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REVIEWING THE RULES AND 

REGULATIONS IMPLEMENTING 

FEDERAL WAGE AND HOUR STANDARDS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON WORKFORCE PROTECTIONS 

COMMITTEE ON EDUCATION 

AND THE WORKFORCE 

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD IN WASHINGTON, DC, JUNE 10, 2015 

Serial No. 114–18 

Printed for the use of the Committee on Education and the Workforce 

( 

Available via the World Wide Web: www.gpo.gov/fdsys/browse/ 

committee.action?chamber=house&committee=education 

or 

Committee address: http://edworkforce.house.gov 

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(II) 

COMMITTEE ON EDUCATION AND THE WORKFORCE 

JOHN KLINE, Minnesota, Chairman 

Joe Wilson, South Carolina 

Virginia Foxx, North Carolina 

Duncan Hunter, California 

David P. Roe, Tennessee 

Glenn Thompson, Pennsylvania 

Tim Walberg, Michigan 

Matt Salmon, Arizona 

Brett Guthrie, Kentucky 

Todd Rokita, Indiana 

Lou Barletta, Pennsylvania 

Joseph J. Heck, Nevada 

Luke Messer, Indiana 

Bradley Byrne, Alabama 

David Brat, Virginia 

Buddy Carter, Georgia 

Michael D. Bishop, Michigan 

Glenn Grothman, Wisconsin 

Steve Russell, Oklahoma 

Carlos Curbelo, Florida 

Elise Stefanik, New York 

Rick Allen, Georgia 

Robert C. ‘‘Bobby’’ Scott, Virginia 

Ranking Member 

Rube ́n Hinojosa, Texas 

Susan A. Davis, California 

Rau ́l M. Grijalva, Arizona 

Joe Courtney, Connecticut 

Marcia L. Fudge, Ohio 

Jared Polis, Colorado 

Gregorio Kilili Camacho Sablan, 

Northern Mariana Islands 

Frederica S. Wilson, Florida 

Suzanne Bonamici, Oregon 

Mark Pocan, Wisconsin 

Mark Takano, California 

Hakeem S. Jeffries, New York 

Katherine M. Clark, Massachusetts 

Alma S. Adams, North Carolina 

Mark DeSaulnier, California 

Juliane Sullivan, Staff Director 

Denise Forte, Minority Staff Director 

SUBCOMMITTEE ON WORKFORCE PROTECTIONS 

TIM WALBERG, Michigan, Chairman 

Duncan Hunter, California 

Glenn Thompson, Pennsylvania 

Todd Rokita, Indiana 

Dave Brat, Virginia 

Michael D. Bishop, Michigan 

Steve Russell, Oklahoma 

Elise Stefanik, New York 

Frederica S. Wilson, Florida, 

Ranking Member 

Mark Pocan, Wisconsin 

Katherine M. Clark, Massachusetts 

Alma S. Adams, North Carolina 

Mark DeSaulnier, California 

Marcia L. Fudge, Ohio 

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(III) 

C O N T E N T S 

Page 

Hearing held on June 10, 2015 ............................................................................... 1 

Statement of Members: 

Walberg, Hon. Tim, Chairman, Subcommittee on Workforce Protections ... 1 

Prepared statement of ............................................................................... 4 

Wilson, Hon. Frederica S., Ranking Member, Subcommittee on Workforce 

Protections ..................................................................................................... 6 

Prepared statement of ............................................................................... 8 

Statement of Witnesses: 

Berberich, Ms. Nicole, Human Resources Director, Cincinnati Animal 

Referral and Emergency Center (CARE), Cincinnati, OH ........................ 12 

Prepared statement of ............................................................................... 14 

Court, Mr. Leonard, Senior Partner, Crowe and Dunlevy, Oklahoma City, 

OK .................................................................................................................. 22 

Prepared statement of ............................................................................... 24 

Harris, Hon. Seth D., Former Acting U.S. Secretary of Labor and Deputy 

U.S. Secretary of Labor, Distinguished Scholar, Cornell University 

School of Industrial and Labor Relations, Ithaca, NY ............................... 34 

Prepared statement of ............................................................................... 36 

Richardson, Mr. Jamie, Vice President of Government and Shareholder 

Relations, White Castle System, Inc., Columbus, OH ............................... 50 

Prepared statement of ............................................................................... 53 

Additional Submissions: 

Takano, Hon. Mark, a Representative in Congress from the State of 

California: 

Report from the National Employment Law Project .............................. 73 

Walberg, Hon. Tim, Chairman, Subcommittee on Workforce Protections: 

Statement submitted on behalf of the National Restaurant Association .......................................................................................................... 85 

Letter dated June 9, 2015, from the National Association of Home 

Builders .................................................................................................. 93 

Report from the U.S. Government Accountability Office dated December 2013, Fair Labor Standards Act, The Department of Labor 

should Adopt a More Systematic Approach to Developing Its Guidance ......................................................................................................... 95 

Ms. Wilson: 

Letter dated April 9, 2015, from National Women’s Law Center ......... 132 

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(1) 

REVIEWING THE RULES AND REGULATIONS 

IMPLEMENTING FEDERAL WAGE AND HOUR 

STANDARDS 

Wednesday, June 10, 2015 

U.S. House of Representatives 

Subcommittee on Workforce Protections 

Committee on Education and the Workforce 

Washington, D.C. 

The subcommittee met, pursuant to call, at 10:02 a.m., in Room 

2175, Rayburn House Office Building, Hon. Tim Walberg [Chairman of the subcommittee] presiding. 

Present: Representatives Walberg, Thompson, Rokita, Brat, 

Stefanik, Wilson, Clark, DeSaulnier, and Fudge. 

Also present: Representatives Kline, Scott, and Takano. 

Staff present: Janelle Belland, Coalitions and Members Services 

Coordinator; Ed Gilroy, Director of Workforce Policy; Callie Harman, Staff Assistant; Tyler Hernandez, Press Secretary; Nancy 

Locke, Chief Clerk; John Martin, Professional Staff Member; Brian 

Newell, Communications Director; Krisann Pearce, General Counsel; Molly McLaughlin Salmi, Deputy Director of Workforce Policy; 

Alissa Strawcutter, Deputy Clerk; Alexa Turner, Legislative Assistant; Tylease Alli, Minority Clerk/Intern and Fellow Coordinator; 

Austin Barbera, Minority Staff Assistant; Denise Forte, Minority 

Staff Director; Christine Godinez, Minority Staff Assistant; Carolyn 

Hughes, Minority Senior Labor Policy Advisor; Eunice Ikene, Minority Labor Policy Associate; Brian Kennedy, Minority General 

Counsel; Kevin McDermott, Minority Senior Labor Policy Advisor; 

Amy Peake, Minority Labor Policy Advisor; Kiara Pesante, Minority Communications Director; Dillon Taylor, Minority Labor Policy 

Fellow. 

Chairman WALBERG. A quorum being present, the subcommittee 

will come to order. 

Good morning, and welcome, to all of our guests. 

I would like to thank our witnesses for joining us today to examine the rules and regulations guiding implementation of federal 

wage and hour standards. 

For more than 75 years—that is older than the Chairman, I am 

happy to say, and the Chairman of the full Committee, too—— 

Mr. KLINE. I am happy, too. 

[Laughter.] 

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Chairman WALBERG [continuing]. I think all of us here at the 

table. 

The Fair Labor Standards Act has been the foundation of our nation’s wage and hour protections. It establishes important rights for 

American workers and continues to guide employers in protecting 

those rights. 

However, the workplace looks very different today than it did in 

1938 when the law was enacted, and the rules and regulations defining the law are failing to meet the needs of a twenty-first century workplace. Regulations that made sense long before the advent of smartphones and telecommuting simply don’t work in the 

modern economy. 

Failing to keep up with the changing workplace, the law’s regulatory structure has become more complex and burdensome. Both 

employees and employers have difficulty understanding their rights 

and their responsibilities and must constantly contend with conflicting legal interpretations of the law. 

Despite sincere efforts to act in the best interest of workers, 

many well-intentioned employers face costly legal battles because 

of a flawed regulatory structure, and we have evidence to back that 

up. 

A report from the nonpartisan Government Accountability Office 

revealed a surge in FLSA lawsuits during the past 20 years, with 

the number of lawsuits increasing by 514 percent since 1991. Let 

me repeat that. There has been a 514 percent increase in FLSArelated litigation over the last 25 years. That is a troubling increase and strong indication that something isn’t working. 

To help address this significant problem, GAO urged the Department of Labor to—and I quote—‘‘develop a systematic approach for 

identifying areas of confusion about the FLSA that contribute to 

possible violations and improving the guidance it provides to employers and workers in those areas.’’ 

Simply stated, we need a system that holds bad actors accountable when they break the law, but that also helps law-abiding employers uphold their obligations. I hope some of our witnesses will 

shed light on whether the department is implementing GAO’s recommendation and what impact it may be having on our nation’s 

workplaces. 

However, even the best administrative guidance cannot make up 

for other shortcomings that exist and are harming those working 

hardest to jump-start the economy. This isn’t the first time these 

concerns have been raised. In fact, this subcommittee has held a 

number of hearings in recent years looking at the very same issue. 

It has been a focus of our continued oversight for a simple reason: we want to ensure that regulations that underpin the Fair 

Labor Standards Act serve the best interests of both American 

workers and employers. 

As Chairman Kline and I noted a year ago, we are ready and 

willing to be a partner in a responsible effort to modernize current 

regulations, but I would stress that it must be a responsible effort. 

The American people deserve a system that is simple, clear, and 

can meet the demands of the modern workforce. The last thing policymakers should do, including those in the administration, is to 

make a bad regulatory system worse. 

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In the coming days the department is expected to release a proposal intended to update federal wage and hour regulations. Rumors are running rampant, and we know concerns are being raised 

about what the proposal may entail. 

Thanks to an administration notorious for overreaching and governing through executive fiat, I share many of those same concerns. 

I expect we will continue to hear about the consequences for workers and job creators if the administration goes too far in the regulatory proposal it is expected to release. 

However, hope springs eternal, and it is my hope the department 

will heed these concerns and ultimately put forward a proposal 

that encourages rather than stifles productivity, personal opportunity, and economic growth. Any proposal that would inflict harm 

on the nation’s workplaces and move the country in the wrong direction will be opposed by this Committee and, no doubt, the American people. 

With that, I now recognize the senior Democratic member of the 

subcommittee and Ranking Member, Representative Frederica Wilson, for her opening remarks. 

[The statement of Chairman Walberg follows:] 

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Ms. WILSON. Thank you, Chairman Walberg, and thank you for 

holding this hearing today and giving us an opportunity to talk 

about the Fair Labor Standards Act. 

And thank you to our panelists for attending. 

And thank you to the audience for having a keen interest in this 

issue. 

Later this month marks 77 years, as it was stated, since this 

landmark law was passed. The Fair Labor Standards Act was 

passed in a time when workers simply were not valued. Women, 

children, immigrants, people of color all were exploited and made 

to work unreasonably long hours for starvation wages. 

Since its passage, the FLSA has been a powerful tool in helping 

workers assert their rights to fair wages and reasonable hours. 

Since the FLSA was passed, Congress has made the necessary updates to ensure that the law continues to protect workers. Congress 

must continue with this legacy and update the FLSA to reflect current economic and employment realities. 

The reality is that this country is facing a dire income inequality 

problem. In the last 40 years hourly pay for the average worker 

has increased 9 percent while worker productivity has increased almost 75 percent. At the same time, top earners have seen astronomical increases in pay. 

The looming problem of income inequality threatens to gut our 

middle class, create a permanent under class, and dismantle the 

American dream of building economic wealth and financial stability. 

This problem not only hurts the individual, but the American 

economy as a whole. When less and less money goes to low-and 

middle-income workers, less and less money is spent in our consumer-based economy. Less money spent on goods and services 

means fewer jobs. Fewer jobs mean fewer Americans working and 

contributing to our tax base. 

It is a vicious cycle that ends in economic turmoil and despair 

for millions of Americans. We must address the issue of income inequality, and we must do it now. 

We do that by strengthening the FLSA with much-needed updates. We must update the FLSA by passing the Paycheck Fairness 

Act to strengthen equal pay protections. We can no longer devalue 

the contributions our daughters, sisters, and wives make to our 

economy. 

We must update the FLSA by passing the Raise the Wage Act, 

to raise the minimum wage. We can no longer insist that people 

pull themselves up by their bootstraps when they make the poverty 

wages that ensure they will never be able to stay afloat, let alone 

get ahead. How do you pull yourself up by the bootstraps when you 

have no boots? 

We must update the FLSA by modernizing the salary thresholds 

for overtime workers. We can no longer pretend that workers who 

toil 60 or more hours a week and take home $23,660 a year are 

paid fair wages. 

We must update the FLSA by expanding overtime and minimum 

wage protections to home health care workers. We can no longer 

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trusting them to care for our aging parents and disabled family 

members. We are almost there ourselves. 

Just as we must update the FLSA, we must, for the sake of income inequality, be wary of rolling back its protections. We cannot 

support efforts to strip workers of their overtime no matter what 

form it takes, no matter how good the intentions. 

Eroding workers’ rights to overtime pay will put us back to the 

days where the economically vulnerable workers faced the illusionary choice between working for far less than they are worth or 

not working at all. 

Labor laws like the FLSA were passed for a reason. That reason 

was to protect workers. And we are the Workforce Protections Subcommittee. 

I look forward to hearing from the witnesses and what we can 

do to strengthen the FLSA and to continue to protect workers. 

Thank you, Mr. Chair. 

[The statement of Ms. Wilson follows:] 

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Chairman WALBERG. I thank the gentlelady. 

Pursuant to Committee rule 7(c), all subcommittee members will 

be permitted to submit written statements to be included in the 

permanent hearing record. And without objection, the hearing 

record will remain open for 14 days to allow statements, questions 

for the record, and other extraneous material referenced during the 

hearing to be submitted in the official hearing record. 

It is now my pleasure to introduce today’s witnesses. 

First is Ms. Nicole Berberich, who is the human resources director for the Cincinnati Animal Referral and Emergency Center, 

CARE, in Cincinnati, Ohio. Ms. Berberich’s specialties include HR 

policies and procedures, training and employee development, employee and labor relations, benefits administration, and workers’ 

compensation. 

Welcome. 

Mr. Leonard Court is a senior partner with Crowe and Dunlevy 

of Oklahoma City, Oklahoma. Since 1997, Mr. Court has served as 

a member of the U.S. Chamber of Commerce Labor Relations Committee. In 1999, he was appointed chairman of the Wage, Hour, 

and Leave Subcommittee. 

Welcome. 

Mr. Seth Harris is a distinguished scholar with Cornell University School of Industrial and Labor Relations in Ithaca, New York. 

From May 2009 until January 2014, Mr. Harris served as Deputy 

Secretary of Labor at DOL, overseeing functions ranging from strategic planning and performance management to legislation and policy development and implementation. He briefly served as Acting 

Secretary of Labor following the resignation of Hilda Solis in January of 2013 until Secretary Perez’s confirmation in July of 2013. 

Welcome back. 

Mr. Jamie Richardson is vice president of government and shareholder relations with White Castle System, Incorporated, of Columbus, Ohio. His primary responsibilities include government affairs, 

shareholder relations, public relations, and corporate philanthropy. 

He joined White Castle in 1998 and has previously served as director of marketing for the company. 

Welcome, and crave on. 

I will ask now the witnesses to stand and raise your right hand. 

We have the normal process of swearing in at this point. 

[Witnesses sworn.] 

Let the record reflect the witnesses answered in the affirmative. 

And you may take your seats. 

Before I recognize you to provide your testimony, let me briefly 

explain our lighting system. A number of you have gone through 

this multiple times, but just to remind, you have five minutes for 

your testimony. We expect that you will keep fairly close to that. 

When the yellow light goes on it means one minute remaining. 

Wrap up your statements as close to the ending time when the red 

light goes on as is possible. 

And as the Chairman of the full Committee has established, I 

will, as well, expect that our Committee members will keep to the 

five-minute time for questioning. 

Having said that, I now recognize Ms. Berberich for your five 

minutes of testimony. 

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STATEMENT OF MS. NICOLE BERBERICH, HUMAN RESOURCES 

DIRECTOR, CINCINNATI ANIMAL REFERRAL AND EMERGENCY CENTER (CARE), CINCINNATI, OHIO, TESTIFYING ON 

BEHALF OF THE SOCIETY FOR HUMAN RESOURCE MANAGEMENT 

Ms. BERBERICH. Chairman Walberg, Ranking Member Wilson, 

and distinguished members of the subcommittee, my name is Nicole Berberich, and I am the human resources director at the Cincinnati Animal Referral and Emergency Center, or CARE Center, 

in Ohio. In my role I oversee all HR policies and procedures, including employee classifications under the Fair Labor Standards 

Act, the FLSA. 

I appear before you today on behalf of the Society for Human Resource Management, or SHRM. Thank you for the opportunity to 

testify today on my experience with the FLSA and implementing 

regulations. 

Mr. Chairman, the FLSA may have been appropriate in the 

1930s, but it is out of step with our modern, technology-based economy, creating unnecessary regulatory burdens for our employers 

and hindering the ability of employers to be flexible and address 

contemporary employee needs. Furthermore, as the millennial generation becomes the majority of employees in the American workforce, the demand for greater use of technology and flexibility will 

only continue to grow. 

Allow me to tell you a little about my organization. CARE Center 

is an emergency and multi-specialty veterinary practice located in 

Cincinnati and Dayton, Ohio. Our team of skilled emergency and 

specialty staff provide 24-hour care seven days a week to the patients and clients we serve. 

Small businesses with a one-person HR department, like CARE 

Center, are likely to experience these regulatory burdens disproportionately, which will likely grow in complication with expected 

changes to FLSA overtime regulations later this month. 

I would now like to highlight challenges my organization faces 

when it comes to implementing flexible arrangements under the 

FLSA. Most notably, the law prohibits private sector employers 

from offering nonexempt employees paid time off or comp time instead of overtime compensation, even though public sector employees have access to this type of flexibility. 

At CARE Center, many hourly employees prefer the option of 

comp time, to have more time off to spend with their families, instead of overtime pay. The veterinary sciences sector attracts a 

workforce dedicated to animal health. Our employees aren’t there 

for the money. 

We have to monitor our labor expenses closely and try to identify 

other ways to attract and retain our workforce through competitive 

employee benefits. Allowing for comp time would provide my organization with an additional workplace flexibility option to attract 

top talent. 

Another opportunity to provide flexibility to our workforce is 

through biweekly work weeks. Under the FLSA, employers are permitted to allow a nonexempt employee to work four 10-hour days 

Monday through Thursday for a total of 40 hours in a week and 

take every Friday off without the employer incurring any overtime 

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obligations. But if our organization wanted greater flexibility, we 

run into challenges. 

For example, some of our veterinarians developed a schedule to 

meet the emergency care needs of our clients by working 50 hours 

in one week and 30 hours in the next. The CARE Center wants to 

structure the workplace so that our doctors work with the same 

technicians and assistants on cases. Working as a dedicated team 

builds rapport between the doctors and technical staff and cultivates a positive work environment that maximizes patient care. 

In the end, I was unable to allow the hourly technicians and assistants to work alongside those same veterinarians under their 

proposed schedule because of the overtime payments that would be 

incurred. 

Mr. Chairman, today’s hearing is timely, given the fact that DOL 

is proposing changes to overtime regulations soon. I fully anticipate 

our practice will be impacted by these changes. 

We have internal medicine and surgery supervisors who I recently reclassified as exempt employees due to their managerial 

and professional responsibilities within our organization. If the salary threshold is doubled, those employees would lose their exempt 

status and will return to hourly, nonexempt status, which they will 

view as a demotion. 

Also, as a 24/7 organization, further changes to the primary duties test requiring additional tracking of exempt time or the elimination of the ability for managers to do both exempt and nonexempt work concurrently would greatly impact our workforce. As 

a small business, managers may pitch in to work at the front desk, 

answer phone calls, and care for patients. 

Our emergency surgery and internal medicine technical supervisors work on the floor as well as manage their departments. Removing the ability to perform these concurrent activities would 

eliminate many opportunities to homegrow our technicians that 

have ambitions to become supervisors. 

In closing, SHRM is concerned that upcoming changes to the 

FLSA overtime regulations will further exacerbate an already complicated set of regulations for employers and would have the unintended consequence of limiting workplace flexibility for employers 

and employees. 

Mr. Chairman, thank you again for allowing me to share my experiences and SHRM’s view on the rules and regulations governing 

the FLSA. I welcome your questions. 

[The statement of Ms. Berberich follows:] 

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Chairman WALBERG. I thank you. 

Mr. Court, we recognize you for your five minutes of testimony. 

STATEMENT OF MR. LEONARD COURT, SENIOR PARTNER, 

CROWE & DUNLEVY, OKLAHOMA CITY, OKLAHOMA, TESTIFYING ON BEHALF OF THE U.S. CHAMBER OF COMMERCE 

Mr. COURT. Thank you, Mr. Chairman, Ranking Member, and 

members of the Committee. 

On behalf of the U.S. Chamber of Commerce, I submitted a written presentation that covers two separate topics. The first is 

changes that are necessary to bring a statute passed in 1938 into 

the twenty-first century. In it are suggestions concerning, for instance, the updating of the computer expert exemption, the addition of an inside sales exemption. 

And I will leave my written comments and the comments of my 

fellow panelists to cover those, because what I want to focus on is 

the second part. 

What we are talking about today is, in part, the regulations as 

they will be in the paper or will be in the publications. What I 

want to talk to you about is how they are being enforced in the 

field, because we have great concern at the Chamber over the enforcement procedures that we are beginning to see over the last 

five to six years that we think are beyond the pale and in many 

respects simply abusive. 

In that regard, I want to focus on three topics. 

First, a deliberate pattern of now encouraging employers not to 

use legal counsel as part of an investigation. I have given you examples in my written paper, but the most recent one was too recent to even make it. This week one of my colleagues had a wage 

and hour investigator meet with her. The second question out of 

that investigator’s mouth was, ‘‘What is the employer trying to hide 

since they have hired an attorney?’’ 

When my colleague indicated that the employer was going to exercise their right to have the attorney sit in for interviews with 

management personnel, as they often do, again, as part of the enforcement policy of the current administration, the investigator 

said to her, ‘‘This investigation will be quicker, it will be easier if 

you do not participate.’’ There seems to be a fear among wage and 

hour investigators of having experienced attorneys sitting in on the 

investigative process. 

The second problem deals with what I would call compelled settlements with no time to consider them. I have given you three examples in my written presentation of situations where, after taking 

months for an investigation, the investigator comes to the closing 

conference, presents the settlement, and demands an immediate 

signature without any time for consideration, whether that be from 

the individual who is involved seeking legal counsel or, as in one 

of the examples, a multistate corporation where the human resources director needed to run the settlement by his boss and up 

the chain of command. But the threat was, ‘‘If you do not sign it 

today we will immediately refer it to litigation.’’ 

The third area is the dramatic increase in the use of civil money 

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lations. The statute specifically empowers the court, not the Department of Labor, to impose those damages. But as part of the 

new settlement process of this administration, we are finding more 

and more that a demand is being made not just to give back pay, 

but to pay double damages and civil money penalties. 

Two of the examples in my paper, if you were talking about a 

retail establishment or a used car salesman, would be called bait 

and switch. Indications both from attorneys in Washington, D.C., 

and attorneys in Mississippi—all over the United States—where 

the investigators are coming in, settling claims, saying, ‘‘You don’t 

have to worry about liquidated damages,’’ and then after the 

amount of settlement has been agreed to by the employer, then 

coming in with a second person now demanding that liquidated 

damages be paid or that adverse publicity would occur in the newspaper. 

In addition to these three areas of enforcement that I say are 

questionable at best, we have also seen a dramatic decrease in the 

amount of employer assistance in trying to comply with the wage 

and hour regulations. You will hear today and have heard before 

the fact that small employers in particular need assistance in understanding what these regulations mean. 

And yet, this administration has announced and deliberately discontinued the practice of issuing opinion letters where I, as an employer, can give a specific factual situation to the Department of 

Labor and ask how this situation should be handled and how the 

law would be applied. The opinion letter gave the employer a safe 

harbor so that when it got direction from the Department of Labor 

it could rely upon that in going forward with its interpretation of 

the law. 

This administration has discontinued the use of those opinion 

letters and in its place now has indicated that what they want to 

do is issue administrative interpretations. But there are two problems. First, we are getting virtually none being issued. Second, 

they do not appear to have that safe harbor protection for the employer so that relying upon them will give a defense. 

So in closing, I would simply urge you to take a look not only 

at what the regulations say, but the tactics that are being used by 

the current administration in forwarding their investigations. We 

at the Chamber believe that is a significant problem. 

[The statement of Mr. Court follows:] 

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Chairman WALBERG. Thank you, Mr. Court. 

Now I recognize Mr. Harris for your testimony. 

STATEMENT OF HON. SETH D. HARRIS, FORMER ACTING U.S. 

SECRETARY OF LABOR AND DEPUTY U.S. SECRETARY OF 

LABOR, DISTINGUISHED SCHOLAR, CORNELL UNIVERSITY 

SCHOOL OF INDUSTRIAL AND LABOR RELATIONS, ITHACA, 

NEW YORK 

Mr. HARRIS. Thank you very much, Mr. Chairman. 

Mr. Chairman, Ranking Member Wilson, Chairman Kline, Ranking Member Scott, it is good to be with both of you again, and 

thank you for the opportunity to testify today. Let me note that I 

am speaking only for myself, not the various organizations with 

which I am affiliated or in the past have been affiliated. 

America’s working families are suffering through a decades-long 

wages crisis, but neither stagnant wages nor growing income inequality is a foregone conclusion. Public policy matters. Congress 

and the Obama administration must do more. 

Most American workers have struggled with stagnant real wages 

for decades. While there are several alternative measures of wages 

and earnings, they all tell essentially the same story. The average 

American worker has not received a meaningful raise since before 

Ronald Reagan was elected president. 

Real wages have begun to rise again under President Obama, yet 

the pace of wage growth is slow and the amount is too small to 

help American families recover from the decline in household incomes caused by the Great Recession. Real median household incomes in the United States remain well below their pre-recession 

levels. 

The story is different for the wealthiest Americans. Their incomes and wages have continued to grow substantially faster and 

more than those of the average family. 

Since 1979, productivity has almost doubled. Our economy has 

more than doubled in size. But working families are not receiving 

their fair share of this growth. 

Households in the top 10 percent of incomes used to take in onethird of our national income. Now they take in half. The ratio of 

the average top 1 percent household’s wealth to the median American family’s wealth in 2015 is more than twice the ratio in 1983. 

The rich are getting richer, and the richest of the rich are doing 

best of all. 

The wages crisis has hurt working families and our economy. 

Seventy percent of the U.S. economy is consumption—that is working-class and middle-class families, among others, buying goods 

and services. 

If working families’ wages, incomes, and wealth do not rise, then 

the American economy will remain locked in a cycle of slow growth. 

We are pressing the accelerator, but we also have our foot on the 

brake. 

A few policy proposals within this subcommittee’s jurisdiction 

would help ameliorate the wages crisis and contribute to narrowing 

income inequality. 

First, Congress must raise the minimum wage, including for 

tipped employees. The Raise the Wage Act would increase the fedemcdonald on DSK9F6TC42PROD with HEARING

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eral minimum wage to $12 per hour by 2020. An increase in the 

minimum wage also would be extended to so-called tipped employees whose federal minimum wage rate has been stuck at $2.13 for 

20 years. This Committee should approve the Raise the Wage Act 

immediately. 

Second, we must expand minimum wage and overtime coverage 

to low-wage workers, like home health aides. In 1975, the Labor 

Department effectively excluded home health aides and other similar workers from minimum wage and overtime protections. The 

home health care industry has changed dramatically, and the regulations must change along with it. 

The Labor Department’s new regulations were blocked by a poorly reasoned district court decision I expect will be reversed by the 

U.S. Court of Appeals, and rightly so. When it is, the Labor Department should immediately implement the new regulations while 

ensuring that higher wages for home health aides do not result in 

reduced assistance to those they serve. 

Third, the Labor Department should expand eligibility for overtime, and Congress should not narrow eligibility. OMB is reviewing 

draft-proposed regulations that would update the rules defining the 

exemption of executive, administrative, and professional employees 

from FLSA coverage. I hope the Labor Department will update the 

salary threshold which must be reached before a worker is exempt. 

Also, to address employer frustration with ambiguity in the existing rules, the proposed regulation should clarify the meaning of the 

primary duty test by establishing a bright line—perhaps a preponderance standard. 

Congress must not narrow overtime eligibility. Various legislative proposals would allow employers to substitute cash overtime 

for comp time. While superficially appealing, these proposals are 

deeply flawed for several reasons that I detail in my written testimony, and the Committee should reject those proposals. 

Fourth, Congress should ensure all workers have access to paid 

leave for family and medical purposes. 

And finally, Congress should provide the Labor Department’s 

Wage and Hour Division with the enforcement resources it needs 

to ensure fair competition among employers and protect workers 

from wage theft. 

Thank you again, Mr. Chairman, and I look forward to the subcommittee’s questions. I appreciate the opportunity to be with you 

today. 

[The statement of Mr. Harris follows:] 

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Chairman WALBERG. Thank you, Mr. Harris, and thank you for 

your timeliness. You have done this before. 

Now I recognize Mr. Richardson for your five minutes of testimony. 

STATEMENT OF MR. JAMIE RICHARDSON, VICE PRESIDENT, 

WHITE CASTLE SYSTEMS, INC., COLUMBUS, OHIO, TESTIFYING ON BEHALF OF THE NATIONAL COUNCIL OF CHAIN 

RESTAURANTS 

Mr. RICHARDSON. Chairman Walberg, Ranking Member Wilson, 

Chairman Kline, and Ranking Member Scott, and members of the 

subcommittee, thanks for the chance to be with you today to discuss the Fair Labor Standards Act. I am Jamie Richardson, and I serve as vice president at White 

Castle. I am pleased to be testifying on behalf of the National 

Council of Chain Restaurants, NCCR, and NCCR members around 

the country, including the country’s most respected restaurants, 

representing millions of hardworking Americans dedicated to good 

business and great taste. NCCR is a division of the National Retail 

Federation, the world’s largest retail trade group. 

White Castle is a family-owned business, and we were founded 

in 1921. From humble beginnings, we have had the opportunity to 

grow thoughtfully over the past 94 years, and today we have 390 

restaurants in 12 states with 10,000 team members who are dedicated to feeding the souls of craver generations everywhere and 

making memorable moments every day. 

Our founder, Billy Ingram, had two key governing principles in 

growing the business: number one, happy employees make happy 

customers; and number two, we have no right to expect loyalty except from those to whom we are loyal. 

More than one in four of our 10,000 team members have been 

with White Castle 10 years or more. The average time one of our 

general managers has been at White Castle is 21 years, and turnover for this key group last year was less than 6 percent. We are 

recognized as an industry leader for our commitment to diversity, 

with 33 percent of our restaurant general managers who are African-American and 77 percent of our restaurant general managers 

who are female. 

Today, we are here to share thoughts on wage and hour protections and the Fair Labor Standards Act. White Castle was 17 years 

old when FLSA was enacted in 1938, and even then White Castle 

was pioneering a notion of enlightened management before it was 

popular. 

For example, we began offering a health insurance benefit in 

1924. Our profit sharing and retirement benefits were pioneered in 

the late 1920s, as well as a holiday bonus initiated for all team 

members to make us an acknowledged employer of choice in the 

1930s. And those are programs that still continue to this day. 

Our nation’s economy and the labor force have changed significantly since the 1930s, so it comes as no surprise that a statute 

from 1938 and its accompanying regulations do not effectively mirror the needs of today’s business and workforce. There has been a 

major shift in the industries that drive employment opportunities. 

Technology has transformed the workplace and job duties, and ememcdonald on DSK9F6TC42PROD with HEARING

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ployees increasingly place a premium on workplace flexibility and 

work-life balance. 

In fact, nearly 80 percent of our White Castle general managers 

tell us the number one reason they love the Castle is the flexibility 

they enjoy. 

The FLSA’s current statutory and regulatory structure is illequipped to cope with these realities. The result is an outdated and 

complex framework in which employers and employees must operate, and the need to modernize a 1930s, Depression-era law for the 

twenty-first century economy has never been more important. 

One specific example about the relevancy of today’s FLSA is especially concerning to restaurants and retailers. The administration is soon expected to propose major changes to the FLSA overtime regulations, which were last updated in 2004. Rather than 

providing more opportunities for individuals to earn overtime pay, 

it appears the new regulations will only result in a more complicated law requiring outside legal advice for small businesses and 

more litigation. 

In anticipation of these regulatory changes, NCCR’s parent organization, the National Retail Federation, commissioned an Oxford 

Economics study to analyze the impacts of an increase in the salary 

threshold on the retail and restaurant industries. The report demonstrates just how disruptive significant increases in the salary 

threshold would be on an American business model that creates 

jobs in every community across the country. 

Looking at the report’s mid-range option found an increase in the 

overtime salary threshold to $808 per week, or $42,016 per year, 

would affect 1.7 million retail and restaurant workers and would 

cost business owners $5.2 billion per year, assuming employers do 

not make changes to offset the increased costs. At White Castle the 

estimated added cost with no changes in our business model would 

be $8 million to $12 million a year. 

In addition to the expected increase of the salary threshold, we 

also anticipate the U.S. Labor Department regulations will make 

unnecessary modifications to the duties test for restaurant managers, which would impose immense costs on chain restaurants and 

would stifle opportunities for career advancement for hourly associates who wish to manage our restaurants. 

In reality, restaurant managers’ days are spent performing management tasks, and they also multitask, stepping in to help serve 

diners during busy times, leading and training team members by 

working side by side with them, motivating and teaching as they 

go. Enacting a duties test would curb a manager’s critical ability 

to multitask and lead in a busy restaurant setting, undermine customer service, limit training opportunities for team members, diminish morale, and force complicated assessments of time spent 

managing in a restaurant setting. 

Mr. Chairman, the FLSA of the twenty-first century should be 

consistent with the purpose and values from the time in which it 

was enacted almost 80 years ago, but the law should be modernized to reflect the twenty-first century demographics of our workforce and the unlimited opportunities provided by our modern and 

dynamic economy. 

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On behalf of White Castle and the National Council of Chain 

Restaurants, thanks again for the opportunity to share our views, 

and we would be happy to answer any questions. 

[The statement of Mr. Richardson follows:] 

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Chairman WALBERG. Thank you, Mr. Richardson. 

Appreciate your time, and all of the testimonies that were given 

and the timeliness that you did them in. 

I now recognize for the first five minutes of questioning the 

Chairman of the full Committee, Mr. Kline. 

Mr. KLINE. Thank you, Mr. Chairman, for the courtesy. Thanks 

for the hearing. 

Thanks, to the witnesses, for your testimony. And I will just add 

to Chairman Walberg’s comments that almost everybody stayed 

pretty doggone close to five minutes. 

So well done, Mr. Chairman. You must have really gotten after 

them. 

It is good to see you again, Secretary Harris, and all the witnesses. It was interesting sitting here listening to Secretary Harris’ 

testimony, and I was thinking that once again, you know, I—that 

is very fine testimony and I disagree with almost everything you 

said. So some things don’t change. 

I do agree that after some six years the incredibly anemic economy for the last six years or so has worked out fairly well for the 

very, very wealthy, but for the rest of America, not so well. 

Mr. Court, I was interested to hear your focus on implementation 

procedures and tactics that you were talking about under the administration. One of the things that you talked about was this immediate settlement without consultation. 

I want to give you some more time here to elaborate on that, how 

that works, and what is the problem that results—— 

Mr. COURT. Thank—— 

Mr. KLINE [continuing]. Because of that action? 

Mr. COURT. Certainly. If you are unfamiliar with the process, essentially, after the investigation is concluded the wage and hour investigator will then come in with his or her findings. The bottomline figure is what we are talking about. They may say you owe 

$30,000 or $130,000, whatever that figure is. 

What is occurring is that the wage and hour investigator is making the individual who is sitting in the closing conference make an 

immediate decision—we will or we will not accept this proposal— 

otherwise the threat is it will go to immediate litigation on behalf—— 

Mr. KLINE. If I may, who is in the room when this happens? 

Mr. COURT. More often than not it is a human resources director 

of the local facility. For instance, one of the examples that is in my 

paper is a multistate employer with a facility that was in Lawton, 

Oklahoma. They were not represented by counsel up through the 

closing conference. This tactic occurred. 

They happened to pick up the cell phone and call me. I indicated 

to the investigator, no, they are entitled to have time so that their 

legal counsel can look at it and, as importantly, so that their home 

office in Phoenix, Arizona can see if the analysis is proper or something that they want to contest. 

And it appears what the Department of Labor is attempting to 

do is cut out the ability of the employer to either respond or analyze the job that has been done by the local investigator. If the investigators were always right that wouldn’t be a problem, but they 

aren’t. I have had numerous occasions where the initial figure 

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would be a six-figure settlement requirement, and after analysis 

and discussion the figure may drop as low as $10,000. 

So it is cutting out the analytical ability of the company and cutting out the ability to deal with higher-ups in the company, in 

terms of this immediate settlement approach that now seems to 

be—— 

Mr. KLINE. But in this immediate settlement approach, if further 

analysis shows that it should have been, to—$35,000 instead of 

$100,000, it is too bad. You are still stuck with $100,000— 

Mr. COURT. That is correct. By then you have signed the settlement. 

Mr. KLINE. Yes. Thank you. 

Mr. Richardson, it is nice to see you again. Glad that you are 

here. 

I am interested in—because we have had conversations—in fact, 

you and I have had conversations, and conversations with how your 

manager, your store manager, your restaurant manager who is sort 

of the captain of the ship—he has got his crew there and he is trying to move through and he is stepping up to—or she is stepping 

up to serve customers during peak times, doing training, leading 

lower-level employees, and doing those things that were in your 

testimony. If this narrow interpretation of the overtime revisions 

were to hit, you said this is going to have a bad impact. 

So one of the things that I have always been interested in is the 

sort of upward mobility here through the stores. And if this were 

to hit, can you talk about what that would do to the—not just to 

the customers and to the function of the store, but what that does 

to the individual? 

Mr. RICHARDSON. Thank you, Mr. Chairman. 

For our team at White Castle we are proud to say that of our 

450 top restaurant operations team members—the general managers, the district supervisors, and the regional directors—445 of 

those individuals started behind the counter at an hourly rate. So 

our promote-from-within culture is critical to that. 

Those general managers are the captains of the ship, as you indicate. Their hope is to be able to become a multi-unit manager, and 

their effort and their energy is so entrepreneurial about coaching, 

guiding, being involved in community. Oftentimes they want to go 

to the Boys and Girls Club and be part of that. They are the face 

of White Castle and ambassadors of good will, and they take great 

pride in the fact that they have achieved this status as a salaried 

team member and helping lead the charge for that restaurant. 

Mr. KLINE. Thank you. 

I see my time is expired, Mr. Chairman. 

Chairman WALBERG. I thank the gentleman. 

And now I recognize the Ranking Member, gentlelady from Florida, Ms. Wilson. 

Ms. WILSON. Thank you, Mr. Chair. 

My question is for Mr. Harris. Please tell me and tell this body 

why the Fair Labor Standards Act is so important to millions of 

American workers, what has been its role in the past, and what it 

will mean for workers going forward. Can you speak to its role in 

income inequality? 

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And while you are doing that, in your written testimony you 

spoke of a woman from Florida and how she struggled to make 

ends meet on low wages. Tell us about her and other instances you 

might have to make this real, so we will know we are talking about 

real people. 

Thank you. 

Mr. HARRIS. Well, let me start with that story. Thank you very 

much for the question. 

While I was Acting Secretary I had the privilege of traveling 

around the country and meeting with small groups of minimumwage and low-wage workers to give them an opportunity to tell me 

about their experience of living at $7.25, $8 an hour in the American economy. And I met this wonderful woman in central Florida 

who had a daughter with a disability, and she had to make the 

really excruciating choice of giving up hours worked and wages, 

which she would never get back, in order to attend a meeting with 

school administrators about her daughter’s individual education 

plan. 

So she went to the meeting. She and her daughter were driving 

home. Her daughter was hungry, so they stopped for dinner but 

she had almost no money. So she bought one hamburger, one order 

of French fries, and got two cups of water. And her daughter ate 

the meat and the French fries and the mother ate the hamburger 

bun and drank the water. 

And that was just one of dozens of poignant stories I heard all 

around the country, people in low wages making excruciating 

choices. Am I going to buy food or am I going to buy clothes for 

my kids? Am I going to fix the car or am I going to fix the heater? 

Am I going to have to split my prescriptions in half because I can’t 

afford a refill? I heard dozens and dozens of these stories. 

The Fair Labor Standards Act is supposed to help fix that. It is 

supposed to establish a fair floor on wages so that workers can’t 

be exploited and have their wages driven down if they don’t have 

the bargaining power to protect themselves in dealings with employers. It is supposed to avoid exploitative long hours not by putting a hard ceiling on hours, but by requiring that employers pay 

a little bit more. And of course, it protects against exploitative child 

labor, very important, which I don’t expect we will be talking about 

a lot today. 

It is critical, how the Fair Labor Standards Act is structured and 

how the regulations under it are written, is critical to the question 

of wage stagnation and income inequality. The minimum wage has 

been stuck for some seven years now. It is well below its historical 

value. 

Overtime regulations, the current salary threshold that we are 

all talking about here for exempt employees is at half of the average hourly wage for nonproduction employees in the American 

economy—half. So I agree with those who say that some of these 

regulations are outdated. They should be updated so that we are 

pushing wages up, particularly for the lowest workers in our economy. 

Ms. WILSON. In your testimony you outline some of the reasons 

why comp time for private employees is problematic. Can you walk 

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us through an example of how workers might be worse off if their 

employers were allowed to offer comp time in lieu of overtime pay? 

Mr. HARRIS. Certainly. Let me give you the example of an employee who works overtime in January, February, and March of a 

year in order to accumulate enough time so that in August she will 

be able to take time off because her grandmother is going to have 

some kind of a medical procedure and she wants to be able to take 

four weeks off in order to be able to care for her grandmother during August, okay? Let’s say her grandmother is 80 years old, just 

to pick a date. 

Under the comp time proposals that I have read there are two 

ways in which the employer controls the comp time, not the employee. So one possibility is that the employer could say, ‘‘I am 

going to cash out your comp time.’’ 

Under the Senate bill, the employer can cash out all of the comp 

time, meaning give them money, give the employee money in return for the comp time and the employee no longer has time off. 

Under the House bill they can take, in this example, half of it— 

two weeks of it—and leave 80 hours. 

Also, the employer could say, ‘‘Well, no, I am sorry, you can’t 

take any time off in August because that will unduly disrupt my 

operations.’’ And the employer unilaterally decides that. 

So comp time is not like cash wages. If you pay somebody cash 

overtime they control how it is spent—the worker controls how it 

is spent. But with comp time the employer gets to decide, in a lot 

of circumstances, whether or not the employee gets the time off. 

So this tradeoff of cash for time is really an illusion in an unfortunate number of cases. 

Ms. WILSON. Oh, boy. 

Chairman WALBERG. The gentlelady’s time is expired. Appreciate 

the exchange there. 

I now recognize myself for my five minutes of questioning. 

Ms. Berberich, in your testimony you also highlight the ability of 

employees to rise through the ranks, like we have heard in other 

testimony, in part to their ability to perform concurrent duties. For 

example, you note that your emergency surgery and internal medicine technical supervisors work on the floor as well as manage 

their individual departments. 

You argue that concurrent duties allow employees to develop a 

variety of skill set opportunities for advancement. Can you talk a 

little bit more about how important that structure is to the overall 

functioning of a business? 

Ms. BERBERICH. Absolutely. 

The employees originally go to school for this technical position, 

and so they are originally hired to be a registered veterinary technician. At a point in time in their career they express an interest 

in moving into a more supervisory, managerial role. However, they 

don’t want to let go of those technical duties, as well. 

So we offer that flexibility where you can still keep up your technical skill set, and yet also get that management development and 

that training and be able to have more of a place in the management meetings and be able to be a part of the policies and the procedures that go on in the hospital. 

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We like to offer our employees the flexibility of them determining 

the where and the when that they can get their job done. If they 

have to be completely on the floor and they don’t have any flexibility outside of the CARE Center then they don’t have that ability 

to work on performance reviews, phone interviews, things like that, 

that further strengthen their bench strength of workforce on the 

floor. 

Chairman WALBERG. And this is their choice? It is all voluntary? 

Ms. BERBERICH. Yes. This is their choice. 

Chairman WALBERG. This is what they want to do. 

Ms. BERBERICH. Yes. 

Chairman WALBERG. For their own personal reasons. 

Ms. BERBERICH. Yes. 

Chairman WALBERG. Okay. 

Mr. Richardson, you mentioned the fact of some statistics that 

the tenure of your general managers, I believe you said, was 21 

years on average? 

Mr. RICHARDSON. Yes, that is correct. 

Chairman WALBERG. Talk to us a little bit about what the potential overtime rules—the changes that would go on there—talk 

about what that would do to employees’ advancement and job security. 

Mr. RICHARDSON. Thank you, Mr. Chairman. 

There are two primary effects. The first that we are worried 

about is the salary threshold. The second is the duties test. 

That duties test element is so important because the general 

manager—he or she invests their time in helping build that restaurant, and they are engaged and leading the charge every day. 

What we know is without any changes, that would increase our investment in that area $12 million to $18 million a year. 

That is the same money we are currently using to provide a 

great health care benefit. That is the same money we are using 

now for our really robust retirement program, and holiday bonuses, 

and profit-sharing. 

So when we look at it, unfortunately, as a family-owned business 

we can’t budget like Washington, D.C., does, so we don’t have the 

same ability—— 

Chairman WALBERG. Don’t get personal, please. 

[Laughter.] 

Mr. RICHARDSON. So we don’t have that opportunity to be able 

to find those dollars. We are already investing as much as we can 

in our people because that is our number one priority. 

Food and people are our two biggest investments, and at the top 

of the list are our people. So for us, we think that would limit their 

ability to continue to grow and take on more responsibility— 

Chairman WALBERG. Is an assistant manager position a significant position? 

Mr. RICHARDSON. An assistant manager position is a good position. That is an hourly position for us, and an opportunity to learn 

on the job and grow. And then there is a management and training 

program that allows those individuals to grow into a general manager position. 

But you are king or queen of the castle once you become a general manager—— 

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Chairman WALBERG. General manager. 

Mr. RICHARDSON [continuing]. It is a fun position. 

Chairman WALBERG. And committed to it. Okay. 

Mr. Court, you discussed in your testimony how wage and hour 

investigators discourage use of legal counsel. Why? What have you 

determined? 

Mr. COURT. I am concerned that they want—that the focus has 

shifted from doing the investigation right to seeing how much 

money they can collect. You all are very used to having agencies 

come to you and tell you as part of their search for appropriations 

that we have collected X number of dollars for, in this case, wage 

and hour violations. And I am concerned that the emphasis has 

been placed more, in terms of even their evaluations, not on whether the investigation is done correctly, but how much money they 

can collect. 

Chairman WALBERG. So this is intimidation for—— 

Mr. COURT. I—it— 

Chairman WALBERG [continuing]. Fundraising purposes? 

Mr. COURT. I think that is part of exactly what is going on. The 

question I always have is—the question was asked of my colleague, 

you know, ‘‘What is the employer afraid of? Why are they hiring 

legal counsel?’’ 

And my response is, ‘‘What is the investigator afraid of when 

legal counsel is there simply to exercise the rights of the employer?’’ 

Chairman WALBERG. Thank you. 

My time is expired. 

I now recognize Mr. Scott, Ranking Member of the full Committee, for his five minutes of questioning. 

Mr. SCOTT. Thank you, Mr. Chairman. 

Secretary Harris, you recognize the policy that we have that 40 

hours is the work week and over that you should get time-and-ahalf unless you are exempt. Now, the rulemaking is going to suggest a higher number than the $23,000. Now, the exact amount of 

that will be subject to rulemaking with interested parties given an 

opportunity to comment, but if we just increased for inflation since 

1975, the wage threshold, do you know what it would be today? 

Mr. HARRIS. I do. Currently we have a little bit north of 21 million people who are exempt under the existing threshold, and raising the threshold to around $51,000, which would be an inflation 

adjustment since 1975, would newly cover 6.1 million workers. 

Mr. SCOTT. But the number would be about $51,000 just with inflation. And the old rate covered about 65 percent of the workers 

as being exempt; now about 11 or 12 percent are covered. 

If we were to cover 90—excuse me—65 percent of the workers 

like they were back in 1975, what would that threshold be? 

Mr. HARRIS. That would cut the number of exempt in half, so it 

would newly cover about 10.4 million workers. 

Mr. SCOTT. And how much—where would the threshold be—dollar amount? 

Mr. HARRIS. To get to that level it would have to be $69,000— a little north of $69,000 a year. 

Mr. SCOTT. Okay. But we don’t know what the number is going 

to be, but that gives you an idea of if we just adjusted for inflation 

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and what the situation was in 1975, kind of what the numbers 

might look like. 

Now, you mentioned wage inequality. The Chairman mentioned 

that the wealthy have been doing well, everybody else not so hot. 

What federal policy has contributed to that? 

Mr. HARRIS. There is no federal policy under President Obama 

that has contributed to that. I am sorry the Chairman left because 

I wanted to have an opportunity to respond. 

This is not a phenomenon of the last six years; it is the phenomenon of the last four decades. We have seen rising wage inequality and income inequality in the United States really since 

the 1970s, and there are a number of factors and federal policies 

that contribute to that. Failure to raise the minimum wage is very 

important. Failure to raise the overtime threshold is another part 

of it. Failure to provide paid leave. 

We are one of the—we are one of two countries out of 185 surveyed by the OECD that don’t provide paid maternity leave as a 

matter of law. We obviously have the Family and Medical Leave 

Act, but that is unpaid leave for workers. 

Obviously, the declining union density has a very important effect. Our failure over the last 10 years to invest sufficiently in creating middle-wage, middle-skill jobs in infrastructure and other industries. So there are a number of policies that we can change. 

But most important, there are policies within the jurisdiction of 

this subcommittee that I think we can act on. Raising the minimum wage would be the first on my list. 

Mr. SCOTT. Now, what effect would the Paycheck Fairness Act 

have on addressing discrimination? 

Mr. HARRIS. Yes. I think the Paycheck Fairness Act would have 

to be included on that list because of the terrible wage gap between 

the average working woman and the average working man, yes. 

Mr. SCOTT. And can you say a word about what increasing the 

minimum wage—what effect that would have on the economy? 

Mr. HARRIS. I think it would help our economy to grow. As I said, 

70 percent of the American economy is built on consumption. Working people spend the money that they get, and they spend it almost 

right away. So it ricochets throughout the economy, and so it increases GDP. 

You give more money to a billionaire, they put it in savings. 

They don’t spend it, and so it is less effective at helping to grow 

GDP. 

So you put more money in the pockets of 30 million, 35 million, 

38 million Americans by raising the minimum wage, we are going 

to see that ricochet, particularly in the communities that need that 

growth the most, the communities that are suffering the most. 

Mr. SCOTT. Now, one proposal that you have commented on, the 

so-called comp time legislation—how much choice does the employee have in terms of—I mean, does the employer or the employee—does the employer get to choose whether or not the employee can get comp time or take overtime? 

Mr. HARRIS. Well, the way the bills are written, the employee is 

not supposed to be subjected to coercion or intimidation in the decision whether or not to use—to select comp time. 

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But, you know, we are talking about the Wage and Hour Division. I know it is appealing to treat it as though it is this monolithic law enforcement juggernaut. 

They have 1,800 employees protecting 135 million workers in 7.3 

million workplaces, and these bills would add yet another responsibility, which is protecting workers from exploitation with respect to 

comp time. Where are the extra resources going to come from to 

do that? I don’t think that Congress is going to provide them, unfortunately, when they pass this bill. And I have read the bills. I 

don’t see any authorization for additional resources in those bills. 

Mr. SCOTT. Thank you, Mr. Chairman. 

Chairman WALBERG. I thank the gentleman. 

Now I recognize the gentleman from Pennsylvania, Mr. Thompson. 

Mr. THOMPSON. Chairman, thank you so much. 

Thank you to the panelists who are here. 

My first question actually is for Ms. Berberich. As a governing 

body we consistently encourage use of modern technology in our 

schools, our research facilities, and government agencies. It is concerning to hear that by failing to update the FLSA we are essentially doing the opposite for businesses in the twenty-first century. 

And by the way, I hope your patient, Carmen, is doing well—the 

boxer. That is just a great story. 

Can you elaborate on how technology is escalating the risk of 

FLSA noncompliance and how employers are coping? 

Ms. BERBERICH. Absolutely. And thank you for the question. 

Our workforce needs the flexibility to be able to work when and 

where they can get the job done. If we have nonexempt employees 

that have to have all of their time tracked it becomes cost-prohibitive to use electronic devices that are not on the premises to conduct work and to have that time tracked and then calculated in for 

payroll purposes. 

Mr. THOMPSON. Very good. Well, as someone who is really—has 

championed, and successfully, telemedicine language—and I know 

veterinarian services it obviously applies, but, I mean, we are 

just—this really poses a real barrier to what is truly accessible 

health care if we don’t do that. 

Mr. Richardson, I really support that, you know, we all want 

greater opportunity for everyone. I want greater wages. 

I see a different pathway than the former secretary does. I see 

that that is achievable through training. I am proud to co-chair the 

Career and Technical Education Caucus, very strong bipartisan 

caucus here in Congress. I think that we achieve that through career ladder advancement, specific training, career and technical 

education training. 

In your testimony you mentioned—and you talked about this 

briefly in a different concept or perspective—that modifications to 

the duties test would stifle opportunities for career advancement 

for hourly associates. Now, I assume that is, you know, that is really going to prevent them from getting access to the type of on-thejob training that would set them up for that advancement. Can you 

elaborate? 

Mr. RICHARDSON. Yes. Thank you, Congressman. 

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One of the things we encounter is with our team members they 

want to grow and they want to learn. They love the flexibility that 

is part of the workplace. For our general managers specifically, we 

understand that this is, for some of them, where they want to be 

for the rest of their career; for others, they want to advance and 

take on more. 

We have what we call a White Castle University. Good example. 

We bring our general managers in from all over the country. They 

congregate in Ohio, in Columbus, at our home office, and they 

spend time together. For them it is a very unifying experience. 

They feel energized. 

We have general manager conferences. 

Those are the types of things that under a new regulatory regime 

we would have to make tough decisions about because we simply 

can’t print our own Castle dollars and have the dollars affordable 

to be able to invest in that. 

Mr. THOMPSON. Very good. 

Mr. Court, as—I am also—I serve on the Agriculture Committee, 

one of the subcommittee chairs there, so part of your testimony 

caught my eye in terms of commodities. During this recession time 

we have been blessed that the agriculture industry has really remained pretty resilient. It has really saved us—that and our domestic energy production. 

But there are some issues related to export, and we have great 

opportunities in export. So my question kind of centers back on 

part of your testimony and questions about there have been concerns with the Wage and Hour Division’s use of the hot cargo provisions of FLSA to clear settlements. 

As you point out in your testimony, growers shipping products 

will—that will quickly spoil have been coerced into signing a consent judgment to get their products moving even though the growers strongly disagreed with the division’s allegations. How should 

the division use the hot cargo provision, and are there alternatives 

to stopping shipments of goods that are perishable? 

Mr. COURT. First, I would say that the hot cargo provision should 

be used sparingly. It is probably better suited for nonperishable 

goods—the garment industry, for instance. 

The specific case that I reference in my written testimony was 

the circumstance in which the threat—not actually threat, but actual use of the hot cargo provision caused growers in California to 

literally lose in excess of $200,000 worth of product. It forced them 

to sign a consent decree, which they did. 

Ultimately, they went to court to undo the consent decree and a 

federal judge found coercion by the Department of Labor, which is 

the very thing that I am complaining about, in terms of the investigative tactics. 

As an alternative—quite frankly, I have not thought through 

what an alternative to the use of the hot cargo would be in the perishable good industry, other than typical enforcement procedures 

that are used in every other industry, which is to do the investigation, do it right, and see if we can get compliance by way of agreement, and then if not, through litigation. 

Mr. THOMPSON. Thank you, Mr. Chairman. 

Chairman WALBERG. I thank the gentleman. 

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Now I recognize the gentlelady from Ohio, where I enjoyed my 

weekend just south of your district very much. And for a Michigander to say that about Ohio, that is pretty special. 

Ms. FUDGE. I thank you very much, Mr. Chairman. Come any 

time. 

Thank you. I thank you all for your testimony today. 

Clearly there is one thing we agree on, and that is that the Fair 

Labor Standards Act is outdated and is in need of updating. I also 

agree that we need to look at what the purpose of the bill is, and 

that is to be sure that we don’t leave behind the very people the 

law was intended to protect, which are the American worker. 

Now, Mr. Court, I just want to be clear on something that you 

said. You indicated that oftentimes when the investigation is completed they come and give you kind of a ‘‘take it or leave it right 

now.’’ Now, if, in fact, that is the case, I am with you. I don’t agree 

that that is appropriate. 

But I do want to be clear on this: The investigator does not determine whether an employer has legal counsel or not, do they? 

Mr. COURT. The investigator does not determine in the strictest 

sense. What they are doing is encouraging— 

Ms. FUDGE. Well, no, no. That is not my question. 

Mr. COURT. Okay. 

Ms. FUDGE. The question is, they don’t determine it, the employer determines whether they have legal counsel or not. 

Mr. COURT. That is correct. The employer determines whether 

they have legal counsel. 

Ms. FUDGE. Okay. Thank you. 

Mr. Richardson, I will have to admit that I have eaten many too 

many of those when I was in college at Ohio State— 

Mr. RICHARDSON. We appreciate your patronage. Thank you. 

Ms. FUDGE. I spent a lot of time in Ohio. Let me say that first. 

But let me ask this question: What is the average salary of your 

managers and how many hours do they work, on average? 

Mr. RICHARDSON. For our general managers they work on average about 40 hours. We think it is important to have work-life balance— 

Ms. FUDGE. Not general manager, the level below that one. 

Mr. RICHARDSON. Oh, the level below that? 

Ms. FUDGE. Yes. 

Mr. RICHARDSON. For those team members who have been with 

us a bit longer they are working somewhere between 35 and 40 

hours, for the most part. We have, with new hires they start out 

as part-time, so that is below 30 hours now. And so with those who 

are below 30 their hope is to be able to be available and be able 

to get the—— 

Ms. FUDGE. What is the salary? My question is, what is the salary, and on average, how many hours do they work? 

Mr. RICHARDSON. Oh, sure. Okay. So you are talking about not 

our general managers but our hourly team members? 

Ms. FUDGE. Correct. 

Mr. RICHARDSON. The average hourly team member at White Castle makes close to $10 per hour. 

Ms. FUDGE. Is that ‘‘close to’’ like $8, or is it—— 

Mr. RICHARDSON. No, no, no, no; $9.78, somewhere in there. 

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Ms. FUDGE. Okay. 

Mr. RICHARDSON. It is about 38 percent ahead of the federal minimum wage. 

Ms. FUDGE. Okay. Now, tell me at what level do you not think 

it appropriate that they should receive overtime. 

Mr. RICHARDSON. When you are talking about the general managers or—— 

Ms. FUDGE. Anybody. Just pick anybody. 

Mr. RICHARDSON. Well, for our team members it is about worklife balance, so our focus, as a people-focused business and happy 

employees making happy customers, is to really meet them where 

they are. The biggest—— 

Ms. FUDGE. I am happy too, but I need the answer. 

Mr. RICHARDSON. Sure. Let me just share one part that shapes 

it, because each person’s choices are different and we offer a lot of 

flexibility, that can shape that pretty dramatically. 

Ms. FUDGE. Thank you so much. 

Mr. Harris, let’s go back to the comp time proposal. I am a 

former mayor so I worked in the public sector. I understand comp 

time very, very well. 

Please explain again for me why you think it is not appropriate 

for the change that the House is talking about to be in law. Please 

explain that for me again. 

Mr. HARRIS. I will do it really quickly, because there is a long 

discussion, I think. The first is the myth that the FLSA is perfectly 

inflexible is just that. It is a myth. There is a great deal of flexibility. 

The difference between the comp time proposals and the FLSA 

is that with the flexibility workers get paid less under the comp 

time proposals and more under the FLSA. So if you are concerned 

about wage stagnation, if you are concerned about income inequality, the comp time proposals are the wrong way to go. 

The second is workers don’t need time or money, they need time 

and money. And I think that the premise of the bill that they 

should have to buy overtime from—buy time off from their employers by sacrificing their overtime pay, in addition to being morally 

dubious, is really problematic as an economic matter and as a matter of where we are in our country. 

And then finally, I would say I—as I said before in response to 

the Ranking Member’s question, I don’t think the workers get the 

deal that they are being promised because employers still control 

the comp time in large part. 

Ms. FUDGE. Thank you very much. 

Just let me say lastly, I understand that there are some issues 

with the investigation. I am going to look into that to see what is 

happening with that. But I do know this one thing: you wouldn’t 

have an investigation if you didn’t break the law. 

Thank you very much. I yield back, Mr. Chairman. 

Chairman WALBERG. I thank the gentlelady, and I do disagree 

that you have had too many White Castles. That is impossible, in 

my position. 

I now recognize the ranking millennial on this Committee, the 

gentlelady from New York, Ms. Stefanik. 

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Ms. STEFANIK. Thank you, Mr. Chairman. And that is very fitting because my question was related to millennials in the workplace, and my question is for Ms. Berberich. 

As a fellow millennial I just wanted to lay down the context. Last 

month millennials surpassed Generation Xers as the largest generation in the U.S. labor force. More than one in three American 

workers today are millennials, and by 2020 nearly half of the U.S. 

workforce will be comprised of millennials. 

So your point about how the FLSA and the fact that it has not 

modernized to keep pace with the technologically driven workplace 

is very meaningful. It will have significant impacts on our broader 

economic growth. 

I know that I am an—typical millennial, an avid user of my 

smartphone, and I know that my constituents at home expect me 

to be in contact at all hours to make sure that I am serving them. 

And I believe that in small businesses and in the private sector it 

is also important to have that flexibility to promote greater productivity and to help grow our businesses. 

So can you talk about specifically how employers have been advised to ensure compliance with current rules is stifling flexibility 

and productivity, from your experience? 

Ms. BERBERICH. Thank you for your question. 

I would say that employers are being stifled in their flexibility 

under the current regulations due to not having the resources for 

tracking this possible compensable time. In an organization such as 

CARE Center I am a one-person HR department. If we have to 

have additional tracking outside of our in-house systems, that 

would be additional expense, and I can say that for CARE Center 

and for many small businesses, we simply don’t have the resources 

for it. 

Ms. STEFANIK. And, Mr. Richardson, you spoke a lot about your 

company’s commitment to flexibility in the workplace. Do you have 

any thoughts, as you are seeing millennials join your business, and 

do you have any reflections to share? 

Mr. RICHARDSON. One of the things that is really interesting as 

we attract more millennials is to see that their priorities are different. And not surprisingly, our general managers who are 40 and 

over are a bit more focused on retirement benefit and what comes 

next in that degree. 

With our younger workers it is absolutely about what can I 

learn, and a different notion of how long is a good time to stay 

somewhere. So to them it is about learning the skills, the portability, having that chance to get the first job in a workplace. 

And I will tell you what is really tough, in a lot of our cities that 

youth unemployment rate is catastrophically high—over 50 percent 

in Chicago; over 38 percent in Detroit; near 27 percent in New 

York. And that is why we fear if there are other wage adjustments 

those are the first folks who don’t get that chance to have that first 

step on the ladder to progress and opportunity. 

So that is where we have real inequality. It is about inequality 

of opportunity that we are seeing in that landscape where we need 

to have more jobs. 

Ms. STEFANIK. Mr. Court, do you have anything to add? 

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Mr. COURT. Let me just respond to the last, I guess, comment 

that if you weren’t doing something wrong there wouldn’t be an investigation. I couldn’t disagree more. 

An investigation can be started by a disgruntled employee. It can 

be started by a business competitor. The Department of Labor recognizes those investigations, and I have cited in my paper at least 

one example from my neighboring state of Arkansas of an investigation that went on for months, ran six-figure legal fees, and ultimately there was a finding that nothing was wrong. 

Ms. STEFANIK. Thank you very much. 

I think in order to encourage economic growth for Millennials we 

ought to be promoting policies that promote flexibility and productivity. 

So thank you very much, and I yield back. 

Chairman WALBERG. I thank the gentlelady. 

And now I recognize the distinguished representative from California, Mr. DeSaulnier. 

Mr. DESAULNIER. Thank you, Mr. Chairman. 

Let me first say that as somebody who has owned and managed 

restaurants—independent restaurants—very different, Mr. Richardson, from your product—I feel some sympathy in the last comment by Mr. Court on regulations that don’t seem to really be efficient, and it might be because of the resources we put into them, 

in terms of their stated goals. 

Having said that, coming from Northern California, where we 

have a very high-cost area but the restaurant business does very 

well in spite of—and having managed—and I own restaurants in 

San Francisco, where you have got a very high minimum wage, you 

don’t have a tipped minimum wage. It is sort of shocking to see 

that the federal tipped minimum wage is only $2.13, and my staff 

made a lot of money in tips. 

So all of that said in the context that California regulations are 

much more difficult than the federal, which I look at as sort of a 

minimum. 

When our managers scheduled they had to pay extra for split 

shifts. A lot of my employees didn’t—they had to commute a long 

way. They didn’t like doing a split shift. But on the other hand, I 

had to pay them time-and-a-half. 

So I understand all that, but in the long run, the biggest problem, to Mr. Harris’ comments—and I have—first question is your 

example of the steel mill was really wonderful, but in the service 

industry you say—the food service industry—trying to get that 

kind of technological improvement, particularly in fine dining, is 

fairly limited, and you still need a well-educated workforce. 

Do you have any responses to productivity when it comes to nonmanufacturing fields, and how do we get more productive employees and still have particularly small businesses thrive? Now, that 

was actually Mr. Harris. 

Mr. HARRIS. Oh. Well, thank you very much. That is a very big 

question. 

So there are industries where technology is not going to be able 

to make dramatic change, but you see in restaurants—fast casual 

restaurants and other kinds—the use of technology for ordering, so 

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en. The servers are essentially just delivering the food, they are not 

taking the orders. 

You are able to pay at your table. That is an innovation of one 

of the fast casual restaurants. 

So that will be an example of—in those small—those businesses 

that use those kinds of technologies will see a decline in the number of employees, but I don’t think we will see the kind of dramatic 

impact, for example, that we have seen in manufacturing. The example I gave in my testimony was a 75 percent cut in the number 

of workers. 

Mr. DESAULNIER. The reason I asked, other than the fact I want 

to avail myself of your wisdom, is so in those fields in order to become—get a greater return on investment it seems like you almost 

have to get concessions on the wage side and benefit side. But that 

is a Henry Ford rule. If I didn’t pay my employees enough to be 

able to come into my restaurant it really had a problem to the larger question that you posed about an economy that is 70 percent 

driven by consumer purchases, and that we have this huge disparity in capital and labor. 

So your comment about tightening the labor markets by creating 

millions of jobs, particularly in middle-wage, middle-skill jobs with 

smart investments in transportation and communication infrastructure, alternative energy, these are all things we have done in 

California and it spurred the economy. So I wonder if you could 

comment on that. 

I guess what I am getting at, for the individual business owner 

they are in a very retail environment. But we have got a larger, 

more complex issue that you are very well versed in that if we 

could get the wages up it would benefit—obviously benefit the economy and the small business owner. 

Mr. HARRIS. I think that is precisely right, is that if we are able 

to raise wages across the board, particularly for low-wage and middle-skill workers, we are simply going to have more people spending more money. Those workers will spend every dollar that they 

get, sometimes more than every dollar that they get, and that 

spurs economic growth. 

It helps White Castle. People are spending more money in their 

restaurants. It helps those restaurants you are talking about in 

California. People are spending more money there. 

It allows them to hire more people. It allows them to expand. It 

allows them to open a new restaurant. 

As demand goes up, good things happen with respect to supply 

and production. 

We have a trend in our economy—it is a long-term trend, really 

since the 1970s—where technology has replaced workers in a lot of 

places. It has also allowed for off-shoring of jobs. So you have a lot 

of middle-wage, middle-skill workers who are dropping into lowwage, low-skill jobs simply because the middle-wage, middle-skill 

jobs are gone. 

Think of ATMs and bank tellers. Think of robots and manufacturing jobs. That has put downward pressure on wages both in the 

middle-wage, middle-skill market and in the low-wage, low-skill 

market. 

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So we both, and I agree with the comment before. We need to 

skill workers up so that they can compete for those high-wage, 

high-skill jobs, but that is difficult for a lot of workers. 

We also have to raise the bottom as much as we can by raising 

the minimum wage, raising overtime standards, making sure that 

we are protecting workers through tough enforcement. 

Mr. DESAULNIER. And I appreciate that, but it is a leap of faith 

for the individual business owner to do that. I have found in my 

experience that when you took that leap of faith as a regional economy it benefited you in the long run. 

Thank you, Mr. Chairman. 

Chairman WALBERG. I thank the gentleman. 

Now I continue with the California questioning by recognizing 

the gentleman from California, Mr. Takano. 

Mr. TAKANO. Thank you, Mr. Chairman. 

I am particularly interested this morning in this morning’s testimony on the forthcoming Department of Labor proposed rule to update the Fair Labor Standards Act white-collar exemption for overtime pay. 

We have heard from witnesses today that the FLSA is outdated 

and hasn’t been updated to reflect the modern workplace. I would 

argue that is one of the very reasons an update to the overtime exemption is badly needed. 

The intent of the white collar exemption to overtime pay was to 

exempt those with sufficient power in the labor market who are 

able to advocate for better wages and hours for themselves. This 

is clearly not the case anymore. 

In 1975, 65 percent of salaried workers were eligible for overtime 

pay. Now only 11 percent of workers are eligible. 

As we have heard this morning, Americans are working longer 

hours and are more productive, yet their wages are largely flat. 

Updating the overtime exemption will help millions of workers 

make ends meet and give an added boost to our economy. 

Well, Mr. Harris, what is your response to those who will say 

that this will hurt the workers we want to help? If employers don’t 

want to pay the extra overtime, won’t they logically increase the 

hours of those working part-time and hire more workers? 

Mr. HARRIS. Well, let me just say, if the biggest problem that 

workers have is that they will have too much money to spend, I 

think that is a problem that we can live with, and that is what is 

going to happen, is that workers who are currently exempted who 

are earning $27,000, $28,000, $29,000 a year and are working 50, 

60, 70 hours a week, they are going to see their pay go up. Either 

because the employer genuinely believes that they should be exempt—they should have the status of an exempt employee and 

they raise their pay in order to get them over the threshold, or because they are going to have to be paid hourly and they are going 

to get more money because they are working in excess of 40 hours 

in a week and they are going to get time-and-a-half. So those workers’ wages are going to go up. 

But I think you are right. We are going to see some substitution 

where workers who are currently working part time in fast-food 

restaurants and other kinds of establishments are going to see 

their hours increase, particularly if the Labor Department focuses 

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on this primary duties test. If we say, ‘‘You know what? You can’t 

work 99 percent of your time doing nonexempt work and still be 

an exempt employee,’’ and we say that work has to be done by 

somebody else, I do expect that we are going to see more part-time 

employees getting more hours, as you predicted. 

Mr. TAKANO. Thank you. 

Mr. Harris, in your testimony you briefly talked about the types 

of workers who will benefit from raising the income threshold for 

overtime pay. Can you tell us more about the characteristics of 

these workers? 

Mr. HARRIS. Right. So, as I said earlier in response to Ranking 

Member Scott’s question, we have about 21 million, almost 22 million workers who are currently exempt with the threshold—or can 

be exempt at the current threshold of $455. 

If we raise the threshold, that is largely going to benefit—not exclusively, but largely going to benefit women workers, because we 

have a lot of women in the low-wage ranks, particularly in industries like retail and fast-food and others. It will disproportionately 

benefit workers of color because, again, they tend to be over-represented in low-wage, low-skill jobs, unfortunately. 

And it is going to help not the youngest workers, because that 

is not who are the assistant managers or the general managers; it 

is going to help workers who are in their 30s and 40s, not the 

millennials, who are going to—who are—who have gotten along in 

their career and have moved up a little bit in their career but are 

still not getting sufficient wages. 

So the groups that have been left behind in our economy are the 

folks who are going to benefit the most from an increase in the 

overtime threshold. 

Mr. TAKANO. Thank you. 

And to add to Mr. Harris’ remarks, I would like to ask unanimous consent to insert into the record a report from the National 

Employment Law Project. This report has stories of workers who 

would benefit. 

[The information follows:] 

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Chairman WALBERG. Without objection. Hearing none, it will be 

submitted. 

Mr. TAKANO. Some would argue that changes to white collar exemption will result in more confusion for employees. It would seem 

to me that the current duties test is responsible for much of the 

confusion regarding exempt versus nonexempt employees. 

Won’t a clearer definition of executive, administrative, or professional work help employers properly categorize employees? And as 

a follow up, won’t raising the income threshold make more employees eligible and mean employers will be less reliant on the duties 

test to determine if a worker is exempt or nonexempt? 

Mr. HARRIS. With respect to the latter point, absolutely, yes. You 

are going to have many—if the threshold goes up, particularly if it 

goes up substantially, you will have many fewer employees to 

whom you have to apply the duties test because they will simply 

be covered by overtime because they are below the threshold. 

With respect to the duties test itself, you know, I think employers are trying to make a choice now: Do they want the devil they 

know or do they want the devil they don’t know that is coming in 

the regulations? 

My view is let’s wait and see what the regulations say. We have 

talked a lot about the regulations here. None of us know what are 

in these proposed regulations except we think that the salary 

threshold is going to go up. 

Let’s see them. Let’s see whether or not they simplify the rules 

for employers. 

One of the things I have said is that if we make a clear, bright 

line on the primary duties test to support some of the things that 

my colleagues on the panel have said, that will make it a lot easier 

for employers. Clear lines are better for people who are regulated 

so they can conform their behavior to the standards. 

So I am hoping that they are going to do that in this regulation, 

and I expect they will. 

Chairman WALBERG. Thank the gentleman. Time is expired. 

Now I recognize the gentleman from Indiana, a great state with 

businesses and challenges, and now competition coming from the 

north finally, and look forward to your questioning. 

Mr. ROKITA. We welcome the competition, and it is a good thing, 

Mr. Chairman. This hearing is also a good thing. I appreciate you 

holding it. 

My apologies for not being able to be here for everyone’s testimony, but we had a late vote series last night, so before that vote 

series I was able to look into some of your remarks and get acquainted with them. When you are trapped in the office you might 

as well work, right? 

My first question, then, would go to, at this point I think, Mr. 

Court. In your testimony you testify to a substantial increase in 

FLSA lawsuits. And in fact, the GAO accounts for a 514 percent 

increase in lawsuits since 1991. 

And Mr. Harris stated in his testimony that—he said the overwhelming majority—I am paraphrasing here, but correct me if I 

am wrong—the overwhelming majority of U.S. companies want to 

comply with the law and, in fact, do comply with the law. That is 

nice. 

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But then you also say—you at least admit the existing rules are 

too complex. 

So, Mr. Court, in your opinion has confusion about FLSA rules 

contributed to the increase in FLSA litigation? Is there a correlation or a causation there? 

Mr. COURT. I don’t believe that the current test of primary duties 

is the source of this increase in litigation. Quite frankly, with all 

due deference to the congressman from California, the California 

bright line test of the 51 percent is indication of how litigation will 

occur, because California leads the country in wage and hour class 

action lawsuits. 

They use a bright line test in California. Who is really going to 

get rich off of a bright line test is the attorneys, because it is simply going to increase the litigation. 

Two years ago I spoke to the Oklahoma State Human Resources 

Conference, and I asked this very question, sort of the one that Mr. 

Harris indicated: Would you prefer a bright line test, which I think 

is the myth that is being spread by proponents of it, or do you prefer the current primary duties test? I asked for a raise of hands 

from an audience of over 150, ‘‘How many of you want a bright line 

test, a percentage test?’’ Not a single person in the room raised 

their hands. 

Mr. ROKITA. This was an audience of who? 

Mr. COURT. Human resource directors. 

And then I was part of a delegation to meet with the secretary 

of labor and his staff over the proposed regulations, as they were 

doing their meetings with various contingency groups, and I told 

this story and a prominent member of that department said to me, 

‘‘Leonard, that is what I am hearing from human resource directors 

all across the country.’’ Businesses do not want the bright line test, 

contrary to what—the propaganda that is being spread. 

Mr. ROKITA. Thank you for that, Mr. Court. Let me ask you this: 

Is it pretty much understood by let’s say the folks in that audience, 

or even you, that the—there has been a reduction in the administration’s compliance assistance in the agency, and actually the 

elimination of the issuance of opinion letters? Correct, right? 

Mr. COURT. That is correct. 

Mr. ROKITA. Right. 

Mr. COURT. That is one of many. 

Mr. ROKITA. Can that be attributed to this increase in lawsuits? 

Mr. COURT. I think the—— 

Mr. ROKITA. Hold on, Mr. Harris. And let the record reflect Mr. 

Harris is nodding his head. But you just said—— 

Mr. HARRIS [continuing]. I was shaking my head—— 

Mr. ROKITA [continuing]. Shaking, excuse me, shaking your head. 

But you just testified earlier that, you know, apparently people like 

detailed, specific rules if they are going to be regulated. Well, the 

administration eliminating opinion letters seems to go against that 

testimony. 

Mr. Court. 

Mr. COURT. I would agree with that observation. 

Another thing the Department of Labor has essentially ceased 

doing for literally decades, if I as an employer found that I had a 

violation, and I wanted to correct it, I have to get approval from 

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the Department of Labor to get an effective release. That is one of 

the methodologies. 

And historically what we would do is go to the Department of 

Labor, say, ‘‘All right, we found this problem; we want to fix it,’’ 

and get their assistance. Today, employers are not doing that because the Department of Labor has quit helping and quit giving 

the assurance that if I voluntarily come forward that won’t result 

in a massive investigation which now could result in the liquidated 

damages and civil money penalties. 

Mr. ROKITA. Yes. Seems to me this leads to an adversarial relationship when they could—the agency could just as easily spend its 

time and resources to help with compliance. 

Mr. COURT. It does that, and quite frankly, it seems to me it is 

counterproductive to the very goal that we are sort of all talking 

about here, which is to quickly get the wages to the employees, because to the extent it encourages litigation, that delays the decision-making process. 

Mr. ROKITA. Thank you, Chairman. I yield back. 

I yield. 

Chairman WALBERG. Let me just ask one question in following 

up with your train that was going there. 

Ms. Berberich, what does ‘‘human resources’’ connote to you? 

Ms. BERBERICH. I am sorry, can you repeat that question? 

Chairman WALBERG. What does ‘‘human resources’’ connote to 

you? What does it mean to you when you hear the term ‘‘human 

resources?’’ And I am coming from a time when you used to be 

called ‘‘personnel department.’’ 

Ms. BERBERICH. Thank you, Mr. Chairman. 

Chairman WALBERG. Could you quickly answer that? 

Ms. BERBERICH. Human resources to me is servant leadership. 

The idea of human resources is to be there for your employees, interpret the laws, help management to make the correct decisions. 

We want to have those good-faith efforts in properly interpreting 

the law and making the decisions that are in the best interest of 

both the business and the employees. 

Chairman WALBERG. Thank you. 

I yield back. 

The gentleman’s time is expired. 

I was just caught there as I was listening with that flashback as 

Mr. Court was speaking that we are in a different time—and I 

think it is a good time—that we are talking not simply about personnel department, ‘‘personnel’’ meaning fairly sterile—people 

hired to do a job—to the issue of human resources, as we look at 

it, I think, in most general cases, across the board. We look at it 

as a cooperative relationship. 

Well, I appreciate the testimony today. I appreciate the answers 

the witnesses have given from both sides of the ledger and in between and all around. 

And I appreciate the attention that the subcommittee members 

have given to this issue. 

So now I would ask the Ranking Member for her closing statement. 

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Ms. WILSON. Mr. Chairman, I want to thank you again for holding this hearing and giving us an opportunity to discuss the Fair 

Labor Standards Act. 

I want to thank all of the witnesses for being here today. 

Today we have heard lots of statistics about how many Americans would benefit from strengthening the FLSA. We have heard 

stories about the people who would benefit from much-needed updates to the law. 

But I want to remind my colleagues that these statistics and stories represent real people. These are our constituents. These are 

people who truly know what it means to struggle with low, stagnant, or unfair wages—millions of Americans who know what it 

means to work long hours and never get ahead. 

These statistics and stories represent the 130 million Americans 

protected by FLSA. Thirty-eight million Americans would benefit 

from a raise to the minimum wage. These are the people who wake 

up every morning and go to their jobs knowing that at the end of 

the day, no matter how hard they have worked, they will not make 

enough to make ends meet. They are why we must pass the Raise 

the Wage Act. 

The statistics and stories represent the millions of women who 

would benefit from the strengthening of the equal pay protection. 

These are the women, no matter how hard they work, may be denied the security of equal pay for equal work. It is unconscionable 

that women on average make $10,000 less a year than men. We 

must pass the Paycheck Fairness Act. 

The stories we have heard today represent the millions of workers who work 60, 70, even 80 hours a week and make less than 

$24,000 a year with no additional pay for overtime. It is absurd 

that we think that these constituents and this scenario constitute 

fair wages. We must support an increased salary threshold for 

overtime pay. 

All of these necessary updates—raising the minimum wage, 

equal pay guarantees, overtime adjustment—reflect the spirit that 

was enshrined in the FLSA 77 years ago. Congress came together 

to memorialize and venerate the rights we know all workers are 

entitled to. 

These rights are predicated on a simple yet wholly undeniable 

fact: American workers deserve to work with dignity. Forty years 

of wage stagnation have chipped away that dignity. It has forced 

far too many Americans to work for far less than what they are 

worth. 

As hard as Americans work to try to make a decent living, to 

provide food for their families, to pay their bills, to put their children through college, we cannot in good conscience take steps to 

erode where protections are in place. 

I stand with my colleagues on this Committee—I don’t care what 

side they are on, what party, but if they stand with me on this 

committee—who remain dedicated to ensuring we restore and uphold the dignity of work. I hope that our colleagues who don’t will 

join us in our endeavor. 

I appreciate this opportunity to talk about FLSA, and I urge this 

subcommittee to do more. 

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Hold a hearing on decreasing the gender wage gap. Hold a hearing on raising the minimum wage. Hold a hearing that finally puts 

the rights of American workers first. Hold a hearing on overtime 

versus comp time versus compensation. 

Hold a hearing and finally agree that this country is facing a serious income inequality problem. We know this, and we must respect this, and we must respect the workers. 

I yield back the balance of my time. 

Chairman WALBERG. I thank the gentlelady, and I certainly 

would concur with the fact that the FLSA has served its purpose 

in many cases over many years in a very positive way. 

And the grand old lady or gentleman that we want to call it, 

whatever gender we give to that legislation, it does need some updating. It needs to get into the real world of today. 

And yes, I am glad that today we had stories of American workers told. But I am also glad we had stories of employers—American 

employers who provide opportunity for the American dream. And 

I think those two stories need to be told, but they need to coincide 

together in a way that is a continuity of that American dream that 

goes on. 

We will have tension. We always will. It is part of America. That 

is why we are the greatest country in the world and have provided 

the greatest opportunity for all men and women, all colors, creeds, 

et cetera, in the world. And we want that to continue. 

But we need to do it in the proper way, and we will have more 

hearings. We will look to more issues to, indeed, from my perspective, get government out of the way as much as possible to let the 

genius that is America and its people function. 

I would say that we have an agenda, we have priorities, but I 

maybe ought to hold back. But I am not; 2009, 2010 was a time 

when the majority party of those two years, the 111th Congress, if 

these were important issues, as important as they are being perceived today and spoken of today—minimum wage, income equality 

and all the rest, overtime hours—why weren’t they dealt with during that time in Congress, when the minority party of today controlled both houses and the White House? If it was that important 

then, and it is that important now, why wasn’t it taken care of 

then with proposals? 

And yet, we brought about legislation that mandated 30-hour full 

time that has caused significant problem to industries even seated 

at this table; 50-employee-level mandate for requirement of health 

care, which has caused extreme problems to our small businesses 

of today and a frustration of our economy moving forward. We don’t 

want that to continue. 

Just two weeks ago I had the privilege, along with the Chairman 

and several members of the full Committee, in visiting Skype in 

Estonia—Tallinn, Estonia. I realized I was not a millennial at that 

time or anything younger than that. But a creative environment 

where they had a 24-hour food service—hot food service there, cafeteria available for their employees; where they had beanbags, if 

they wanted to take a nap they could do that. 

They had a sauna. For those of you that aren’t Scandinavian, 

that is a sauna. They had a playroom. They had work stations 

without walls. And I felt very old there. 

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And yet, Microsoft and Skype are doing creative things there 

that allows for flexibility, creativity, authenticity of the workforce 

in doing things to move the common agenda forward for that company—Google and others like that. 

But it is not just those companies. It is, as we heard, the food 

industry, the health care industry of both humans and animals, the 

brick and mortar manufacturing, sales forces, with the resources 

we have today that make it possible for you to do your work away 

from the workplace and do it well and still meet needs of the family concerns, of the individual concerns. 

And that is something we want to get right when we look at 

FLSA, to make sure it is not just good for now but it is good for 

a number of—maybe not 75 years, with the rapid increase that we 

have. So I think that is, again, why flexibility has to be there, so 

we will keep looking at it. 

I hope that Department of Labor has been listening today. I hope 

that they have heard real-world stories that have gone on. I hope 

they understand the creative tension that was even at the witness 

table today so that we don’t do things that ultimately frustrate the 

movement forward not just for this country but for each individual 

in this country—the employee and the employer—so we can remain 

the standard for the world. 

Let me just point out finally in conclusion, a lot of statements 

were made about the Working Families Flexibility Act, H.R. 1406, 

specifically. Let me make it very clear: The decision to receive comp 

time is completely voluntary. 

Workers can withdraw from a comp time agreement whenever 

they choose. No worker can be intimidated, coerced, or forced to accept comp time instead of cash wages. All existing enforcement 

remedies, including action by the U.S. Department of Labor, are 

available to workers. Just make sure the facts of the legislation are 

clear. 

Having no more issues to come before the Committee at this 

time, I declare it adjourned. 

[Additional submissions by Chairman Walberg follow:] 

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[Additional submission by Ms. Wilson follows:] 

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[Whereupon, at 12:13 p.m., the subcommittee was adjourned.] 

Æ 

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