (B) Collective bargaining agreement.--In a 
                case in which a valid collective bargaining 
                agreement exists between an employer and the 
                representative of the employees that is 
                recognized as provided for in section 9(a) of 
                the National Labor Relations Act (29 U.S.C. 
                159(a)), an employee may only be required under 
                this subsection to receive compensatory time 
                off in lieu of monetary overtime compensation 
                in accordance with the agreement.
          (2) General rule.--
                  (A) Compensatory time off.--An employee may 
                receive, in accordance with this subsection and 
                in lieu of monetary overtime compensation, 
                compensatory time off at a rate not less than 
                one and one-half hours for each hour of 
                employment for which monetary overtime 
                compensation is required by this section.
                  (B) Definitions.--In this subsection:
                          (i) Employee.--The term ``employee'' 
                        does not include an employee of a 
                        public agency.
                          (ii) Employer.--The term ``employer'' 
                        does not include a public agency.
          (3) Conditions.--An employer may provide compensatory 
        time off to employees under paragraph (2)(A) only 
        pursuant to the following:
                  (A) The compensatory time off may be provided 
                only in accordance with--
                          (i) applicable provisions of a 
                        collective bargaining agreement between 
                        the employer and the representative of 
                        the employee that is recognized as 
                        provided for in section 9(a) of the 
                        National Labor Relations Act (29 U.S.C. 
                        159(a)); or
                          (ii) in the case of an employee who 
                        is not represented by a labor 
                        organization that is recognized as 
                        provided for in section 9(a) of the 
                        National Labor Relations Act, an 
                        agreement or understanding arrived at 
                        between the employer and employee 
                        before the performance of the work 
                        involved if the agreement or 
                        understanding was entered into 
                        knowingly and voluntarily by such 
                        employee and was not a condition of 
                        employment.
                  (B) The compensatory time off may only be 
                provided to an employee described in 
                subparagraph (A)(ii) if such employee has 
                affirmed, in a written or otherwise verifiable 
                statement that is made, kept, and preserved in 
                accordance with section 11(c), that the 
                employee has chosen to receive compensatory 
                time off in lieu of monetary overtime 
                compensation.
                  (C) An employee shall be eligible to accrue 
                compensatory time off if such employee has not 
                accrued compensatory time off in excess of the 
                limit applicable to the employee prescribed by 
                paragraph (4).
          (4) Hour limit.--
                  (A) Maximum hours.--An employee may accrue 
                not more than 240 hours of compensatory time 
                off.
                  (B) Compensation date.--Not later than 
                January 31 of each calendar year, the employer 
                of the employee shall provide monetary 
                compensation for any unused compensatory time 
                off accrued during the preceding calendar year 
                that was not used prior to December 31 of the 
                preceding calendar year at the rate prescribed 
                by paragraph (8). An employer may designate and 
                communicate to the employees of the employer a 
                12-month period other than the calendar year, 
                in which case the compensation shall be 
                provided not later than 31 days after the end 
                of the 12-month period.
                  (C) Excess of 80 hours.--The employer may 
                provide monetary compensation for an employee's 
                unused compensatory time off in excess of 80 
                hours at any time after providing the employee 
                with at least 30 days' written notice. The 
                compensation shall be provided at the rate 
                prescribed by paragraph (8).
          (5) Discontinuance of policy or withdrawal.--
                  (A) Discontinuance of policy.--An employer 
                that has adopted a policy offering compensatory 
                time off to employees may discontinue the 
                policy for employees described in paragraph 
                (3)(A)(ii) after providing 30 days' written 
                notice to the employees who are subject to an 
                agreement or understanding described in 
                paragraph (3)(A)(ii).
                  (B) Withdrawal.--An employee may withdraw an 
                agreement or understanding described in 
                paragraph (3)(A)(ii) at any time, by submitting 
                a written notice of withdrawal to the employer 
                of the employee. An employee may also request 
                in writing that monetary compensation be 
                provided, at any time, for all compensatory 
                time off accrued that has not been used. Within 
                30 days after receiving the written request, 
                the employer shall provide the employee the 
                monetary compensation due in accordance with 
                paragraph (8).
          (6) Additional requirements.--
                  (A) Prohibition of coercion.--
                          (i) In general.--An employer that 
                        provides compensatory time off under 
                        paragraph (2) to an employee shall not 
                        directly or indirectly intimidate, 
                        threaten, or coerce, or attempt to 
                        intimidate, threaten, or coerce, any 
                        employee for the purpose of--
                                  (I) interfering with the 
                                rights of the employee under 
                                this subsection to request or 
                                not request compensatory time 
                                off in lieu of payment of 
                                monetary overtime compensation 
                                for overtime hours;
                                  (II) interfering with the 
                                rights of the employee to use 
                                accrued compensatory time off 
                                in accordance with paragraph 
                                (9); or
                                  (III) requiring the employee 
                                to use the compensatory time 
                                off.
                          (ii) Definition.--In clause (i), the 
                        term `intimidate, threaten, or coerce' 
                        has the meaning given the term in 
                        section 13A(d)(2).
                  (B) Election of overtime compensation or 
                compensatory time.--An agreement or 
                understanding that is entered into by an 
                employee and employer under paragraph 
                (3)(A)(ii) shall permit the employee to elect, 
                for an applicable workweek--
                          (i) the payment of monetary overtime 
                        compensation for the workweek; or
                          (ii) the accrual of compensatory time 
                        off in lieu of the payment of monetary 
                        overtime compensation for the workweek.
          (7) Termination of employment.--An employee who has 
        accrued compensatory time off authorized to be provided 
        under paragraph (2) shall, upon the voluntary or 
        involuntary termination of employment, be paid for the 
        unused compensatory time off in accordance with 
        paragraph (8).
          (8) Rate of compensation for compensatory time off.--
                  (A) General rule.--If compensation is to be 
                paid to an employee for accrued compensatory 
                time off, the compensation shall be paid at a 
                rate of compensation not less than--
                          (i) the regular rate received by such 
                        employee when the compensatory time off 
                        was earned; or
                          (ii) the final regular rate received 
                        by such employee,
                whichever is higher.
                  (B) Consideration of payment.--Any payment 
                owed to an employee under this subsection for 
                unused compensatory time off shall be 
                considered unpaid monetary overtime 
                compensation.
          (9) Use of time.--An employee--
                  (A) who has accrued compensatory time off 
                authorized to be provided under paragraph (2); 
                and
                  (B) who has requested the use of the accrued 
                compensatory time off,
        shall be permitted by the employer of the employee to 
        use the accrued compensatory time off within a 
        reasonable period after making the request if the use 
        of the accrued compensatory time off does not unduly 
        disrupt the operations of the employer.
          (10) Definitions.--The terms `monetary overtime 
        compensation' and `compensatory time off' shall have 
        the meanings given the terms `overtime compensation' 
        and `compensatory time', respectively, by subsection 
        (o)(7).
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SEC. 213. EXEMPTIONS.

    (a) The provisions * * *
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    (m)(1)(A) In the case of a determination of whether an 
employee is an exempt employee described in subsection (a)(1), 
the fact that the employee is subject to deductions in 
compensation for--
          (i) absences of the employee from employment of less 
        than a full workday; or
          (ii) absences of the employee from employment of less 
        than a full pay period,
shall not be considered in making such determination.
    (B) In the case of a determination described in 
subparagraph (A), an actual reduction in pay of the employee 
may be considered in making the determination for that 
employee.
    (C) For the purposes of this paragraph, the term `actual 
reduction in compensation' does not include any reduction in 
accrued paid leave, or any other practice, that does not reduce 
the amount of pay an employee receives for a pay period.
    (2) The payment of overtime compensation or other additions 
to the compensation of an employee employed on a salary based 
on hours worked shall not be considered in determining if the 
employee is an exempt employee described in subsection (a)(1).
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SEC. 215. PROHIBITED ACTS; PRIMA FACIE EVIDENCE.

    (a) After the expiration of one hundred and twenty days 
from June 25, 1938, it shall be unlawful for any person--
          (1) * * *
          * * * * * * *
          (3)(A) to discharge or in any other manner 
        discriminate against any employee because such employee 
        has filed any complaint or instituted or caused to be 
        instituted any proceeding under or related to this 
        chapter, or has testified or is about to testify in any 
        such proceeding, or has served or is about to serve on 
        an industry committee; or
          (B) to violate any of the provisions of section 13A;
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SEC. 216. PENALTIES.

    (a) Fines and Imprisonment.--
    (f)(1) In addition to any amount that an employer is liable 
under subsection (b) for a violation of a provision of section 
7, an employer that violates section 7(r)(6)(A) shall be liable 
to the employee affected in an amount equal to--
          (A) the product of--
                  (i) the rate of compensation (determined in 
                accordance with section 7(r)(8)(A)); and
                  (ii)(I) the number of hours of compensatory 
                time off involved in the violation that was 
                initially accrued by the employee; minus
                  (II) the number of such hours used by the 
                employee; and
          (B) as liquidated damages, the product of--
                  (i) such rate of compensation; and
                  (ii) the number of hours of compensatory time 
                off involved in the violation that was 
                initially accrued by the employee.
  (2) The employer shall be subject to such liability in 
addition to any other remedy available for such violation under 
this section or section 17, including a criminal penalty under 
subsection (a) and a civil penalty under subsection (e).
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