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THE ADMINISTRATION’S OVERTIME 

RULE AND ITS CONSEQUENCES FOR 

WORKERS, STUDENTS, NONPROFITS, 

AND SMALL BUSINESSES 

HEARING 

BEFORE THE

COMMITTEE ON EDUCATION 

AND THE WORKFORCE 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

HEARING HELD IN WASHINGTON, DC, JUNE 9, 2016 

Serial No. 114–51 

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 

CEWDOCROOM with DISTILLER

(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 

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(III) 

C O N T E N T S 

Page 

Hearing held on June 9, 2016 ................................................................................. 1 

Statement of Members: 

Kline, Hon. John, Chairman, Committee on Education and the Workforce 1 

Prepared statement of ............................................................................... 2 

Scott, Hon. Robert C. ‘‘Bobby’’, Ranking Member, Committee on Education and the Workforce ............................................................................. 5 

Prepared statement of ............................................................................... 6 

Walberg, Hon. Tim, a Representative in Congress from the state of Michigan .................................................................................................................. 3 

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

Wilson, Hon. Frederica S., a Representative in Congress from the state 

of Florida ....................................................................................................... 7 

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

Statement of Witnesses: 

Bernstein, Dr. Jared, Senior Fellow, Center on Budget and Budget Policy 

Priorities ........................................................................................................ 20 

Prepared statement of ............................................................................... 22 

Passantino, Mr. Alexander J., Esq., Partner, Seyfarth Shaw LLP, Washington, D.C. ................................................................................................... 38 

Prepared statement of ............................................................................... 41 

Rounds, General Michael, Associate Vice Provost of Human Resource 

Management, University of Kansas, Lawrence, KS ................................... 30 

Prepared statement of ............................................................................... 32 

Sharby, Ms. Tina, Chief Human Resources Officer, Easter Seals New 

Hampshire, Manchester, NH ....................................................................... 9 

Prepared statement of ............................................................................... 12 

Additional Submissions: 

Guthrie, Hon. Brett, a Representative in Congress from the State of 

Kentucky: 

Prepared statement of Dr. William Luckey ............................................ 65 

Hinojosa, Hon. Rube ́n, a Representative in Congress from the State of 

Texas: 

Letter from Professors at Colleges and Universities .............................. 94 

Mr. Kline: 

Prepared statement of the Society for Human Resource Management 114 

Letter from America Association of Colleges of Pharmacy (AACP) ...... 116 

Letter from Consumer Technology Association ...................................... 118 

Letter from Credit Union National Association (CUNA) ....................... 120 

Letter dated June 9, 2016, from College and University Professional 

Association for Human Resources (cupa-hr) ........................................ 123 

Prepared statement of Independent Electrical Contractors .................. 125 

Prepared statement of Independent Insurance Agent ........................... 128 

Prepared statement of National Association of Federal Credit Unions 

(NAFCU) ................................................................................................. 131 

Prepared statement of National Association of Home Builders 

(NAHB) ................................................................................................... 133 

Prepared statement of National Federation of Independent Business 

(NFIB) ..................................................................................................... 134 

Letter dated June 6, 2016, from National Multifamily Housing Council (NMHC) and the National Apartment Association (NAA) ............ 136 

Letter dated June 17, 2016, from National Retail Federation (NRF) ... 137 

Letter dated June 9, 2016, from Partnership To Protect Workplace 

Opportunity ............................................................................................ 139 

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IV 

Additional Submissions—Continued 

Mr. Kline—Continued 

Letter dated June 9, 2016, from WorldatWork ....................................... 169 

Mr. Scott: 

Economic Policy Institute: Facts on the updated overtime rule ............ 172 

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

California: 

Economic Policy Institute: Nonprofit organizations in support of the 

Department of Labor’s new overtime regulations ............................... 175 

Questions submitted for the record by Stefanik, Hon. Elise, a Representative in Congress from the State of New York to General Rounds 183 

General Rounds response to questions submitted for the record 185 

CEWDOCROOM with DISTILLER

(1) 

THE ADMINISTRATION’S OVERTIME 

RULE AND ITS CONSEQUENCES FOR 

WORKERS, STUDENTS, NONPROFITS, 

AND SMALL BUSINESSES 

Thursday, June 9, 2016 

U.S. House of Representatives 

Committee on Education and the Workforce 

Washington, D.C. 

The Committee met, pursuant to call, at 10:00 a.m., in Room 

2175, Rayburn House Office Building, Hon. John Kline [Chairman 

of the Committee] presiding. 

Present: Representatives Kline, Wilson of South Carolina, Foxx, 

Roe, Thompson, Walberg, Salmon, Guthrie, Rokita, Heck, Messer, 

Carter, Bishop, Grothman, Curbelo, Stefanik, Allen, Scott, Hinojosa, Davis, Courtney, Fudge, Polis, Wilson of Florida, Bonamici, 

Pocan, Takano, Jeffries, Clark, Adams, and DeSaulnier. 

Staff Present: Bethany Aronhalt, Press Secretary; Andrew 

Banducci, Workforce Policy Counsel; Janelle Gardner, Coalitions 

and Members Services Coordinator; Ed Gilroy, Director of Workforce Policy; Jessica Goodman, Legislative Assistant; Callie Harman, Legislative Assistant; Nancy Locke, Chief Clerk; John Martin, Professional Staff Member; Dominique McKay, Deputy Press 

Secretary; Brian Newell, Communications Director; Krisann 

Pearce, General Counsel; Molly McLaughlin Salmi, Deputy Director of Workforce Policy; Alissa Strawcutter, Deputy Clerk; Juliane 

Sullivan, Staff Director; Olivia Voslow, Staff Assistant; Joseph 

Wheeler, Professional Staff Member; Tylease Alli, Minority Clerk/ 

Intern and Fellow Coordinator; Austin Barbera, Minority Press Assistant; Pierce Blue, Minority Labor Detailee; Denise Forte, Minority Staff Director; Christine Godinez, Minority Staff Assistant; 

Brian Kennedy, Minority General Counsel; Kevin McDermott, Minority Senior Labor Policy Advisor; Kiara Pesante, Minority Communications Director; Arika Trim, Minority Press Secretary; Marni 

von Wilpert, Minority Labor Detailee; and Elizabeth Watson, Minority Director of Labor Policy. 

Chairman KLINE. A quorum being present, the Committee on 

Education and the Workforce will come to order. I will recognize 

myself for a brief opening comment. 

In July of 2011, Chairman Walberg held a subcommittee hearing 

to examine whether the Fair Labor Standards Act was meeting the 

needs of the twenty-first century workplace. And the answer, of 

CEWDOCROOM with DISTILLER

2 

course, was a resounding no. We learned the rules implementing 

the law are too complex, bureaucratic, and outdated. Trial lawyers 

profit while workers are denied their fair share under a broken regulatory system. That is precisely why this Committee, more specifically Republicans on this Committee, have repeatedly called for responsible effort to streamline and modernize Federal overtime 

rules. 

Workplaces are more dynamic and innovative than they have 

ever been, and the needs of today’s workers are much different 

than for those who worked when the law was written more than 

75 years ago. Workers and employers have a better shot to succeed 

when Federal policies reflect the changing realities of our economy. 

The Department of Labor had an opportunity to build consensus 

around a set of responsible reforms that would have garnered 

broad bipartisan support. Yet the Department chose, once again, to 

take an extreme partisan approach that will hurt the very people 

they claim they want to help. This rule will disrupt the lives of 

countless individuals and do nothing to remove the regulatory 

landmines that are harmful to workers and employers. That is 

what small business owners, college and university administrators, 

State and local officials, and heads of nonprofit organizations have 

warned about. But these warnings were ignored. 

The Department ignored the voices of those who must implement 

this rule in the workplaces, on their campuses, as they serve the 

needs of people in their communities. Instead, the Department listened to the same progressive voices who have been wrong for so 

long about how to address the challenges facing working families, 

the same voices who claimed a trillion-dollar stimulus bill would 

create jobs and deliver a strong economy. It didn’t. The same voices 

who claimed the government takeover of health care would lower 

costs and protect the health care people liked. It hasn’t. The same 

voices now claim this overtime rule will provide a pay raise for millions of Americans. It won’t. 

The regulatory onslaught under this administration is unprecedented. The President and his liberal allies have advanced new 

rules governing retirement advice, health and safety, energy, union 

organizing, Federal contracting, financial markets, health care, and 

wages. Still, there are those who can’t understand why the economy is anemic or why job growth is sluggish or why wages are 

largely stagnant. 

Now we have an overtime rule that will do more harm than good, 

particularly for lower-income workers and younger Americans. 

Chairman Walberg has led our efforts in this area for years, and 

I—where is Chairman Walberg? Ah, there he is, and I will now 

yield to him the remainder of my time to explain in more detail the 

costs and consequences of this rule. 

[The statement of Chairman Kline follows:] 

Prepared Statement of Hon. John Kline, Chairman 

Committee on Education and the Workforce 

In July 2011, Chairman Walberg held a subcommittee hearing to examine whether the Fair Labor Standards Act was meeting the needs of the twenty-first century 

workplace. The answer was a resounding ‘no.’ We learned the rules implementing 

the law are too complex, bureaucratic, and outdated. Trial lawyers profit while 

workers are denied their fair share under a broken regulatory system. 

CEWDOCROOM with DISTILLER

3 

That is precisely why this committee—more specifically, Republicans on this committee— have repeatedly called for a responsible effort to streamline and modernize 

federal overtime rules. Workplaces are more dynamic and innovative than they have 

ever been, and the needs of today’s workers are much different than for those who 

worked when the law was written more than 75 years ago. Workers and employers 

have a better shot to succeed when federal policies reflect the changing realities of 

our economy. 

The Department of Labor had an opportunity to build consensus around a set of 

responsible reforms that would have garnered broad, bipartisan support. Yet the department chose once again to take an extreme, partisan approach that will hurt the 

very people they claim they want to help. This rule will disrupt the lives of countless individuals and do nothing to remove the regulatory landmines that are harmful to workers and employers. 

That’s what small business owners, college and university administrators, state 

and local officials, and heads of nonprofit organizations have warned about. But 

these warnings were ignored. That’s right—the department ignored the voices of 

those who must implement this rule in their workplaces, on their campuses, and 

as they serve the needs of people in their communities. 

Instead, the department listened to the same progressive voices who have been 

wrong for so long about how to address the challenges facing working families. The 

same voices who claimed a trillion dollar ‘‘stimulus’’ bill would create jobs and deliver a strong economy. It didn’t. The same voices who claimed a government takeover of health care would lower costs and protect the health care people liked. It 

hasn’t. Those same voices now claim this overtime rule will provide a pay raise for 

millions of Americans. It won’t. 

The regulatory onslaught under this administration is unprecedented. The president and his liberal allies have advanced new rules governing retirement advice, 

health and safety, energy, union organizing, federal contracting, financial markets, 

health care, and wages. Still there are those who can’t understand why the economy 

is anemic, or why job growth is sluggish, or why wages are largely stagnant. 

Now we have an overtime rule that will do more harm than good, particularly for 

lower-income workers and younger Americans. Chairman Walberg has led our efforts in this area for years, and I would like to yield to him to explain in more detail 

the costly consequences of this final rule. 

Mr. WALBERG. I thank you, Mr. Chairman, for recognizing me on 

this. This is an important issue, and we have spent significant time 

on it with the hopes, that someone out there dealing with this 

would listen, and listen to reality. I mean, today, I received a copy 

of a letter sent out by professors and nonprofits, none of which who 

have anything to do, as far as I can tell, with establishing a budget 

and dealing with paying people, and making sure institutions continue. And in fact, what I see here, professors of theater and others, no wonder we have got the problem with misunderstanding 

what realities are and making sure that people have opportunities 

for expansion, opportunities for experience, opportunities for resume building, opportunities to do things that happen in America. 

Whew, now that I got all that out of my system, let me go on with 

a statement here. 

Because of this rule, many Americans will soon realize that they 

have fewer job prospects, less flexibility in the workplace, and 

fewer opportunities to climb the economic ladder. Thousands of salaried workers will be demoted to hourly status. These workers will 

feel as though they have taken a step back in their careers when 

they are forced to clock their hours and they no longer have flexible 

schedules to balance work and family. With this shift, workers will 

have fewer opportunities for on-the-job training and career advancement. 

Last year we heard from Eric Williams, who started his career 

working on the line at a fast food restaurant and then climbed the 

ranks to become an industry executive. He testified how the DeCEWDOCROOM with DISTILLER

4 

partment’s actions will limit the ability of hardworking men and 

women to achieve the same success, and that is reality. He also 

owns businesses now, but it started with the opportunity, the opportunity to expand his capabilities. Younger Americans in particular will be hurt. 

At a time when rising college costs and student debt are a national concern, the administration is pushing a rule that will make 

matters even worse. Colleges and universities nationwide, including the University of Michigan in my home state, who testified in 

front of our subcommittee and said, ‘‘Absolutely. Tuition costs will 

raise as a result of it.’’ Not what these professors have stated, who 

have no responsibility for that, but people who have the concerns 

have indicated across the board that tuition will have to increase. 

They have warned this rule forced them to raise tuition and reduce 

services. 

This rule will make it harder for young people to pursue their 

education, and adding insult to injury, it will be even harder for 

them to begin their careers. Nonprofit organizations with tight 

budgets faced similar challenges. Every day in each of our districts, 

these organizations are making a difference in the countless lives, 

whether helping underprivileged youth, building good homes for 

low-income families, or serving the needs of individuals with disabilities. We should do everything we can to support and encourage 

these crucial services. But as one of our witnesses will testify 

today, this rule will do the exact opposite. 

Finally, Mr. Chairman, as is often the case with the administration, this rule creates new hurdles for startups and small businesses. Many won’t be able to afford this mandate even if they 

wanted to. Some will have no choice but to hold back on hiring, lay 

off workers, or cut back hours. To make matters worse, they will 

continue to confront a confusing regulatory maze that encourages 

costly litigation. 

The bottom line is that this rule hurts the very individuals the 

administration claims it will help. That is why I introduced legislation earlier this year along with Senator Tim Scott to protect workers, students, nonprofits, and small businesses from the rule’s 

harmful consequences. Today’s hearing is the next step in our efforts. I look forward to our discussion and yield back to the Chairman. 

[The statement of Chairman Walberg follows:] 

Prepared Statement of Hon. Tim Walberg, a Representative in Congress 

from the state of Michigan 

Thank you, Chairman Kline. 

Because of this rule, many Americans will soon realize they have fewer jobs prospects, less flexibility in the workplace, and fewer opportunities to climb the economic ladder. 

Thousands of salaried workers will be demoted to hourly status. These workers 

will feel as though they’ve taken a step back in their careers when they’re forced 

to clock their hours, and they’ll no longer have flexible schedules to balance work 

and family. 

With this shift, workers will have fewer opportunities for on-the-job-training and 

career advancement. Last year, we heard from Eric Williams, who started his career 

working on the line at a fast-food restaurant and then climbed the ranks to become 

an industry executive. He testified how the department’s action will limit the ability 

of hardworking men and women to achieve the same success. 

CEWDOCROOM with DISTILLER

5 

Younger Americans in particular will be hurt. At a time when rising college costs 

and student debt are a national concern, the administration is pushing a rule that 

will make matters even worse. Colleges and universities nationwide—including the 

University of Michigan in my home state—have warned this rule will force them 

to raise tuition or reduce services. This rule will make it harder for young people 

to pursue their education, and adding insult to injury, it will be even harder for 

them to begin their careers. 

Nonprofit organizations with tight budgets face similar challenges. Every day, in 

each of our districts, these organizations are making a difference in countless lives, 

whether helping underprivileged youth, building good homes for low-income families, or serving the needs of individuals with disabilities. We should do everything 

we can to support and encourage these crucial services, but as one of our witnesses 

will testify today, this rule will do the exact opposite. 

Finally, as is often the case with the administration, this rule creates new hurdles 

for startups and small businesses. Many won’t be able to afford this mandate, even 

if they wanted to. Some will have no choice but to hold back on hiring, lay off workers, or cut back hours. To make matters worse, they’ll continue to confront a confusing regulatory maze that encourages costly litigation. 

The bottom line is that this rule hurts the very individuals the administration 

claims it will help. That’s why I introduced legislation earlier this year, along with 

Senator Tim Scott, to protect workers, students, nonprofits, and small businesses 

from the rule’s harmful consequences. Today’s hearing is the next step in our efforts. I look forward to our discussion and yield back to the chairman. 

Chairman KLINE. The gentleman yields back. I am going to be 

recognizing the Ranking Member Scott for his opening comments, 

and by agreement he will yield part of his time to the Ranking 

Member on the subcommittee, Ms. Wilson. I recognize Mr. Scott. 

Mr. SCOTT. Thank you, Mr. Chairman. Mr. Chairman, last month 

the Department of Labor took a long overdue step towards addressing income inequality by restoring and strengthening overtime protections for millions of Americans. Before too long, we have let the 

bedrock worker protections wither, leaving millions of Americans 

working harder than ever with very low pay. 

Some of those changes over the years include, in 1965, CEOs 

earned 20 times the pay of the typical worker. Now they earn over 

300 times. In 1970s, the Federal minimum wage was equal to 50 

percent of the average hourly worker’s pay. Today, minimum wage 

is only about 35 percent of the average hourly worker’s pay. In 

1975, the overtime threshold below which most salaried workers 

are automatically eligible for overtime pay recovers 60 percent of 

them were covered. Today, it is only 7 percent. 

Overtime protections in the Fair Labor Standards Act of 1938 

were intended to curve overwork and help create jobs by encouraging employers to hire more workers rather than overworking the 

few. But the overtime salary threshold has been allowed to erode 

so badly that today a worker earning less than the poverty threshold for a family of four still makes too much to be automatically 

eligible for overtime pay. Congress intended that the Fair Labor 

Standards Act would protect and expand the middle class. For too 

long, the overtime regulations were consistent. And for a long time, 

the overtime regulations were consistent with that goal. Between 

1938 and 1975, the salary threshold was updated seven times, and 

it was set at a meaningful level, initially, and kept pace with 

changing economies. But over the past 40 years, the threshold has 

only been updated once, in 2004, and that increase was far below 

the historical average. 

CEWDOCROOM with DISTILLER

6 

The Department of Labor’s job is to implement laws passed by 

Congress. With this rule, the Department has done its job making 

the Fair Labor Standards Act’s overtime protections meaningful 

again. The rule restores the 40 hour work week, raising the salary 

threshold to $913 a week, approximately a little over $47,000 a 

year. This update will make 4.2 million workers newly eligible for 

overtime and strengthen overtime protections for 8.9 million more 

workers. Today, too many workers are deemed ‘‘salaried’’ and then 

work 50, 60, or even 70 hours a week, working their last 10, 20, 

or 30 hours for no pay at all. Yeah, that’s right. After they have 

worked the first 40 hours, the additional 10, 20, or 30 hours, as it 

has been said, they have the freedom to work those 10, 20, or 30 

hours. Well, I agree. 

Unfortunately, the interpretation is different because the 10, 20, 

or 30 hours extra are worked for free, and I am not sure that is 

the freedom that most workers want. Some of these workers wind 

up earning below the minimum wage when all of their work hours 

are taken into account, and that’s wrong. When you work extra, 

you should be paid extra. Instead of forcing workers to put in extra 

hours with no pay, the rule will result in some employees getting 

back some precious time with their families, which we know is critical to parents’ ability to help children thrive. It will also create 

jobs by putting incentives in place for employers to spread work 

hours to new employees, and it will result in part-time employees 

having the opportunity to work additional hours that many want 

and need. 

Critically, the rule ensures that we will not see eligibility for 

overtime erode so badly again by requiring automatic updates for 

the salary threshold every three years. Polls show that 79 percent 

of Americans agree that it is time for our Nation’s overtime rules 

to be updated, and Committee Democrats stand with our fellow 

Americans in welcoming that increase. 

I look forward to hearing from the witnesses about this role so 

we can reduce income inequality and strengthen the middle class, 

and I commend the Department of Labor for its excellent work on 

this issue. And I now yield to the ranking member of the subcommittee, Ms. Wilson. 

[The statement of Ranking Member Scott follows:] 

Prepared Statement of Hon. Robert C. ‘‘Bobby’’ Scott, Ranking Member, 

Committee on Education and the Workforce 

Thank you, Mr. Chairman. 

Last month the Department of Labor took a long overdue step toward addressing 

the income inequality crisis facing our nation by restoring and strengthening overtime protections for millions of Americans. 

For far too long, we have let the bedrock worker protections wither— leaving millions of Americans working harder than ever for very low pay. 

In 1965, CEOs earned 20 times the pay of the typical worker. Today they earn 

over 300 times more. 

In the 1970s, the federal minimum wage was equal to 50 percent of the average 

hourly worker’s pay. Today the minimum wage is equal to only 35 percent of the 

average hourly worker’s pay. 

And in 1975, the overtime threshold below which most salaried workers are automatically eligible for overtime pay covered over 60 percent of salaried workers. 

Today it covers only 7 percent. 

The overtime protections in the Fair Labor Standards Act of 1938 were intended 

to curb overwork and help create jobs by encouraging employers to hire more workers, rather than overworking a few. But the overtime salary threshold has been alCEWDOCROOM with DISTILLER

7 

lowed to erode so badly that today a worker earning less than the poverty threshold 

for a family of four still makes too much to automatically qualify for overtime pay. 

Congress intended the FLSA to protect and expand the middle class. And for a 

long time, the overtime regulations were consistent with that goal. Between 1938 

and 1975, the salary threshold was updated seven 

times—it was set at a meaningful level initially and kept pace with a changing 

economy. But in the past 40 years, the threshold has only been updated once (in 

2004) —and that increase was far below the historical average. 

The Department of Labor’s job is to implement the laws passed by Congress. With 

this rule, the Department has done its job – making the Fair Labor Standards Act’s 

overtime protections meaningful again. The rule restores the 40-hour workweek by raising the salary threshold to $913 per week, or roughly $47,476 per year. This update will make 4.2 million workers 

newly eligible for overtime and strengthen overtime protections for 8.9 million more 

workers. 

Today too many workers are deemed ‘salaried’ and then work 50, 60, or even 70 

plus hours a week—working the last 10, 20 or 30 hours for no pay at all. That’s 

right after they’ve worked the first 40 hours, the additional 10, 20 or 30 hours, as 

it’s been said, they have the ‘freedom’ to work those 10, 20 or 30 hours. Well I agree. 

Unfortunately the interpretation is different, because 10, 20 or 30 hours extra hour 

are worked for free. I’m not sure that’s the freedom that workers want. 

Some of these workers wind up earning below the minimum wage when all of 

their work hours are taken into account. That is wrong. When you work extra, you 

should get paid extra. 

Instead of forcing workers to put in extra hours for no pay, the rule will result 

in some employees getting back precious time with their families, which we know 

is so critical to parents’ ability to help children thrive. It will also create jobs by 

putting incentives in place for employers to spread work hours to new employees, 

and it will result in part-time employees having the opportunity to work additional 

hours that many want and need. Critically, the rule ensures that we will not see 

eligibility for overtime erode so badly again by requiring automatic updates to the 

salary threshold every three years. 

Seventy-nine percent of Americans agree that it is time for our nation’s overtime 

rules to be updated and Committee Democrats stand with our fellow Americans in 

welcoming this increase. 

I look forward to hearing from our witnesses about how this rule can reduce income inequality and strengthen the middle class. And I commend the Department 

of Labor for its excellent work on this important issue. 

I now yield to the Ranking Member of the Subcommittee, Mrs. Wilson. 

Ms. WILSON. Thank you, Ranking Member Scott. The Department of Labor’s final overtime rule will extend overtime protections 

to 4.2 million Americans, including 330,870 workers in my home 

state of Florida and 101,463 workers in my colleague’s state of 

Florida. In addition to extending overtime eligibility to millions, 

this update strengthens overtime protections for 8.9 million workers who are already eligible for, but are unfairly denied, overtime 

pay. 

Salaried workers are entitled to premium overtime unless they 

both earn above the salary threshold and meet a duties test. Unfortunately, too many employers fail to perform a duties test, focusing 

only on the salary threshold which since 2004 is near poverty 

wages. 

This focus on salary level alone has left far too many employees 

misclassified as exempt, depriving them of the overtime pay they 

deserve. Since its inception, the salary level test was designed to 

prevent this missed classification by screening out workers who 

were obviously not exempt because they failed the job’s duties test. 

But as the salary threshold becomes outdated, misclassification becomes more abundant as more workers are subject to the duties 

test. The previous salary level only screened out 15 percent of 

workers who failed the duties test. The new rule restores the advoCEWDOCROOM with DISTILLER

8 

cacy of the salary threshold, simplifies application, and prevents 

misclassification by making clear that 8.9 million Americans who 

were previously subject to, but failed, the duties test are still eligible for overtime pay simply by virtue of their salaries. 

I urge my colleagues in the majority to rethink their stance on 

this sensible effort to prevent misclassification. I urge them, also, 

to cosponsor my bill, the Payroll Fraud Prevention Act, which 

would prevent another form of misclassification: the 

misclassification of employees as independent contractors, which 

deprives them of vital wage and hour protections. I urge the majority to reconsider its position on both of these policies designed to 

protect workers from the misclassification that can deny them their 

hard-earned pay. I yield back. 

[The statement of Ranking Member Wilson follows:] 

Prepared Statement of Hon. Frederica S. Wilson, a Representative in 

Congress from the state of Florida 

Thank you, Mr. Chair. 

The Department of Labor’s final overtime rule will extend overtime protections to 

4.2 million Americans, including 330,870 workers in my home state of Florida and 

101,463 workers in my colleague’s state of Michigan. 

In addition to extending overtime eligibility to millions, this update strengthens 

overtime protections for 8.9 million workers who are already eligible for, but are unfairly denied, overtime pay. 

Salaried workers are entitled to premium overtime unless they both earn above 

the salary threshold and meet a duties test. Unfortunately, too many employers fail 

to perform a duties test, focusing only on the salary threshold, which, since 2004, 

has hovered near poverty wages. This focus on salary level alone has left far too 

many employees misclassified as exempt, depriving them of the overtime pay they 

deserve. 

Since its inception, the salary level test was designed to prevent this 

misclassification by screening out workers who were obviously non-exempt because 

they failed the job duties test. But as the salary threshold becomes outdated, 

misclassification becomes more abundant as more workers are subject to the duties 

test. The previous salary level only screened out 15 percent of workers who failed 

the duties test. 

The new rule restores the efficacy of the salary threshold, simplifies application, 

and prevents misclassification by making clear the 8.9 million Americans who were 

previously subject to, but failed, the duties test are eligible for overtime pay simply 

by virtue of their salaries. 

I urge my colleagues in the majority to rethink their stance on this sensible effort 

to prevent misclassification. I urge them to also cosponsor my bill, the Payroll Fraud 

Prevention Act, which would prevent another form of misclassification - the 

misclassification of employees as independent contractors, which deprives them of 

vital wage and hour protections. I urge the majority to reconsider its position on 

both of these policies designed to protect workers from the misclassification that can 

deny them of their hard-earned pay. 

I yield back. 

Chairman KLINE. The gentlelady yields back. Pursuant to Committee Rule 7(c), all 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 such statements and other extraneous material referenced 

during the hearing to be submitted for the official hearing record. 

We will now turn to the introductions of our distinguished witnesses. 

Miss Tina Sharby is the chief human resources officer with 

Easter Seals New Hampshire, Inc., in Manchester, New Hampshire. Additionally, she is currently president of the Manchester 

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Area Human Resources Association Board of Directors and a board 

member of the New Hampshire Human Resources State Council. 

Dr. Jared Bernstein is a senior fellow with the Center on Budget 

and Policy Priorities here in Washington, D.C. Dr. Bernstein previously served as chief economist and economic advisor to Vice 

President Biden, and was a member of President Obama’s economic 

team. Between 1995 and 1996, Dr. Bernstein held the post of deputy chief economist at the U.S. Department of Labor. 

General Michael Rounds is the associate vice provost of human 

resource management at the University of Kansas, in Lawrence, 

Kansas, where he oversees human resource services for more than 

10,000 faculty, staff, and student employees on the K.U. Lawrence 

and Edwards campuses. Before joining the University of Kansas, 

General Rounds served as deputy superintendent in the Office of 

District Support for the Louisiana Department of Education. He retired from the Army in 2009 at the rank of brigadier general. 

Mr. Alexander Passantino is a partner with Seyfarth Shaw LLP 

here in Washington, D.C., and leads the D.C. office’s Wage and 

Hour Litigation Practice Group, focusing in part on FLSA compliance issues. Prior to joining Seyfarth Shaw, Mr. Passantino started 

as deputy and acting administrator of the U.S. Department of Labor’s Wage and Hour Division from 2006 to 2009. I would like to 

ask our witnesses to please raise your right hand. 

[Witnesses sworn.] 

Chairman KLINE. Let the record reflect the witnesses answered 

in the affirmative. Before I recognize each of you to provide your 

testimony, just a brief reminder of our lighting system. We allow 

five minutes for each witness to provide testimony. When you 

begin, the light will turn green. When one minute is left, the light 

will turn yellow. At the five minute mark, the light will turn red, 

and I would ask you to try to wrap up your testimony quickly. 

I am very loathe to gavel down a witness in their testimony, but 

we have got a lot of members here who want to be engaged in the 

discussion. And when we get to members, I will remind my colleagues that you will have five minutes. That is for the question 

and answer, folks. And I am not loathe to gavel down my colleagues. 

We are ready to start, and I would recognize Miss Sharby for five 

minutes. 

TESTIMONY OF TINA SHARBY, CHIEF HUMAN RESOURCES OFFICER, EASTER SEALS NEW HAMPSHIRE, MANCHESTER, NH, 

TESTIFYING ON BEHALF OF THE SOCIETY FOR HUMAN RESOURCE MANAGEMENT 

Ms. SHARBY. Good morning, Chairman Kline and Ranking Member Scott. I am Tina Sharby, the chief human resources officer for 

Easter Seals New Hampshire, and I am appearing before you today 

on behalf of the Society for Human Resource Management. I appreciate the opportunity to share a little bit about what this new overtime rule means for not-for-profits like mine, as well as SHRM’s reaction to the final regulation. 

In short, Mr. Chairman, while SHRM supports an update to the 

salary threshold, the final overtime rule is too much, too fast. The 

rule will have a far-reaching negative impact on Easter Seals New 

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Hampshire, on our dedicated employees, and most importantly on 

some of the most vulnerable members of our community. Despite 

overwhelming input from members of the regulated community 

through the rulemaking process, the administration unfortunately 

missed a real opportunity to put forth a rule that works for employers and employees. Not-for-profit organizations in particular will be 

disproportionately impacted by the rule’s dramatic 100 percent increase to the salary threshold, and this threshold only escalates 

since the final rule indicates an automatic increase every three 

years. Let me briefly explain my organization. 

Easter Seals New Hampshire is the parent organization to 

Easter Seals Rhode Island, Easter Seals Maine, and Vermont. In 

2015 alone, we assisted over 16,000 individuals and provided over 

$6 million in free and subsidized services. As a not-for-profit with 

limited flexibility in the budget, I have serious concerns on how I 

will be able to cover potential overtime expenses. 

Most of Easter Seals New Hampshire’s funding comes through 

Medicare, Medicaid, and other State and Federal funding sources, 

and funding to these programs is not expected to receive any increases anytime soon. We are unable to raise prices on products or 

services to clients to cover these added overtime costs. Faced with 

a doubling of the salary threshold, we will have no other option but 

to drastically reduce the services in order to continue to operate. 

A program at significant risk is the Military and Veterans Service Care Coordination Program, which provides services 24/7 for 

our veterans in emergency situations. Since the program’s inception, we have responded to over 100 incidents, significantly reducing the risk of suicide. Because of the potential cost for overtime 

under the final rules, Easter Seals New Hampshire will be forced 

to limit our ability to provide this around-the-clock care and lessen 

these life-saving support services. 

Mr. Chairman, we estimate that the final overtime rule will cost 

Easter Seals $427,000 in the first year alone, but the consequences 

of the rule are not just financial. They also impact our employees 

negatively. 

Consider our care coordinators who are salaried professional employees. They respond to care needs whenever a service member or 

veteran needs help. These employees make an average of $43,000 

a year. This is below the rule’s new salary threshold, but clearly 

they conduct exempt tasks such as supervising services and overseeing the planning of client care. If these care coordinators are reclassified as nonexempt, not only will they no longer be able to provide these critically needed services around the clock, we will view 

their reclassification as a demotion. In fact, we have calculated that 

a total of 280 employees will need to be reclassified from salary to 

nonexempt status. 

Additionally, during times of crisis, these coordinators often work 

well over 40 hours a week to provide emergency client care. When 

the schedule returns to normal, they will take time off to attend 

other life events. Now, with these employees being reclassified, 

they will be forced to closely track every minute in a work week, 

and less likely will they be going to a doctor’s appointment and 

child’s soccer games. 

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Mr. Chairman, the final rule was clearly a missed opportunity to 

update overtime regulations in a way that works for both employers and employees. Throughout the rulemaking process, SHRM has 

supported a measured increase in the salary threshold. However, 

doubling the salary threshold in the 40th percentile of weekly earnings presents significant challenges for employers like mine. 

Tying the increase to the 40th percentile sharply contrasts with 

historical updates through the salary threshold that represented a 

more reasonable increase and acknowledged differences across sectors and in certain areas with lower cost of living. SHRM and its 

members are equally concerned about the automatic threshold to 

increase. 

In closing, Easter Seals, other not-for-profits, SHRM, and employers across the country have serious concerns with the final 

overtime rule. That is why SHRM strongly supports the Protecting 

Workplace Advancement and Opportunity Act. The bill would nullify the final overtime rule in order to have the Department of 

Labor do a better economic impact analysis before issuing new 

changes to the overtime regulations. SHRM and its members look 

forward to working with the Congress to improve the overtime rule 

in a way that works for both employers and employees. Thank you 

and I welcome your comments. 

[The statement of Ms. Sharby follows:] 

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Chairman KLINE. Dr. Bernstein, you are recognized for five minutes. 

TESTIMONY OF JARED BERNSTEIN, SENIOR FELLOW, CENTER 

ON BUDGET AND POLICY PRIORITIES, WASHINGTON, D.C. 

Mr. BERNSTEIN. Chairman Kline, Ranking Member Scott, thank 

you for the opportunity to testify in this extremely welcome update 

to an essential labor standard. My first point is that in our age of 

high levels of income and wealth and equality, it is essential that 

labor standards first established 75 years ago in the Fair Labor 

Standards Act are updated. By adjusting the overtime salary 

threshold, this new rule does exactly that. 

Second, the blue line in the figure you see there shows that this 

adjustment, while welcome and significant, is but a partial adjustment, one that reflects the Department of Labor’s responsiveness 

to thousands of comments from stakeholders. Were we to fully adjust the threshold for the value it has lost since 1975, it would be 

set at well over a thousand dollars per week instead of about $900 

per week, which is the 40th percentile of the lowest wage region, 

the South. The new threshold will also cover 35 percent of full-time 

salaried workers, a large increase from the 7 percent covered today, 

but a far cry from the 60 percent covered in 1975, as Ranking 

Member Scott pointed out. In other words, this new threshold is a 

reasonable but conservative choice. The U.S. economy is twice as 

productive as it was 40 years ago, and the workforce is much more 

highly educated. I know of no plausible economic reason why our 

labor market cannot maintain a standard that approaches what we 

had back then. 

Third, opposition to the new rule is misguided. Given the DOL’s 

thoughtful compromises in only partially updating this labor standard, and the new rule’s negligible impact on the national wage bill, 

many of the attacks on it amount to nothing more than knee-jerk 

responses from business lobbyists doing what they are paid to do: 

fight the rule regardless of the substantive arguments that support 

it. And while concerns about compliance cost, and cost to nonprofits 

and higher educational institutions deserve a response, they too 

miss the mark. 

On compliance cost, the DOL, at the behest of employers, did not 

change the duties test, which is the most complex part of the overtime determination. Since firms should already be in compliance 

with this part of the law, no new compliance costs are invoked in 

this area. In fact, at a recent congressional hearing, the witness 

representing the National Restaurant Association conceded this 

point, admitting that compliance with the new rule ‘‘would be an 

easy transition to make from a management and bookkeeping 

standpoint.’’ 

The higher threshold actually simplifies firms’ compliance burden as more workers will be automatically covered, the need for the 

duties test on millions of salary workers is now obviated. The DOL 

also worked hard to accommodate the concerns of nonprofit and 

higher educational institutions. For certain Medicaid-funded providers of services for individuals with intellectual or developmental 

disabilities, for example, the new rule does not take effect for three 

years, providing time for outreach, technical assistance, and budget 

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adjustment. As another example, DOL ensured that future National Research Service Award Grants from the NIH will be above 

the new salary threshold. 

It is also important to note that the FLSA contains some exemptions for teachers, including professors, adjunct instructors, certain 

coaches, and academic administrative personnel, as well as many 

graduate and undergraduate students. The DOL’s new guidance 

even highlights that the Department generally ‘‘views graduate and 

undergraduate students who are engaged in research under a faculty member supervision as being in an educational relationship 

and not an employment relationship with the school, and thus, not 

entitled to overtime.’’ 

On the whole, the rule is predicted to increase the total payroll 

of nonprofits and higher education institutions by far less than onetenth of 1 percent. I hope members keep that in mind when we listen to some of the heated rhetoric we are hearing. Most importantly, these organizations should remember that the pay and 

work-family balance of their workers is no less important than the 

pay and work-family balance of workers at for-profit institutions. 

The whole point of this labor standard is to guarantee employees 

fair workplace conditions, a point recently amplified by a group of 

nonprofits in favor of the proposed rule, who wrote, ‘‘Our own 

workers and the families they support also deserve fair compensation and greater economic security.’’ As these nonprofits argued, 

teaching or working for the public good should not require working 

long, unpaid hours. 

While my fellow witness may argue otherwise, I urge you on the 

Committee to remember that we could just as easily have found 

representatives from the education and nonprofit sectors who 

strongly support the new rule, recognizing its role in valuing and 

respecting their workforces. Those of us who purport to care about 

the public good have the responsibility to practice the values we 

preach. This rule gives an excellent opportunity to do just that. 

Thank you. And I yield back my time. 

[The statement of Mr. Bernstein follows:] 

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Chairman KLINE. The gentleman yields back and I thank him for 

it. General Rounds, you are recognized. 

TESTIMONY OF GENERAL MICHAEL ROUNDS, ASSOCIATE VICE 

PROVOST OF HUMAN RESOURCE MANAGEMENT, UNIVERSITY OF KANSAS, LAWRENCE, KS 

Mr. ROUNDS. Good morning, Chairman Kline, Ranking Member 

Scott, and members of the Committee. Thank you for providing me 

the opportunity to testify on the administration’s overtime rule 

that will impact our students, families, and hundreds of employees 

at the University of Kansas. 

When fully implemented, the recent changes to the Fair Labor 

Standards Act will have a significant impact on the university. 

K.U. is a major public research university, and it is the flagship 

institution in the State of Kansas. Like many public universities 

across the country, the percentage of university resources that 

come from public funding sources has decreased significantly over 

the past decade. While university leaders agree that an increase to 

the minimum salary threshold is due, an increase of 100 percent 

at one time in 2016 is difficult to absorb without significantly impacting university services. 

Many employees on college campuses, including K.U., are currently exempt from the overtime pay requirements. To comply with 

the pending increase in the exempt threshold from $23,660 to 

$47,476, colleges and universities may increase the salaries for a 

few individuals whose current pay is closest to the new threshold, 

but will need to reclassify the majority of impacted employees to 

hourly status. While in some cases these changes are appropriate 

and would keep with the spirit of the legislation, in many instances 

K.U. is being forced to reclassify employees who work in jobs that 

have always been exempt and are well suited to exempt status. It 

is K.U.’s position that this widespread reclassification is to the detriment of both our employees and students. 

As a nonprofit and public entity, K.U. is reflective of the higher 

education industry in our inability to absorb the increased costs 

that come with higher salaries for exempt employees, expanded 

overtime payments, and other labor and administrative costs associated with transitioning traditionally exempt employees into nonexempt status. In the face of these costs and challenges, K.U. will 

ultimately be forced to adjust or reduce services, eliminate or consolidate positions, or at some point raise tuition, all to the detriment of our students. The changes will also increase the costs of, 

and thus inhibit, important research done by the university. 

Unfortunately, due to recent cuts in public funding, the university does not have the central funding flexibility to apply against 

the financial impacts of the adjusted overtime rule as we enter a 

new State fiscal year on 1 July. With no central fiscal flexibility, 

K.U. is compelled to pass any financial responsibilities for addressing the legislation along to our school’s department and research 

centers. Working on relatively fixed budgets, each unit has limited 

options available to address the mandated changes. In the shortterm, the primary impact will be felt in the reduction of services 

or the elimination of positions. Ultimately, our most important 

stakeholder, students, will bear the burden of these adjustments. 

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As of June 6, 2016, the university has 354 currently exempt employees impacted by the revised overtime rule. The projected cost 

to raise these employees to the new annual salary threshold is 

around $3 million. The alternative, if chosen, is to switch these employees to a nonexempt status and pay them overtime. The projected overtime cost to sustain our current level of services is 

roughly equivalent to the cost to raise each employee to the new 

exempt threshold. Since neither of these options are currently financially feasible for any of K.U.’s units, it is inevitable that there 

will be a reduction in the services currently being provided by K.U. 

units, the students, as we transition employees from their current 

exempt to nonexempt status without the flexibility of working more 

than 40 hours per work regardless of mission demands. 

The one relatively flexible financial lever that the university has 

to increase revenue is to raise tuition. Tuition increases need to be 

approved by the Kansas Board of Regents and are justifiably closely scrutinized. For the upcoming fiscal year beginning in July, the 

window to use a tuition increase to help mitigate the impact of the 

new overtime rule in 2016 and 2017 has closed. It is probable, however, that tuition will ultimately be pushed higher in future years 

in order to address the enduring impacts of the new overtime rule. 

Due to both the near- and long-term fiscal impacts of the new 

overtime rule, K.U. believes that the Protecting Workplace Advancement and Opportunity Act is important legislation because it 

would require a more detailed economic analysis, including understanding and mitigating the impacts on higher education before 

these dramatic changes to Federal overtime pay requirements are 

fully implemented at K.U. We appreciate the administration’s ambitious agenda to promote affordable, high-quality educational opportunities, expanding access to college, and providing the support 

necessary to drive students to on-time completion and long-term 

success. However, the new changes to the overtime rule represents 

a major expense for a public university and puts our campus in further financial strain as we continue to deal with decreased State 

funding. There is simply no way for universities like K.U. to absorb 

costs of this magnitude without an impact on our academic research and outreach missions that will be felt by the public and 

students we serve. Thank you. 

[The statement of Mr. Rounds follows:] 

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Chairman KLINE. Thank you. Mr. Passantino, you are recognized. 

TESTIMONY OF ALEXANDER PASSANTINO, PARTNER, 

SEYFARTH SHAW LLP, WASHINGTON, D.C. 

Mr. PASSANTINO. Thank you. Chairman Kline, Ranking Member 

Scott, members of the Committee, thank you for the opportunity to 

speak with you today regarding the Department of Labor’s revisions to the white collar overtime regs. As a partner in the Washington, D.C. office of Seyfarth Shaw my practice focus is on helping 

employers comply with FLSA. I spend my days providing advice 

and counsel to employers on things like independent contractor status, overtime exemptions, and other pay practices. Since the Department announced its revised regulations three weeks ago, I 

have been discussing this issue pretty much nonstop with employers, with trade associations, with colleagues, and I am pretty sure 

that my family’s been subjected to it as well. 

Today, I want to focus and spend the time flagging some of the 

compliance challenges that employers will face in the coming 

months as they decide how to proceed with the revised regulations. 

Certainly, a few employers, particularly in some industries and 

in some higher-wage regions of the country, may find that all they 

need to do is decide and flip some switch. For the vast majority of 

employers, however, the revisions require a thorough analysis of 

the costs and benefits associated with each of the several options 

for currently exempt employees earning an annual salary between 

$23,000 and $47,000. 

On the one side, you have the increased costs of the increased 

salaries, not just for the affected employees, but for supervisors or 

for more experienced employees to avoid salary compression. On 

the other hand, we have the impacts of converting employees to 

nonexempt status and is explained in more detail in my written 

testimony. 

Those impacts include: harming the ability of employers to provide and employees to take advantage of flexible scheduling options, including part-time employment; treating employees in the 

same job classification for the same employer differently based on 

regional cost of living differences; limiting career advancement opportunities; decreasing morale for those employees who are demoted to nonexempt status, particularly where peers in other locations remain exempt; reducing employee access to a variety of additional benefits, including incentive pay; deterring employers from 

providing newly reclassified employees with mobile devices and remote electronic access, further limiting employee flexibility; increasing FLSA litigation based on off-the-clock and regular rate of 

pay claims; and introducing a host of legal and operational issues, 

such as increased costs for administration. 

It is important to remember that converting an employee to nonexempt status means that the employer must treat the employee 

as nonexempt for all purposes. This means accurately tracking 

time; ensuring compliance with the minimum wage and overtime 

provisions; and, properly computing the regular rate of pay for 

overtime. With respect to tracking time, converting employees to 

nonexempt status means throwing them into a regulatory scheme 

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developed for the workplace of a different century. It would take 

them from the 2004 white collar exemption regulations and place 

them under regulations where the case is cited or from the 1940s 

and the 1950s. 

Although in fairness, there is at least one case from 1960s cited 

in those regulations. It uses as examples people who are working 

crossword puzzles and playing checkers while they are waiting 

around on the job; telephone operators who have switchboards in 

their homes. In the modern workplace, the old understandings of 

waiting time, travel time, work time, and even workplace are 

pushed beyond the point of breaking. When you are talking about 

email, working on a laptop from a coffee shop, taking a call in the 

school pickup line, and all the time in between whether it is travel 

or waiting, the current rules do not work. 

How does an employer determine what time is paid and what 

time is not? Where do the principles of continuous workday begin 

and end? The answers are not clear. The regulations, guidance, and 

cases provide arguments on virtually every side of the issue. And 

every day employers are sued over the seemingly minor bits of time 

that have not been included in employees’ hours of work. Yet it is 

the employer’s obligation to keep adequate records of the employees’ time, not just an eight written at the end of the day, every day, 

but the actual hours worked. And failure to do so results in severe 

consequences to employers in litigation. 

Under the existing rules, payments, like bonus payments, incentive payments, have to be included in the nonexempt employees’ 

regular rate of pay. Sometimes that has to go back over the course 

of a year. Faced with that difficult calculation, employers often 

forego those types of incentive payments to nonexempt employees. 

The issues that I am raising now do not include issues related to 

morale, the get-it-done mentality, part-time employment, and even 

how employers are going to pay. 

So, once the employers decide they are going to convert someone 

to nonexempt status, they need to determine how they are going 

to pay, the rate they are going to pay, whether it is going to be a 

salary plus overtime, whether it is going to be straight hourly. 

Once those decisions are made, employers have to communicate. 

They have to craft communications to explain this to employees 

and they need to do it in such a way that has the employee understanding that they are still a valued member of the team and that 

they are not diminished in any way because they are losing their 

exempt status. And employers also need to craft these communications because the plaintiffs’ lawyers have already announced that 

they are on the lookout for new cases based on the reclassification. 

On top of that, this process will repeat itself every three years 

as the Department increases the salary automatically every three 

years. In exchange for this, the Department’s revisions do little to 

promote the President’s directive to modernize the regulations. 

Rather, they are going to place large numbers of employees under 

a regulatory scheme that was last updated in the 1960s and is 

fraught with uncertainty. 

The Department itself is going to issue a Request for Information 

on some of these issues related to how the regulatory framework 

applies to the modern workplace. Unfortunately, employers do not 

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have the luxury of waiting for the Department to modernize the 

regulatory scheme. They need to be in compliance by December 1 

and the clock is ticking. 

Thank you for the opportunity to appear before the Committee 

and I look forward to your questions. 

[The statement of Mr. Passantino follows:] 

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Chairman KLINE. Thank you. I thank all the witnesses. Let me 

start questioning with you, Mr. Passantino, because you are kind 

of on a roll here. You know from your time at Wage and Hour that 

it is time-consuming to create regulations in accordance with the 

Administrative Procedure Act and governing law. But the reason 

Congress established this process is because it is so important to 

offer the public, including affected stakeholders, the opportunity to 

provide commentary informing the rulemaking process. Your testimony correctly notes that the Department’s regulations sets a process automatically increasing the salary threshold every three years 

without fulfilling all of the procedural requirements designed to 

produce good rules. Can you take a couple of minutes here and explain how dangerous that is and possibly illegal that is to establish 

this process? 

Mr. PASSANTINO. Sure. You know, by eliminating the notice and 

comment rulemaking process for all future salary increase, the Department has apparently decided that it doesn’t need the input of 

the regulated community. So, historically, it has been notice and 

comment, the Department proposes a salary level. The regulated 

community weighs in, says we think it is too high, we think it is 

too low. And they take those comments under consideration and 

then the final rule comes out with a new salary level. In 2004, the 

salary level proposed was lower than the salary level in the final 

rule. In 2016, the salary level proposed was higher than what happened in the final rule. So, it can fluctuate in both directions depending on what the comments say. 

What the Department has done is said, we do not need to hear 

from the regulated community. We do not need to understand what 

the economic conditions are and how this is going to impact anyone 

who is directly affected by this rule. We are just going to update 

this every three years based on a standard that we have identified 

now in 2016, and we are going to do this for eternity. 

I do not believe that complies with the Administrative Procedure 

Act. I think it is sort of a super proposal for eternity. It is just we 

are going to propose this standard for all time. Congress has never 

authorized automatic increases and I think it is highly problematic 

that the Department is doing that. 

Chairman KLINE. Thank you, sir. I yield back. We will recognize 

Mr. Scott. 

Mr. SCOTT. Thank you, Mr. Chairman. Ms. Sharby, did you indicate the $265,000 will be the cost to raise all the salaries up to the 

exempt level? 

Ms. SHARBY. Yes, that is correct. 

Mr. SCOTT. So that anybody making from about $23,000 could 

get a raise to over $23,000, everybody between 23 and 47 could get 

to 47 and it would cost you $265,000? 

Ms. SHARBY. Correct. 

Mr. SCOTT. And you would be right back to where you are today 

in terms of dealing with the overtime rule. What is your total budget? 

Ms. SHARBY. We are very close to a hundred million. 

Mr. SCOTT. One percent of a hundred million is 1 million and you 

are talking about $265,000? 

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Ms. SHARBY. That is just in the cost to raise the employees to the 

new salary threshold. That does not take into consideration— 

Mr. SCOTT. Which would put you right back where you are today. 

Ms. SHARBY. Does not take into consideration the overtime costs 

that will definitely dramatically increase. 

Mr. SCOTT. No, there would be no overtime because they would 

be exempt. Those employees would be in the same situation that 

they are today in terms of overtime. 

Ms. SHARBY. Excuse me. When I gave that number, that is not 

to bring all of our employees up to the new exemption. Those are 

the employees that we feel that we have to bring to the new exemption given their level of responsibility. Very many of our employees would not be going up to the new salary threshold. 

Mr. SCOTT. What kind of hours are these employees working 

today? 

Ms. SHARBY. It depends on the position. 

Mr. SCOTT. After they work 40 hours and they are not considered 

exempt over $23,000, what is their hourly rate of pay after the 40 

hours today? 

Ms. SHARBY. I could not answer that. 

Mr. SCOTT. Zero. Is that right, Dr. Bernstein? 

Mr. BERNSTEIN. Yeah, that is right. I mean, these workers are 

not being paid overtime, so any hour worked after 40 hours under 

current conditions before the new rule goes into effect is paid zero. 

Mr. SCOTT. Not time and a half. Not straight time. 

Mr. BERNSTEIN. No, these workers are paid for 40 hours. Any 

overtime they are working is not covered. These are workers who 

are deemed exempt by dent of their salaries or their duties and, 

therefore, they are not paid for overtime. So, any hour of overtime 

work is paid zero. 

Mr. SCOTT. And so if you have a full-time employee who has already worked 40 hours and a part-time hourly worker who has 

worked 20 hours and you got to get 10 more hours of work done, 

if you lay it on the 40-hour full-time worker, how much does it cost 

you? 

Mr. BERNSTEIN. Well, it costs you— 

Mr. SCOTT. If they are exempt for this. 

Mr. BERNSTEIN. It costs you, under the new rule, it will cost you 

time and a half and I think the— 

Mr. SCOTT. And under the present law, what would it cost? 

Mr. BERNSTEIN. It would cost you zero under the present law. 

Mr. SCOTT. And if you did it to the part-time worker, you would 

actually have to pay for the 10 hours. 

Mr. BERNSTEIN. Well, that is right, but I think one of the points, 

if I may, Ranking Member Scott, one of the points you are getting 

at here is something that I think is very important for my colleagues on the witness stand to consider because I don’t think they 

have by dint of their testimony, which is that there are various 

other ways that the increased threshold can be absorbed other than 

taking people up to the top salary cap. 

My colleague from the University of Kansas suggested that everyone will have to be taken up to the salary cap, but, of course, 

as you just pointed out, you can take workers who are working 

part-time, increase their hours as long as they remain below 40, 

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53 

there is no change to payroll. There is no change to payroll based 

on the overtime change. In other words, they are under 40, so they 

are not getting time and a half. They would be working more hours 

and they would have to be paid more straight time. 

There are various other absorption mechanisms. You can create 

more jobs at straight time. That is another way to avoid the overtime threshold and I actually think that is a very positive development. Various analyses, including, by the way, the National Retail 

Federation, which testified here, suggested that the new role would 

create over a hundred thousand jobs through this mechanism. Employers avoid paying the overtime by creating straight-time employment. 

Mr. SCOTT. And Mr. Rounds, did you say in your testimony that 

you could raise everybody from under 47 that’s making more than 

23 up to 47 to get them back to exempt for about $3 million? 

Mr. ROUNDS. Ranking Member Scott, we have 354 members as 

of today who are under the new threshold. 

Mr. SCOTT. And you can get to the 47— 

Mr. ROUNDS. And that cost us about $3 million. 

Mr. SCOTT. About 3 million. What’s your total budget? 

Mr. ROUNDS. I don’t have the university— 

Mr. SCOTT. Over a billion? 

Mr. ROUNDS. It’s over a billion dollars. 

Mr. SCOTT. One percent of a billion is about 10 million? 

Mr. ROUNDS. Yes. 

Mr. SCOTT. What does your basketball coach make? 

Mr. ROUNDS. The basketball coach, which is Mr. Bill South, is 

not a State employer and, therefore, I don’t have his salary. 

Chairman KLINE. And the gentleman’s time has expired. Mr. 

Wilson? 

Mr. WILSON. Thank you, Mr. Chairman, and thank each of you 

for being here today. Ms. Sharby, I really appreciate your service. 

Easter Seals makes a difference around our country for so many 

people, so thank you for what you do. I’m also very grateful that 

I have four sons that have participated in the Boy Scouts of America and with the extraordinary encouragement of my wife, all four 

of them are Eagle Scouts. 

During a recent discussion with the Indian Wars Council Scout 

Executives, I was informed by the negative impact that the regulation will have on the Boy Scouts in South Carolina, which makes 

such an important difference of the lives of the young people of our 

State. Can you expand on the impact this regulation will have on 

the quality and quantity of services that nonprofit organizations 

will be able to provide families? 

Ms. SHARBY. Yes, I can. Currently, Easter Seals relies on level 

funding at best. Usually we are forcing cuts in our budget and we 

are going to have to consider how we are going to be able to continue these services. As I mentioned earlier, we provide free and 

subsidized services. So that is going to be an area where we are 

going to have to pay particular attention due to the lack of funding. 

In addition, it takes a long time to develop a relationship between the staff member and the person who is receiving services. 

It is not as simple as saying, okay, we will hire a new staff member 

to come in and pick up the responsibilities. In the state of New 

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Hampshire with the 2.6 percent unemployment rate, bring them 

on. I have 150 staff vacancies. If you have people that you can send 

to me that are qualified to work for Easter Seals, I would be happy 

to interview them, but that is just simply not the case. 

So, our employees come to work for us because they believe in 

the mission. They do not necessarily come for the salary. They 

want to be paid a fair salary. I totally support that, but they come 

for the mission to make a difference in the lives of the individuals 

that they serve. And now, we are creating a situation where they 

are not going to have the flexibility to do the things that they feel 

are necessary in order to provide this quality. 

Mr. WILSON. And indeed, you and your staff are making a difference. 

General Rounds, over the past several months, I’ve had the opportunity to speak with many colleges and universities throughout 

the state of South Carolina regarding the impact of the Department of Labor’s overtime rule. At South Carolina’s flagship university, the University of South Carolina, this rule will affect nearly 

a thousand employees, cost the university over a million dollars a 

year to comply, which I believe could lead to destroying jobs. In a 

time when universities are facing a decrease in State funding and 

students are facing rising tuition costs, can you speak on the ultimate impact this burdensome and expensive overtime regulation 

will have on faculty students and programs? 

Mr. ROUNDS. Thank you, Congressman Wilson. As you mentioned, it does have an impact on our ability to provide the same 

type of response for many of the employees who are impacted. As 

you know, universities are not 9:00 to 5:00 organizations. Their cultures are responsive to our primary stakeholders who are students 

and many of the employees who are affected by this are employees 

who are directly engaged with students on a regular basis and if 

we try and force them into a 9:00 to 5:00 box, it will make it very 

difficult for them to provide the same services and maintain the 

same culture we currently have at K.U. 

Mr. WILSON. And I have seen it personally. I have a dear neighbor who is a tennis coach and she sees this as catastrophic to her 

ability to work with the students at the college that she teaches. 

Mr. Passantino, there was recently an article in the Los Angeles 

Times where the millennial generation is most likely the generation that would like to change careers, give up promotion opportunities, move their family to another place for flexibility. What kind 

of impact will this have on businesses that do provide flexible alternatives for persons who use laptops and smartphones? 

Mr. PASSANTINO. I think the most significant piece for those employees who are reclassified as nonexempt, so who are below the 

threshold and the employer decides not to bring them up to the 

new threshold. It is going to be difficult for the employers to continue to provide them with those opportunities. Whether a particular time is compensable, paid under the act, depends on a lot 

of facts and circumstances, but there are principles that have been 

in place for a very long time that simply do not apply when you 

have someone starts in the office, goes to a coffee shop, heads off 

to a softball game, works at home. They do not apply in the same 

way as they do in the more traditional workplace. 

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Chairman KLINE. Thank you very much. Speaking of basketball, 

Mr. Courtney, you are recognized. 

Mr. COURTNEY. Thank you, Mr. Chairman, and thank you to the 

witnesses for being here today. Again, I think I want to follow up 

on a point Mr. Scott was making in terms of trying to, you know, 

step back and look at this from sort of a total global standpoint in 

terms of the impact of this rule. 

Dr. Bernstein, on page five of your testimony, you mentioned 

what the actual impact on the Nation’s Wage Bill is going to be 

and, again, I don’t know if you have it at your fingertips, but I’ll 

let you, again, underscore that point. 

Mr. BERNSTEIN. Thank you because I think it is really critically 

important to scale some of the numbers we are hearing by, just as 

Representative Scott was suggesting, by the budgets of the organizations. And when you do so, you find that nationally, the costs of 

the new rule will amount to less than one-tenth of 1 percent of the 

national payroll. Now, national payroll is in the trillions. 

So, we are talking about a relatively small group of workers who 

are newly covered and among that group of workers that are newly 

covered, those who are more likely to work overtime. 

Now, in the higher educational sector, that payroll share also 

amounts to well under one-tenth of 1 percent and in the nonprofit 

sector, again, less than one-tenth of 1 percent. And in fact, if you 

look at the affected workers who usually work overtime in both the 

higher ed sector and the nonprofit sector, it’s less than 1 percent 

of their workforce. 

Now, I still think this is an important rule and not all the benefits are monetized. Some of the benefits come from being able to 

balance work and family. Tremendously important, but it does not 

show up in the national accounts as extra dollars. But when you 

go in the monetary side, you see the fractions involved here. I 

would say very much belie the level of some of the rhetoric we are 

hearing. 

Mr. COURTNEY. Thank you. And again, also, I think that the narrative that somehow the Department of Labor stonewalled, you 

know, any input that came in during the rulemaking process, 

again, I also served with Mr. Walberg in the Workforce Protection 

Subcommittee when fair labor standards was discussed. And, indeed, I would agree with the Chairman’s comments that, you know, 

it was in need of an update and a modernization. Again, I kind of 

came to a different ending point in terms of what needs to be updated and that your graph certainly showed that, how this rule had 

just deteriorated to the point that it was less than 10 percent of 

the American workforce that was getting any benefit from it. 

And again, during the rulemaking process, nonprofits were listened to. Again, as you pointed out, the Medicaid waiver programs 

for people with intellectual disabilities, again, they operate under 

a one revenue system of operation and it is very rigid because 

these Medicaid waivers are under caps. And again, the Department 

gave a three year non-enforcement accommodation to those programs. In terms of universities and research, as your testimony 

points out, the National Institute of Health, in terms of future research grants is going to, again, align these grants to comply with 

the rules, is that correct? 

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Mr. BERNSTEIN. Yes, by aligning the grants to comply with the 

rules what you’re saying is that the grants will equal the upper 

bound of the salary threshold and thus not invoke higher overtime 

costs. And I think it is really germane and I have a great deal of 

respect for my colleagues on the panel who are providing important 

services, as was recently mentioned. I think it is germane that both 

of them, and I very much underscore their point, have pointed out 

their problem is less with this overtime role and more with their 

funding streams. 

And I think in the case of Kansas, that is particularly striking 

because in Kansas, we know there has been this experiment with 

tax cuts and these cuts taking effect in 2013 have blown a $400 

million hole in the State budget. State spending on higher education for a student in Kansas is down 22 percent since 2008 and 

my colleague, Mr. Rounds, made those points very clearly. 

But what you can’t do in my mind in terms of the labor standards is cut taxes on wealthy people so that you cannot pay middle 

class a fair wage for a fair day’s work. 

Mr. COURTNEY. And having talked to Secretary Perez, I think, 

you know, this question of the Medicaid waiver programs, I mean, 

frankly, the Department of Health and Human Services has to be 

brought into this discussion in terms of how they set these waivers. 

Again, it will align with these new fair labor standards. 

So, again, I think you are right. This is going to create a healthy 

sort of discussion, both at the State level and the Federal level, 

about trying to get, whether it is research grants, UConn or K.U., 

or whether it affects nonprofit programs that provide critical services for vulnerable populations that they get the adequate resources to create a living wage. I yield back, Mr. Chairman. 

Chairman KLINE. The gentleman yields back. Dr. Roe. 

Mr. ROE. Thank you, Mr. Chairman. General Rounds, thank you 

for your service to our great country and all the panelists for being 

here. I was asked to speak about two weeks ago at the Tennessee 

Valley Carter Meeting on entrepreneurship and job creation. And 

I wondered why when you hear the administration say that we 

have 14–1/2 million new jobs, unemployment rate has gone down 

from 9 percent to 5 percent, all are true. Why is it when you poll 

the American people that 70 percent and the majority of Democrats 

are saying the country is headed in the wrong direction? It does not 

make sense. I mean, those two things together do not make sense. 

I began to look at in detail and what has happened is between 

1990 or 1992 and ’96 during that recession, 420,000 new businesses 

were formed in this country. Between 2002 and 2006, 400,000 new 

businesses were formed. Between 2010 and 2014, 166,000 businesses were form. And what happened was 20 counties in this 

country made up half the new businesses formed in America and 

60 percent of the counties actually had a net loss. That is why we, 

as the American people, feel like we are going in the wrong direction. 

And in my opinion, the way the other side, Dr. Bernstein, you 

are an advisor to the President, believe that raising the minimum 

wage and doing this salary is actually helping the economy. It is 

not. 

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If complying with government regulations were a country, it 

would be the fourth largest country in the world, just compliance 

costs, and this is going to add another compliance cost of what we 

are doing. I am a Boy Scout, an Eagle Scout. I worked Scout Camp 

every summer. There is no way on this Earth that not-for-profit— 

as a matter of fact, I have to write them a check when I get 

home—there is no way in the world that they can comply with this. 

If you are a Scout leader and you go by on a Friday morning to 

set up a jamboree for the weekend for Boy Scouts, by Sunday 

morning you got to leave them because you have done your 40 

hours and you have not worked all week. 

I worked there 24 hours a day, seven days a week when I was 

a camp counselor. As you were saying, when do we start camp? 

You talk about 10ths of a percent at the University of Tennessee. 

It is going to add $9 million—$9 million—to the University of Tennessee which is a 2 percent increase in tuition for every student in 

the system. I talked to one of the land grant colleges two weeks ago 

when I was at the Valley Quarter Meeting and it is going to add 

$2 million costs to that one college. 

Tuition costs have skyrocketed. That is the last we need to do 

and at the University of Kansas. That cost has got to be passed on. 

And Dr. Bernstein, I will point out in our great State of Tennessee, we had cut taxes. We have the lowest per capita debt in 

the nation. We provide free community college for people, so it can 

be done by lowering bureaucratic hurdles and this is just one of 

them. 

General Rounds, this to me is a very personal. I was on the foundation board of my college and providing a quality education for 

someone like me who is a first generation student, it is another 

barrier that is out there. And I do not know how not-for-profits, 

like Ms. Sharby, you are talking about, are ever going to comply 

with this. So, General Rounds, if you would like to comment on the 

costs and then, Ms. Sharby, if you would. 

Mr. ROUNDS. Thanks, Congressman Roe, as I pointed out in my 

testimony, if you look at the fact that we are relatively flat or decreasing in our budget, it makes the absorption of any additional 

costs very difficult without taking dramatic steps. And in this case, 

the ability to absorb these costs because they are not available 

means that if for the majority of the individuals impacted, is they 

will become nonexempt as opposed to exempt and they will not be 

able to provide the same services that they currently do because 

they have very good flexibility in how they execute their job responsibilities. They will lose that flexibility. 

Mr. ROE. My good friend, the Ranking Member, brought up the 

basketball coach at the University of Kansas. Well, that is fine, but 

what about these State schools where I went where a coach may 

make $35,000 or $40,000 a year and they are out recruiting athletes? How in the world are you ever—they are driving eight hours 

to a game. How in the world are you going to comply with that? 

I have no earthly idea. Not everybody is at the University of Kansas, at a major university. Trust me, when you are a coach at Austin P. State University where I went, you are making small, little 

teeny bucks, not the mega bucks that a great coach like that is 

making. 

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So, my time is about expired. I do want to, Mr. Chairman, I want 

to submit this new map of economic growth and recovery as a matter of the record. 

Chairman KLINE. Without objection. 

Mr. ROE. I yield back. 

Chairman KLINE. The gentleman’s time expired. Ms. Fudge, you 

are recognized. 

Ms. FUDGE. Thank you very much, Mr. Chairman, and thank you 

all for your testimony today. Mr. Bernstein, in your testimony, you 

note that the FLSA overtime exemptions were designed and intended to cover a particular class of worker. These exemptions have 

now been construed to cover assistant managers or supervisors 

that don’t necessarily meet the duties test. How has the manipulation of this exemption, which, in fact, it has been manipulated, negatively and unfairly affected low-level management workers, causing them to lose out on overtime that they should receive? 

Mr. BERNSTEIN. By misclassifying them as exempt, thus prohibiting them from getting time-and-a-half when they work beyond 40 

hours a week. If you actually look at the intention of the FLSA and 

the duties of the types of workers you are mentioning, these are 

workers who very much should be covered by overtime protections, 

but are not. Therefore, and it is much like the conversation I was 

having with representative Scott a minute ago, when they work an 

hour, two, five, 10 hours of overtime, every one of those hours costs 

$0 to their employer. There is a— 

Ms. FUDGE. Excuse me, sir. The time is not accurate. Please proceed, sir. 

Mr. BERNSTEIN. Okay. Every one of those hours is unpaid. One 

of the most important aspects of the new rule is that it does away 

with this confusion around the duties test by updating the salary 

threshold and setting it at $913 per week, these workers will now 

be automatically covered. 

Ms. FUDGE. So, in effect, for many, many years, they have actually benefitted by the misclassification and have gained significant 

dollars that they really should have been paying people for a very 

long time. 

Mr. BERNSTEIN. That’s correct, and in fact, we were talking a little bit, a second ago, about the underlying economy and some of the 

dynamics there in. And one of the problems we have had is this 

increase in economic inequality, whether it is wage or wealth or income inequality, it is doubled in terms of share of income to the 

top 1 percent over the past 35 years. One of the things you see is 

that the profit share of national income recently reached historic 

highs. It is coming down a bit as the job market has tightened, and 

that is one of the dynamics that we are describing here. Workers 

are not being fairly compensated, and that has helped to boost profit margins. That is not a bad thing. Profit margins are good, but 

profit margins should afford you to be able to pay a middle-class 

wage to workers who are working over 40 hours a week. 

Ms. FUDGE. And employers have unfairly benefitted from it. 

Mr. BERNSTEIN. Correct. 

Ms. FUDGE. Mr. Bernstein, we have repeatedly heard the argument that raising wages in any way would stifle job creation and 

economic growth, and today is no different. We hear the same 

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thing. Our failure to act has seen the demise of the 40-hour work 

week, and that is what we have seen today, really, the demise of 

the 40-hour work week. Could you elaborate on how this salary increase will actually help economic growth and not hurt it? 

Mr. BERNSTEIN. Well, a number of ways. One of the things I 

mentioned earlier, I think, is quite important. There are many 

labor economists who believe that one impact of the new rule will 

be the creation of new straight-time jobs, that is, employers who 

don’t want to pay overtime to newly covered workers can avoid that 

by hiring other workers and paying them straight time. Also, it can 

increase the hours of their part-time workers, yet still keep them 

below 40. 

Now, Goldman Sachs argues that would create about 100,000 

jobs. National Retail Federation argues more. To the extent that 

workers working more than 40 hours newly covered are now making time-and-a-half, these are workers who earn middle-class incomes, middle-class salaries. The top threshold in an annual sense 

is about $47,000 per year. That is actually below the—that is about 

around the median household income. These workers tend to spend 

their paycheck, so that feeds back into the economy. We have a 70 

percent consumption economy. That’s pro-growth. And, in fact, you 

talk about a sloggy macro economy, one reason for that has to do 

with this inequality problem, and the fact that when the benefits 

of growth flow to the top of the scale, consumption tends to be less 

robust. 

Ms. FUDGE. I have no further questions, but if there is something 

you want to address in my last two minutes that you have heard— 

Mr. BERNSTEIN. Well, thank you. 

Ms. FUDGE.—please feel free. 

Mr. BERNSTEIN. You know, I think there is a real lack of care, 

and I am glad Mr. Passantino is here because I sense he really understands these rules. I think there is a lack of care and consideration by many folks who oppose these rules in terms of what is actually in there. 

One, we just a heard a member complaining about coaches and 

the need to pay overtime to coaches. Well, athletic coaches, assistant coaches who fall under the exemption when their primary duty 

is teaching are exempt. And so, there are a variety of exemptions: 

teachers, academic administration personnel, graduate and undergraduate students. I urge my colleagues on the witness stand and 

their institutions to look much more carefully at that aspect of the 

rule. 

I will state, and since we are talking about coaches, I will note, 

that at least it is my understanding that the basketball coach at 

K.U.—and I’m a huge Jayhawks fan, just to get that on the 

record—is paid something in the range of $5- to $6 million a year. 

Now, if Mr. Rounds’ numbers are correct, that means that you 

could fully compensate for the overtime cost that he designated and 

still pay their basketball coach about $3 million a year, which 

sounds pretty good deal to me. 

Chairman KLINE. So, we agree that the coach is exempt. The 

gentlelady’s time has expired. Mr. Walberg. 

Mr. WALBERG. Thank you, Mr. Chairman. I guess I have gained 

more understanding of why our economic growth at an anemic 2 

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percent or less is what it is with economic advice that is coming, 

like what we are hearing today. It is frustrating to think that we 

have an administration that thinks you can name it and claim it, 

and that businesses, universities, and others can simply pick the 

dollars out of the air to pay, and that doesn’t happen. And when 

we get into social welfare agencies, and we get into charitable 

causes, and entities that provide real basic help to people, this is 

not reality. And that is what is frustrating and maybe that is why 

we are that level of growth. 

It is interesting, also, that with the Puerto Rican bill that is 

being considered right now, the administration is willing to forego 

overtime regs and a minimum wage for 25 and under, indicating 

that will help grow the economy in Puerto Rico. Just want to bring 

that up, hypocrisy that we hear. 

Mr. Passantino, Department of Labor’s final overtime rule is 

going to result in the demotion of salaried exempt employees in 

every corner of the country. By DOL’s own estimates, very few of 

the Department’s estimated 4.2 million impacted employees will actually see any potential benefit from this rule because they do not 

currently work more than 40 hours per week. 

However, these employees will be negatively impacted when they 

lose workplace flexibility, opportunities to attend training and networking events, and certain performance-based bonuses as a result 

of being reclassified. Do you anticipate, Mr. Passantino, significant 

morale issues amongst employees as a result of these changes? 

Mr. PASSANTINO. I think, in talking to clients since the rule’s 

been out, that is a very likely probability. As is in my testimony 

and as I said earlier, one of the issues is with respect to mobile devices and remote access. As annoying as they may be from time to 

time to be tethered to your job all the time, it also allows you to 

be away from your job for parts of the day and to be away from 

your workplace and to get things done when you are not sitting at 

your desk. 

Mr. WALBERG. Workplace of the 21st century, right? 

Mr. PASSANTINO. That is right. 

Mr. WALBERG. Flexibility, opportunity. 

Mr. PASSANTINO. Right. 

Mr. WALBERG. Choice. 

Mr. PASSANTINO. We have also talked to employers about the 

bonus issue and the fact that— 

Mr. WALBERG. Yeah, talk about that. Talk about the bonus issue 

and the impact of this rule. 

Mr. PASSANTINO. So, for nonexempt employees, when there are 

nondiscretionary bonuses, and nondiscretionary bonuses are basically all of your incentive types of payments, those get included in 

the regular rate of pay for overtime purposes. So, if you have someone who is making $10 an hour, their overtime rate would be $15 

an hour, but if they got a bonus on top of that, you would have to 

go back and recalculate their rate in order to determine what their 

new overtime rate is. 

Mr. WALBERG. Hurting many of the people that appreciate the 

compensation that comes from bonus and opportunity and expanded opportunities. 

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Mr. PASSANTINO. Well, frankly, when we talk to employers, when 

we explain everything that is necessary to recalculate that rate of 

pay, they just decide to forego the bonus. 

Mr. WALBERG. No bonuses. 

Mr. PASSANTINO. Right. 

Mr. WALBERG. Yeah. Mr. Passantino, contrary to the Department’s assertion, changes to expand overtime eligibility will not 

necessarily result in a windfall of overtime income for newly classified, nonexempt employees. Will you describe some of the adjustments employers will consider making in order to keep labor costs 

under control? 

Mr. PASSANTINO. I mean, one is that they can limit the amount 

of hours that someone works. Another is you can reduce the base 

rate of pay so that if you expect someone to work 45 hours per 

week, their previous salary becomes—you divide it by 45 or your 

divide it by 45 plus something else. And then their hourly rate will 

get them to what they made anyway. So, they make the same, except now they are keeping track of their hours and they are getting 

paid for overtime up to that 45 and then they would be paid timeand-a-half over that. You can pay them on a salary that reflects 

their current pay and then they would get a little bit extra for the 

amounts they work over 40. So, there are a variety of different 

ways that it can be accommodated. 

I think the other part of the equation, it may change the way 

that employers hire in new individuals to those positions. They 

maybe come in at lower rates to account for that overtime premium. 

Mr. WALBERG. Generally, going back to the 20th century when 

we are in the 21st and moving rapidly in this 21st century to something expanding in the workplace. Thank you, I yield back. 

Chairman KLINE. The gentleman yields back. Mr. Polis, you’re 

recognized. 

Mr. POLIS. Thank you, Mr. Chairman. You know, for stepping 

back for too long, workers across our country have simply been putting in more and more hours without receiving the compensation 

they deserve. You know, we have talked about many examples, but 

a manager at a fast food restaurant in my district might earn a 

salary of $26,000 a year, but work 50, 60, 70 hours. At that salary, 

a family of four is well below the poverty line. But under the new 

overtime rules, they will finally be compensated for their work and 

receive the pay they deserve. 

In fact, my district or my state has 248,000 workers that will 

benefit from the overtime rule. I would also like to note that this 

update would directly benefit 275,000 workers in my colleague’s, 

Mr. Walberg’s state, who we just heard from. And I think that is 

something that is long overdue and that workers deserve. 

There has been some discussion of higher ed workers and I wanted to go to Mr. Bernstein on that. I represent a district with two 

institutions of higher education: Colorado State University and 

University of Colorado, Boulder. There has been a lot of discussion 

about the rules affecting higher education. And to be clear, I wanted you to talk about what actual impact might this have on higher 

education and what percent of the higher education workforce 

would even be affected by these rules. 

CEWDOCROOM with DISTILLER

62 

Mr. BERNSTEIN. Thank you. According to numbers from the 

Labor Department, 3.4 percent of workers at colleges and universities would be affected by the rule change in the sense that their 

salaries are between the current and the new threshold. However, 

it then becomes most workers in that bound, between the old and 

the new threshold, most workers don’t work overtime. So, the next 

thing you have to do is ask how many of the workers in the affected range work overtime, and that gets you to .5 percent in the 

higher ed sector and, by the way, .8 percent in the non-profit sector. So, less than 1 percent of workers affected in that regard and 

as a share of their payroll, as I have been stressing throughout the 

discussion, under one-tenth of 1 percent in both cases, whether 

we’re talking national, higher ed, or non-prof. 

Mr. POLIS. And in addition, with the particular carve out around 

instructors that under the guidance from the Department of Labor 

generally covers assistant athletic instructors and others, so some 

of those, even some of .5 percent out of the 3.4 percent that make 

in that range that might work more than 40 hours a week, are 

some of them not even in the teacher exemption categories, some 

of those workers? 

Mr. BERNSTEIN. Right, so this is again, it is critical to go back 

and understand the nature of the exemptions. Bona fide teachers, 

coaches, graduate and undergraduate students, academic administrative personnel are often exempt, meaning that the new rule will 

not affect their pay. In postdoctoral cases, which is an important 

area for my friend here from higher ed, again, I want to underscore 

that the Department of Labor’s working closely with the NIH and 

the National Science Foundation to ensure that grants are now at 

the level of the upper bound of the salary threshold. 

Mr. POLIS. And if there are workers that are affected, then I 

think you are down to whatever, .1 percent or .4 percent, let us say 

it is janitorial manager or something like that. You know what? 

The universities need to maintain a competitive pay scale in the 

private section anyway. I mean, if the private sector is paying overtime and somehow the university were exempt from it, would they 

even be able to engage or hire somebody for these positions? 

Mr. BERNSTEIN. Well, if the job market is soft enough, they 

might, but in a tighter job market, they would not. But I think the 

key point here is that it is really hard to understand why someone 

who chooses to work in the public sector should be treated differently than someone who works in the for-profit sector when it 

comes to fair pay for overtime work. I think, as my colleague Ms. 

Sharby said, that these workers want to be paid a fair salary. And 

I think that is a great point. There is no reason, especially when 

we are talking about an impact that is less than one- tenth of 1 

percent on payroll, that workers in one sector should be treated so 

unfairly relative to workers in a different sector. 

Mr. POLIS. Well, even this again, economically, if we want the 

nonprofit or public sector to attract talented workers, they have to 

have overall compensation packages. They are competitive. Obviously, overtime is part of that; vacations are part of that; pay is 

part of that; benefits are part of that. But overall, you need to be 

competitive or you are going to wind up with the least talented 

people in these positions simply because the more talented ones are 

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taken up by the private sector. So, we have to be competitive across 

all sectors. I think consistency of rules is very important to do that 

and I yield back. 

Chairman KLINE. The gentleman yields back. Mr. Guthrie. 

Mr. GUTHRIE. Thank you very much. And I want to continue 

talking to Mr. Rounds on this idea of colleges, and I understand 

you worked at the University of Kentucky; K.U. are large, large enterprises. Well, Kentucky has a lot of small colleges, a lot of small 

colleges that were brought into being 100, 150 years ago from mission-oriented—and I have a written statement addressed to the 

Committee from Dr. William Luckey. He’s the president of Lindsay 

Wilson College in Columbia, in Derek County, Kentucky. And his 

statement raises very serious concerns with the overtime rule and 

I will ask it to be entered into the record. 

Chairman KLINE. Without objection. 

Mr. GUTHRIE. Lindsay Wilson College is a small, private, nonprofit college serving one of the poor areas in Kentucky and actually one of the poorer areas in our country. Sixty-two percent of the 

college undergraduates are Pell eligible. Fifty percent of the Pell eligible have an expected family contribution of zero. Lindsay Wilson 

students receive more in state-based grants than any other private 

college in Kentucky and I would like to read from Dr. Luckey’s 

statement summarizing Lindsay Wilson’ College’s concerns with 

the overtime rule. 

It says, ‘‘The DOL website states, the ruling will transfer income 

from employers to employees. I can tell you that in our case and 

in the case of hundreds of private colleges that submit a comment 

to OMB with this rule was under review, just the opposite is going 

to happen. Employees will lose their jobs and many other salaried 

professionals will be relegated to a lower profile, nonexempt status 

because for nonprofits, like Lindsay Wilson, there is no extra employer money to transfer. But our students that are among the Nation’s most needy will suffer most. When the changes from Federal 

overtime rule take place at the current amount and in the current 

timeframe of implementation, it would be devastating to Lindsay 

Wilson College and I dare say it will hurt, not help, small colleges 

all across America.’’ 

So, Mr. Rounds, that is the end of the quote from that. Mr. 

Rounds, many small, private colleges face strict budget constraints. 

Ninety-five percent of Lindsay Wilson’s revenues come from student enrollment. When costs go up, tuition must rise or services 

must be cut. In this regard, is Lindsay Wilson’s predicament similar to K.U.’s as it faces the overtime rule? 

Mr. ROUNDS. Thank you for the question. It is similar to K.U.’s. 

And what I would like to point out is with the 354 individuals who 

are currently considered exempt, 92 of those are postdocs. And I 

had put into my testimony that we plan on bringing them up to 

the new threshold because to not do so would make us noncompetitive. Obviously, it has a huge impact on us because there is a fixed 

budget. Granted, NIH is going to raise grant levels. We are working under current grant levels and so, under fixed budget, you— 

Mr. GUTHRIE. But Lindsay Wilson is not a grant-based—you 

know, it does not do a lot of its—it is 95 percent student tuition, 

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not NIH research. But, so, I know it is a separate—maybe it is a 

little different from the University of Colorado, but please continue. 

Mr. ROUNDS. Yes, sir, but the remainder of the individuals are 

not in that position where they are tied to grants and we can do 

the adjustment in order to bring their salary levels up. So, in those 

cases, we are going to have to make them nonexempt employees 

and as we make them nonexempt employees, it has been pointed 

out on several occasions is that they will lose their workplace flexibility. I think the portrayal that we are not concerned about the 

making them competitive with the rest of the workforce—our employees competitive with the rest of the workforce is not accurate, 

at least at K.U. 

Over the last two years, we went through an extensive market 

study and within that market study, the intent was to ensure that 

we are paying our employees comparable to the industry and comparable to the region and as we finish that, we brought 33 percent 

of our workforce wages up in order to make sure that we were balanced. Naturally, difficult to do in a tight fiscal environment, but 

the right thing to do. As part of that process, I would point out that 

even employees that we raise their salary as we did a review, if 

they went from an exempt to a nonexempt status, that was more 

important to them losing their exempt status then the fact that 

they had their salary raised. And so, as Mr. Passantino has pointed 

out, we have found as we look at this particular issue that there 

are morale issues associated with it. The scope of those morale 

issues were not even sure of at this point. 

One last thing, and I appreciate the opportunity, is we have 

talked a lot about our basketball coach and his salary. Mr. Self is 

not paid with State funds and, therefore, I think a lot of the comparisons of what reducing his salary would do for us is not necessarily germane. So— 

Mr. GUTHRIE. University of Kentucky chose this year to take athletic funds and build an academic building with it as well, so. 

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Chairman KLINE. The gentleman’s time has expired. Mr. Hinojosa. 

Mr. HINOJOSA. Thank you, Chairman Kline and Ranking Member Scott. Today’s hearing on the updated overtime rule by the Department of Labor is long overdue. According to the Economic Policy Institute, an estimated four million workers would benefit from 

the proposed overtime rule. And it would help more than 1.5 million working people in my own home State of Texas. 

Critics of this much-needed final rule also argue that colleges 

and universities cannot afford the increased costs. These educational institutions, like all other entities, will have a number of 

ways to come into compliance with the rule, including raising employee pay, limiting employees to 40 hours per week, paying overtime on top of an employee’s salary as needed, or any combination 

of the above. Additionally, many employees at these colleges are exempted from coverage under the FLSA. 

It seems to me that we must be realistic about the number of 

people affected here. I think back to 20 years ago when I was elected to come to Congress, I was looking back on the computer, and 

saw that 1996, when I was elected, the minimum wage was $4.75 

an hour. Under Bill Clinton, his second term, ending his second 

term, we were able to pass an increase of the minimum wage and 

it went in several steps. It reached $7.25 in 2009. That is nine 

years ago—no, seven years ago. But it was interesting to me that 

the same arguments that I hear my friends on the other side of the 

aisle that businesses will close and things will go to hell just didn’t 

pan out. That is not what happened. 

What happened is in the second term of Bill Clinton, we had a surplus of $600 billion. We balanced our budget. It was a period 

of prosperity because we raised the interest—I am sorry, the minimum wage, plus many other things that occurred under Clinton’s 

second term. So, what we are being told now, same excuses for not 

changing the minimum wage in about 12 years to me is hollow. It 

is not true. It seems to me that we have got to be realistic and that 

we have got to do something. 

I request unanimous consent, Mr. Chairman, to submit a letter 

from over 250 professors at colleges and universities across the 

United States and they strongly support the Department of Labor’s 

new rule governing overtime. 

Chairman KLINE. Without objection. 

Mr. HINOJOSA. Thank you, Mr. Chairman. Mr. Rounds, I have a 

couple of minutes and I want to ask you, according to your cost estimates, assuming they are correct, your costs of this proposed rule 

will represent seven-tenths of 1 percent of payroll costs in 2015. It 

would represent three-tenths of a percent of total operating expenses and about 50 percent of what USA Today reports is the annual pay of Kansas University’s head basketball coach. Why do you 

think these small percentages will require such a drastic reductions in student services? 

Mr. ROUNDS. Thank you. I appreciate the question. I am answering the question as what I am looking at is the individuals’ who 

are primarily affected. And as you look across the individuals who 

are impacted, a large percentage are individuals who work directly 

with our students and as you look at the different numbers, what 

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I am aware of is the fact that we are on a very fixed and tight 

budget. And it would be difficult or impossible in order to—those 

individuals that are directly associated with providing services to 

our students in order to be able to adjust their salaries to make 

them— 

Mr. HINOJOSA. Thank you, Mr. Rounds, my time is almost up 

and I want to say that I respectfully disagree with you. Goldman 

Sachs says this morning, ‘‘New Obama rule on overtime likely to 

add 100,000 jobs to the economy.’’ I think that is more likely to 

happen— 

Chairman KLINE. And the gentleman’s time has expired. Dr. 

Foxx. 

Dr. FOXX. Thank you, Mr. Chairman. I want to thank our panel, 

all of them, for being here today. I do want to say that I think some 

of the information being presented here comes from folks that live 

in an alternate universe where they have never worked in the private sector, recommendations coming in from folks who never 

worked in the private sector and have no idea what it cost in addition to direct costs to comply with such government rules and regulations. 

And I want to say that—and Dr. Bernstein said everybody should 

be paid fairly, and I agree with that. But there are many people 

in this country, Dr. Bernstein, who work in nonprofits that do not 

do it for the money. As Ms. Sharby has said, they do it out of a 

sense of mission, and they make that choice when they go there. 

Just like we do not pay our teachers enough in this country, in my 

opinion, but they know when they go to those jobs what the pay 

is going to be. And they do it out of a sense of mission. 

And I think that is perfectly fine. We need to continue our civil 

society, organizations outside the control of government that have 

that sense of mission. It’s part of what makes us such a great country. 

Mr. Passantino, I think that General Rounds was getting to this 

point, but I would like to ask you if you would talk a little bit 

about the areas where the Department of Labor may have underestimated the costs of compliance with this because we know historically, these government agencies, again, live in an alternate 

universe and have no idea what it costs to implement the rules and 

regulations. Would you say a little more about the costs of compliance for these rules? 

Mr. PASSANTINO. Sure and I think a lot of the costs of compliance 

is not simply complying with this rule. It is what this rule forces 

employers to do in the context of other regulations. So, it is not 

simply do we look at the increased salary and what that increased 

salary level does to a particular employee and whether that’s an 

added cost and whether, as a result of that employee getting a 

raise, that employee’s supervisor then has to get a raise and that’s 

an additional cost. 

You also have to look at the overtime payments that are going 

to be made to the employees that are reclassified as nonexempt. 

You need to look at the cost of implementing timekeeping systems. 

You need to look at the costs of additional, frankly, legal advice 

and H.R. work to determine what is compensable; what is paid 

time for employees who are not used to keeping track of time, who 

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are not used to punching a clock, who have the freedom to use 

their computers at home and mobile devices. And now, for the first 

time, these employers are going to have to make decisions on 

whether that is paid time and where the particular time begins 

and ends. 

Dr. FOXX. Right, and I want to follow up a little bit on the adequacy of keeping records. The Labor Department’s guidance accompanying the final rule says, ‘‘There’s no requirement that employees punch in and punch out.’’ You talked about the challenges of 

sitting in the school pickup line, for example, and sending out 

emails or answering a telephone call before work, after work, miscellaneous things that all of us do. But to that point, the guidance 

specifies for an employee who works a fixed schedule, an employer 

need not track the employee’s exact hours worked each day. But 

considering the ever-increasing threat of litigation on the wage and 

hour front, is it ever advisable for employers to forego tracking 

hours for overtime-eligible employees? 

Mr. PASSANTINO. I mean, it is a huge mistake to say we are not 

going to track those hours. Sure, if somebody is always going to 

work 9:00 to 5:00 every day, the rule says you can keep track of 

time that way and they can mark a box that says, yes, that is what 

I worked today. Given the nature of the employees that are going 

to fall in this reclassification, given the nature of the workplace 

and the reliance on electronic devices, given the fact that there are 

lawsuits filed each and every day over six minutes here and six 

minutes there, it is a mistake not to keep track of those hours religiously for employers to make sure that they are capturing, you 

know, whether somebody works eight hours or whether they work 

eight hours and six minutes. 

Dr. FOXX. Thank you very much. And in my last 13 seconds, I 

want to say to Ms. Sharby’s comments, she points in here, ‘‘Easter 

Seals cannot afford to pay overtime and the children with disabilities that we serve are the ones that will suffer the most.’’ And I 

think it is really important that we understand the most vulnerable in our country are going to be punished by these rules. Thank 

you, Mr. Chairman. 

Chairman KLINE. The gentlelady yields back. Ms. Bonamici. 

Ms. BONAMICI. Thanks so much Mr. Chairman. I see the Department of Labor’s overtime rule as a long overdue update and I 

think, Dr. Bernstein, you made clear in your testimony with your 

chart that it is long overdue. According to your testimony, back in 

1975, more than 60 percent full-time salaried employees earned 

salary levels that qualified them for overtime pay. Today, it is only 

7 percent, and with this increase it will only go up to 35 percent. 

According to the Economic Policy Institute, in my home State of 

Oregon, about 124,000 people will benefit. Talking about this rule, 

Nicolai from Oregon said, ‘‘I have worked an average of 55 hours 

each week for the past year, but since I have been salaried during 

that time, I have not been eligible for overtime pay. This new regulation would mean a raise of about $10,000 a year for me, which 

would allow me to invest in education and build my life and my 

family.’’ You know, across my state of Oregon, there are many businesses that are recognizing that they can offer workplace fairness 

and balance for their employees and still continue to prosper. 

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In fact, I just attended a few days ago an event called When 

Work Works that was sponsored by Family Forward Oregon and 

the Center for Parental Leave Leadership. And at that event, they 

recognized many of our forward-thinking employers that have really been leading the way and providing their employees with a fair 

pay, flexible and positive workplace policies, and they reported that 

these policies have helped them tremendously, not only with their 

bottom line, but with recruitment and retention. 

Now, some have said that complying with this overtime rule is 

going to reduce flexibility for employees. I am going to ask you 

about that, Dr. Bernstein, but I do not find that argument persuasive. The Economic Policy Institute report noted that both the 

hourly workers now and salary workers making less than the new 

threshold say they have little control of their schedules now anyway. In fact, you know, working people, they can’t have their kids 

or their parents schedule their illness around their employer’s convenience. It does not work that way and these are people who cannot afford to forfeit their hard-earned pay. 

So, under the Fair Labor Standards Act, employers can allow 

workers to alter their start and end times. They can give advance 

notice of schedules to take time off. And the overtime rule does not 

change that. And, in fact, to provide flexibility, we should be working on in this Committee the Schedules That Work Act, for example, and the Family and Medical Insurance Leave Act. These would 

truly provide workers with the flexible and predictable schedules, 

as well as joining the rest of the world in offering paid time off. 

So, Dr. Bernstein, I mentioned the flexibility argument that we 

have heard here today. Can employers still offer as much flexibility 

and predictability under the new rule as they could under the old 

rule and can you describe what this flexibility would look like from 

the perspective of both the employer and the employees? 

Mr. BERNSTEIN. Yes, I can and I appreciate the question because 

I think that, once again, there has been a great deal of misleading 

comments made today suggesting that some of the nuances in the 

rule are not well understood. One of my colleagues mentioned that 

the rule forced employers to move workers, I quote, ‘‘from salary 

to nonexempt status.’’ That’s simply not the case. Workers can absolutely remain salaried workers under the rule. I’m sure Mr. 

Passantino will back me up on that. 

It does mean, of course, that those workers will have to be paid 

overtime per hour if they are within the threshold, but there is 

nothing that says a worker has to be moved from his or her salary 

status. 

There has also been a tremendous amount of assertion here 

about morale and flexibility. I think we would be well advised to 

stick to the research on that and maybe tone down some of the assertions. I am not sure how it helps morale to pay people zero per 

hour for overtime, especially when we are talking about considerable numbers of hours as we have heard from some of the members 

today. 

But if we look at the research by Dr. Lonnie Golden, an economist that looked at this question, he found that contrary to a common assumption, salary workers, the affected pay levels appear to 

have no more ability to take time off for personal or family matters 

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and that hourly workers at that same annual earnings level, salaried workers at the affected pay levels, so at the levels affected by 

the new rule, either report greater work family conflict and work 

stress or report greater incidence of the conditions associated with 

conflict and stress as do hourly workers. Unfortunately, when it 

comes to flexibility and morale, there is not a lot of difference between somebody who is hourly or salaried if you are barely getting 

by. 

If you are a middle-class family earning the current threshold, $24- or $25,000 a year, as has been said, you are near poverty. If 

you are at the new threshold, you are below the median earning. 

So, whether you are salaried or hourly, morale and stress is a huge 

issue for you that is resolved when you no longer get paid zero per 

hour for working overtime. 

Ms. BONAMICI. Thank you, Dr. Bernstein. My time is expired. I 

yield back. Thank you, Mr. Chairman. 

Chairman KLINE. The gentlelady yields back. Mr. Carter, you are 

recognized. 

Mr. CARTER. Thank you, Mr. Chairman, and thank all of you for 

being here today. I am going to start with General Rounds. General, first of all, thank you for your service to our country. I had 

the privilege of serving as chair of Higher Education, Senator to 

Georgia when I was in the State legislature. So, higher education 

is very important to me. And I want to know the impact that this 

if going to have on higher education. In fact, I think it is only appropriate that this Committee know the impact. After all, we are 

Education and the Workforce. 

And after all, we have dealt and continue to deal with increased 

student debt. We have continued to deal with all of the things to 

do with student loans and those are things that are very important 

to us. I want to know because the American Council on Education 

released a statement on May 17 talking about the effects that this 

could have on higher education, and I quote, ‘‘It could have a combination of tuition increases, service reductions, and possibly layoffs.’’ Do you find that to be true, General Rounds? 

Mr. ROUNDS. I do find all of those assertions to be possible. And 

one of the things that I would like to read that I have available 

is a statement from our vice provost, who is responsible for providing student services. And I think this is very compelling, what 

he says is, ‘‘What the new rule really does is impede our ability to 

customize and personalize the educational process beginning from 

the time a student initiates an inquiry to the time they depart or 

graduate. The level of personalization or customization has been a 

source of sustainable, competitive advantage for us in a highly competitive environment as we have emphasized and benefitted from 

focusing on the relational versus the transaction aspects of the 

work. This rule directly impedes our ability to build these relationships.’’ 

‘‘In addition, I think it is a direct contradiction to the national 

completion agenda as a student’s access to and availability of academic support personnel and services will be reduced. K.U. needs 

to highlight decreasing services is more than reducing operating 

hours. It will have a profound impact and an ability to attract, retain, and graduate students.’’ 

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Mr. CARTER. Right. 

Mr. ROUNDS. And that is tied to the individuals who work with 

students on a recurring basis. Many of them were impacted by this 

legislation. 

Mr. CARTER. Absolutely, and we understand that and that is one 

of the things we are most concerned with. 

Ms. Sharby, I want to ask you, you are an H.R. specialist. You 

are an expert at this, years of experience and much expertise. How 

is this going to impact you as an H.R. person? Now, I want to 

know, you have only until December 1 to comply with this. I mean, 

obviously, it is going to have a big impact. 

Ms. SHARBY. Well, the biggest impact that we have right now is 

trying to develop a communication to our employees that we are 

going to have to change from exempt to nonexempt status and how 

to do that in a way that they don’t feel diminished. 

They have already spoken to me saying, ‘‘What does this mean 

to me? How am I going to do what I want to do in order to meet 

the needs of the clients that we serve.’’ So, that is one of our big 

struggles. 

The other thing that we have to do is we are going to look at alternative ways to pay our employees. Offering overtime simply is 

not an option. 

Mr. CARTER. Okay, very quickly, I have a minute and a half left. 

There is one thing that we are missing on this panel today is small 

business. I am a small businessman. November 21, 1988, I opened 

my first retail pharmacy. Dream come true for me. Went to three 

banks, not to compare interest rates, but instead, the first two 

turned me down. The third one finally went along with it and 

loaned me the money. And I want to ask you, Dr. Bernstein, how 

many businesses have you run in your career? 

Mr. BERNSTEIN. Actually, I am running one now. I have a— 

Mr. CARTER. Are you? 

Mr. BERNSTEIN. Yeah, yeah. 

Mr. CARTER. Is it a small business? Is this going to impact you? 

Mr. BERNSTEIN. I have a self-employed business and I believe— 

Mr. CARTER. Self-employed business? 

Mr. BERNSTEIN. Correct. I have a self-employed business— 

Mr. CARTER. So, do you have any employees? 

Mr. BERNSTEIN.—along—let me finish, please. Along with— 

Mr. CARTER. I will reclaim my time. Are you the only employee? 

Mr. BERNSTEIN. I’m trying to answer your question, sir. Yes, I 

have my— 

Mr. CARTER. You are the only employee? 

Mr. BERNSTEIN. I work for a private employer in the nonprofit 

sector. I also have a self-employed business where I am the only 

employee and believe me, I hear a lot of the kinds of— 

Mr. CARTER. So, you are not going to have to comply with the 

overtime rule. You do not have employees. 

Mr. BERNSTEIN. I would be exempt from the overtime rule. 

Mr. CARTER. You would be exempt. As I was— 

Mr. BERNSTEIN. I have been— 

Mr. CARTER. Sir— 

Mr. BERNSTEIN.—part of small businesses where I did work was 

an exempt employee. 

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Mr. CARTER.—as I was exempt from the overtime rule when I 

opened my business and when I was working, not 40 hours a week, 

not 60 hours a week. I was working 80 hours a week. I did that 

for at least five or six years. The first year, I made nothing. The 

second, the third, the fourth year, I made half of what I had been 

making before. Now, where were those overtime rules then? There 

were no overtime rules then. Mr. Bernstein—Dr. Bernstein— 

Mr. BERNSTEIN. I suspect you were exempt. 

Mr. CARTER.—have you ever signed the front of a paycheck? You 

sign the back of a paycheck. You don’t sign the front of a paycheck. 

Mr. BERNSTEIN. No, that is not true. 

Mr. CARTER. There is a big difference. 

Mr. BERNSTEIN. That is not true. I have— 

Mr. CARTER. That is true, sir. 

Mr. BERNSTEIN.—various business endeavors where I— 

Mr. CARTER. And I doubt that anyone who has had an impact on 

these rules— 

Mr. BERNSTEIN.—have had to sign the front of the paychecks. 

Mr. CARTER.—signs the front of the paycheck. They sign the back 

of— 

Chairman KLINE. The gentleman’s time has expired. Mr. Pocan. 

Mr. POCAN. Thank you, Mr. Chairman. Well, I guess I am a little 

surprised that we are having this hearing with the name it has 

rather than something like Overtime Rule Long Overdue. Instead, 

we are having one to question exactly what it is about. And I do 

have to agree with Mr. Carter on one thing. You know, there are 

about 187,000 people in my district who will get a raise out of this. 

I think your state, you are going to get about 493,000, but when 

you said it would be good to have a small person up here, I say 

that all the time. So often we get attorneys and this time we do 

not have all attorneys, but often, we do not get people actually impacted. 

And I think that is one of the questions I lead off with right 

away with Mr. Bernstein. If I understood you correctly, of the rule, 

are you saying in answer to Mr. Polis’ question that it is about onehalf of a percent of people affected are in the university arena and 

under 1 percent in nonprofit and the rest are small businesses? 

Mr. BERNSTEIN. Well, what I said was— 

Mr. POCAN. Well, not small business, but other traditional business models. 

Mr. BERNSTEIN. I was not saying anything about the size of business. I was saying that the affected workers within those industries 

amount to less than 1 percent. 

Mr. POCAN. So, do you know if the nonprofit and the university 

sector of employees versus other private sectors, do you know what 

percent of that is affected by this? 

Mr. BERNSTEIN. So, in the total economy, including all sectors, 

less than 1 percent of the workforce is affected in that, they are 

between the new and old threshold and they tend to work—they 

are current exempt and they tend to work overtime. That is less 

than 1 percent. 

Mr. POCAN. Sure, the question, though, is how many of that are 

in businesses— 

Mr. BERNSTEIN. In small businesses? 

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Mr. POCAN.—other than the U.W.—other than universities and 

nonprofits? 

Mr. BERNSTEIN. Oh, the vast majority. 

Mr. POCAN. See, that was the question because I think that is 

the problem is by not having small businesses here, it is almost 

like a Trojan horse, right? We are bringing in some more sympathetic industries, you know, nonprofit universities with a part of 

the rule, but we are not talking about the people that think it is 

okay to offer someone with a family of four a sub-poverty wage to 

work overtime. And that is exactly what that current level is set 

at. It is a sub-poverty wage for a family of four. So, four million 

people immediately and millions of others will benefit by this rule 

and yet the folks we brought in, quite honestly, there are other 

issues around. 

I heard you, Ms. Sharby, and I heard you loud and clear. You 

said Medicare and Medicaid funding, there is no increase expected 

in the near future. Would you like to have an increase in those 

funds that come to your organization? It is a simple yes or no. 

Ms. SHARBY. Yes, I think it would be helpful. 

Mr. POCAN. Thank you. And I think the other thing we heard 

was from Mr. Rounds, you were talking specifically about it was 

going to cost $3 million to do it, but I understood right from some 

other previous comments since 2008, there has been, is that correct, a 22 percent cut to K.U. from your State budget? 

Mr. ROUNDS. That is correct. I do not remember the exact percentage, but that is about right. 

Mr. POCAN. So, you know, Mr. Chairman, I guess what I am getting at is when we look at the macro level of, you know, at first, 

I think it was 354 people then you just told us 92 were going to 

get the increase anyway because they are postdocs, they will be 

getting it through NIH, et cetera. So, we are talking about 262 people left, but you got a 22 percent cut to your budget from your 

State. I have a state that is doing the same thing. They just cut 

$250 million from the university. 

Let’s look at the big picture here. And the big picture is we 

should have a hearing, quite honestly, on all these state institutions that have not lived up to their obligation to their students in 

publicly funded universities. I have seen articles on this. That is 

a much bigger dynamic than the 262 people that are going to be 

affected there. 

And, Ms. Sharby, just a quick question on the one-quarter of 1 

percent of your budget that you are going to need to comply with 

this. Does that affect people in all four states or just New Hampshire? 

Ms. SHARBY. All four states. 

Mr. POCAN. So, at four states we have the opportunity to give 

people a wage increase who work for your organization for a really 

small amount of money. So, I think the whole contention around 

who we have here before us does not really address the fact that 

there are a lot of small businesses out there and not even small, 

it is big businesses, who— fast food, et cetera, who are paying people again at sub-poverty wages that would have to work and not 

get paid for overtime for a family of four. That is a real issue and 

having this increase, Mr. Bernstein, if I remember right, for decCEWDOCROOM with DISTILLER

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ades, wasn’t it adjusted for inflation, wasn’t the rate about a thousand a week that was previously offered? 

Mr. BERNSTEIN. Yeah, if you go back to 1975 and you put it into 

today’s dollar, the threshold was $1,100 per week, about $57-, 

$58,000 per year. 

And if I may make one quick other comment, I think it would 

be a mistake to assume that the general perspective of nonprofits 

and higher ed is represented on this panel today. There are two 

statements out today, one from a representative of higher ed, one 

representative of nonprofits, very much in support of this rule. So, 

our draw today was very much tilted to our tired and nonprofits 

that are against the rule, but do not be misled because there are 

many of those institutions that are very supportive. 

Mr. POCAN. And thank you for saying that because there is a list 

of, I think, a few hundred folks, organizations that are supporting 

the rule as well. I yield back my time. 

Chairman KLINE. The gentleman yields back. Mr. Allen. 

Mr. ALLEN. Yes, thank you, Mr. Chairman, and, of course, I come 

from the small business world as well and what my understanding 

was as far as salaried employees was that was something that you 

did to reward them for their achievement. In other words, you 

guaranteed them basically 40 hours a week of work and they could 

count on that salary. And then, of course, we also had incentive 

pay if they performed beyond their expectations. They received 

compensation as well and many times, in our business the compensation exceed the actual salary. And, of course, there was no— 

they didn’t punch a clock. I mean, you know, their time was their 

time. And so now I am assuming that what we are going to do is 

we are going to have this compliance issue as far as these people 

are concerned. 

My biggest concern is the growth of this economy and, you know, 

the economy, it’s not growing. As part of Economy Study Incorporated, this rule has discovered that many employees will potentially decrease and employers will potentially decrease employees 

eligible for overtime protections, base salary and decrease overtime 

hours work to compensate. In a time of slow economic growth, 

when the government should be promoting policy that creates jobs 

and grows the economy, why is DOL encouraging further regulation that will decrease economic output and overall GDP growth? 

Mr. Passantino, you want to answer that question? 

Mr. PASSANTINO. The question as to why DOL is doing this? 

Mr. ALLEN. I mean, at a time when our economy is basically 

stagnant. We are growing less than 2 percent sometimes we have 

quarters with 1 percent, some quarters less than 1 percent. I mean, 

how do we get this economy to a 4 to 5 percent growth? I mean, 

I don’t see how this rule is going to help. 

Mr. PASSANTINO. I am not an economist and on a macroeconomic 

level, I do not have any real insight into that. What I can say is 

that employers who I have had discussions with recently, really are 

struggling with how they are going to implement this and the decisions that they are going to have to make, whether they are going 

to be able to afford to raise someone’s pay; whether they are going 

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plish the goal of getting to the same total compensation at the end 

of someone’s work week. 

I would also like to say that the concept that a salaried exempt employee earns $0 after 40 hours in a week is a fallacy. And the 

simple fact of the matter is that employee earns the salary when 

they work hour one. So, by that logic, they also get paid $0 for hour 

two and hour three and hour four, all the way up to however many 

hours they work in that work week. That is the point of the salary. 

It covers work from when you start to when you end in any particular work week. 

Mr. ALLEN. Mr. Rounds, as far as your university, I mean, again, 

you know, you are trying to educate people to go get a good job. 

How is this going to affect your ability to do that? I mean, are you 

going to have to cut back on the number of students, or are you— 

what are you going to do to deal with this? 

Mr. ROUNDS. Sir, as I mentioned, we will likely change the status of many of the employees that are impacted by the law. 

Mr. ALLEN. Many of those hourly, to an hourly rate? 

Mr. ROUNDS. Move them to a nonexempt status, so they would— 

for anything over 40 hours that we have to pay them overtime. As 

Dr. Bernstein has pointed out, there are multiple options that we 

have, but the bottom line is anything over 40 hours we have to pay 

them. And if that is true, many of these employees right now have 

very flexible approaches to doing their jobs. And those flexible approaches are tied to meeting the needs of students and our concern 

is that they will lose that flexibility and, therefore, they will not 

meet the needs of the students in the same way, which obviously 

reduce the services and impacts the quality of the education that 

we can provide. 

Mr. ALLEN. Well, I am just about out of time. Ms. Sharby, I want 

to tell you how much I appreciate what the Easter Seals does. I am 

a former president of the Augusta Easter Seals Board and great 

work. We are actually making folks who basically cannot do a job. 

We are teaching them how to do jobs and putting them to work. 

And I think that is what America is all about and I appreciate your 

service. I yield back. 

Chairman KLINE. The gentleman yields back. Mr. Takano. 

Mr. TAKANO. Thank you, Mr. Chairman. The Department of Labor’s update to the overtime rule is long overdue and, according to 

the Economic Policy Institute, would benefit 1,076,000 working 

people in my home state of California. I would like to point out 

that this update will directly benefit my colleague, Mr. Allen’s 

state, by 493,000. Nearly half a million people of Mr. Allen’s state 

would benefit from this rule. 

The overtime rule is one of the most significant actions the administration has taken to support working families and fight income inequality. While we can get bogged down in details, it is important not to lose sight of the millions of workers and their families the rule will help, workers such as Soledad, a member of 

Mom’s Rising and a mother of four from California. Soledad wrote 

in support of the rule saying, ‘‘I work as a salaried employee and 

always work more than my regular 40 hours a week. My usual 

weekly hours can amount to 50 or 60 hours a week and I do not 

get paid for the extra time. Sometimes I work 12 hour days without 

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compensation due to being salaried. This has got to stop for people 

that work more than 40 hours a week. Overtime takes away the 

quality of life with our families. We are too tired to do anything 

with our families and are still not being compensated.’’ 

According to the Economic Policy Institute, 12.5 million salaried 

workers such as Soledad will directly benefit from the rule. It 

helped 6.2 million women, 4.2 million parents, and 5.5 million 

workers between the ages of 35 and 54. 

Well, changing gears, as we have heard this morning, the FLSA 

does not contain a specific exemption for nonprofit organizations, 

but that does not mean that there is no nuance in how the rule 

will apply to nonprofits. Dr. Bernstein, can you provide some examples of nonprofit institutions? Are all nonprofits small entities that 

are engaged in charitable work? 

Mr. BERNSTEIN. Some nonprofits, and this is something I speak 

to in my testimony, including social welfare and some educational 

institutions are exempt based on characteristics of the institutions 

themselves and the workers within them. Although typically, somebody in there is probably going to be nonexempt. The DOL has 

worked hard, however, to both provide guidance and accommodate 

some of these concerns, as is mentioned for the Medicaid funded 

providers is a service for intellectual development disabilities, the 

new rule does not take effect for three years and, in addition, higher education institutions worry about the effect of their postdocs 

are comforted by this national research award point I have been 

making where NIH will raise the grant level to the new higher cap. 

Mr. TAKANO. Okay, as a follow-up, can you talk about enterprise 

coverage and the types of nonprofits that are exempt under the 

provision? 

Mr. BERNSTEIN. Sure. Based on the nature of their activities and 

whether they involve revenue-generating sales of above half a million dollars. Some nonprofits or individual workers at those nonprofits may be exempt from the new rule. This has a lot to do with 

the extent to which you are operating something that looks a lot 

like a business within a nonprofit. So, to the extent that you are 

generating revenues by making sales that go over a half a million 

dollars, you would be covered, but if you are doing volunteer activities, you are not engaged in the type of work that looks like a business that would be covered, then your institution, your establishment may be exempt. 

Mr. TAKANO. So, plenty of nonprofits are exempt and it is just 

that, that $500,000 level. Thank you. It is important that we look 

at the numbers here. According to the Department of Labor analysis, only 1 percent of employees at nonprofits who will be affected 

by the rule regularly work overtime. Is that correct, Dr. Bernstein? 

Mr. BERNSTEIN. That is right. 

Mr. TAKANO. Well, it is an adjustment, but it is not a burden 

nonprofits cannot handle. In fact, I would like to ask unanimous 

consent to insert in the record a letter from nearly 140 nonprofits 

that write in support of the final rule and who are committed to 

complying with the new regulations. 

Chairman KLINE. Without objection. 

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Mr. TAKANO. Thank you. Dr. Bernstein, would you like to add a 

little more to just the idea of the number of nonprofits that can 

comply? 

Mr. BERNSTEIN. Well, I think that the points that we have heard 

from both Ms. Sharby and Mr. Rounds are very important in the 

following sense. Their problem is not with the rule, it is with the 

fact that their funding has often been cut. So, if you are talking 

about an education system that is taking a 20 percent cut in its 

support, they are going to have all kinds of problems of which this 

rule is the least of them. What we are trying to do here is establish 

fair pay for fair work and that is a separate problem from the fact 

that, in many ways, Congress and State legislatures, especially in 

Kansas where they have aggressively cut taxes, are underfunding 

their university system. 

Chairman KLINE. And the gentleman’s time has expired. Mr. 

Thompson. 

Mr. THOMPSON. Mr. Chairman, thank you so much for this hearing. You know, to me, I have heard the word ‘‘poverty’’ mentioned 

a lot and I would be hard pressed—I do not think there is anyone 

on either side of the aisle is not concerned about that issue, is not 

concerned about providing opportunities for—a greater opportunity 

for success, for realizing the American dream, which really is greater opportunity. But the pathway to greater opportunity and out of 

poverty is not an arbitrary executive branch dictate. I am sorry. It 

just does not work. Those cookie cutters rarely work. They usually 

wind up with unintended consequences and make matters worse 

for people and that is what we are trying to defend and push back 

on here. 

To me, rather it is really looking at a pathway out of those situations, a pathway for Soledad, a mother of four that I just heard 

about, and I have met lots of those folks just like that. You know, 

around my congressional district, they need a pathway. They need 

something like, quite frankly, I shamelessly plug it, a career in 

technical education training. And with the Chairman’s support, I 

think everybody on this Committee is going to have an opportunity 

to talk more about that in the days to come here, hopefully, before 

we leave, you know, before that third week in July. 

And so, you know, my first question is for Ms. Sharby. Tina, I 

have just this past weekend, I had the privilege of speaking at the 

closing ceremony at the Pennsylvania Special Olympics Games, 

2016 Games, which I love organizations like yours, like Special 

Olympics. I am a long-time Scouter, so I look at the hours, the 

evening hours, the weekends I have been involved doing my part 

as a volunteer. I know how important it is to fund the mission, you 

know. And I look at the good that it has done, which is amazing 

with those resources, and I looked at the quality of individuals. 

Last week, I was at a Goodwill facility up in Erie County and 

I look at the job training that goes on there. So, my question for 

you is, first of all, thank you for your tremendous work you do as 

a part of the nonprofit community. And organizations like yours, I 

have mentioned some of those, Easter Seals, Special Olympics, 

Goodwill, the Boy Scouts of America, the Girl Scouts, they help 

boost the quality of life for so many people and families every year. 

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And as legislators, we should be working tirelessly to support your 

mission, not making it harder for you to succeed. 

Given the widespread presence of Easter Seals across the United 

States, and as a former rehab professional, I work very closely with 

the Easter Seals, when I had a real job is the way I like to describe 

it. How will the final overtime rule affect the ability of individuals 

to access crucial services, specifically in rural and underserved 

areas? 

Ms. SHARBY. Thank you for the question. It is a really good question. I can give you the example of our care coordinators and our 

military and veteran services programs. The individuals that we 

serve work very closely with the care coordinators and they develop 

a relationship where trust does not come very easily amongst that 

population that we serve. So, we are looking at potentially having 

to develop an on-call system where only one of eight of our coordinators would be on call for the week because we cannot afford to 

pay the overtime. It is a non-funded program that we run. 

The concern that we have about that is now the person that 

needs the emergency help maybe in the middle of the night, losing 

their home or thinking about suicide, they are going to that on-call 

person who might not be their care coordinator, they are not going 

to want to talk to them. They want to talk to their care coordinator. That is where we think that the services are really going to 

impact the individuals that we serve. 

Mr. THOMPSON. How important is that at a time of crisis, because that is what you have described? And you cross that over to 

agencies, nonprofits are facing manning suicide hotlines and services, children in youth, how important is it to have the right person 

available at time of crisis when people actually reach out? 

Ms. SHARBY. It is literally the difference between life and death. 

Mr. THOMPSON. I do not think an arbitrary executive—it would 

be a shame to see the loss of lives as the result of some executive 

branch action. 

Mr. Passantino, the Department of Labor’s final overtime rule includes an extremely narrow, non-enforcement provision for entities 

which provide Medicaid services for disabled individuals and facilities of 15 or fewer beds. Given your expertise, can you speculate 

on how many employers or employees this provision would actually 

help? And additionally, would these employers be protected from 

legal action during this non-enforcement period? 

Mr. PASSANTINO. I am not sure to your first part of the question 

about how many will be impacted, but I suspect it is very small. 

The more consequential pieces, a non-enforcement policy does not 

mean the regulation is not in effect. It means that the Department 

of Labor is not going to take any enforcement action against someone based on those regulations. The private rights of action continue to exist and that non-enforcement policy does nothing to the 

private right of action. 

Mr. THOMPSON. So, the bull’s eye would be put on the backs of 

those agencies for frivolous litigation. Thank you. 

Chairman KLINE. And the gentleman’s time has expired. Ms. 

Clark. 

Ms. CLARK. Thank you, Mr. Chairman, and thank you to all the 

panelists for joining us today. I have to say, I want to go back to 

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the comments of my colleague, Mr. Pocan, and say I feel like we 

are missing in this discussion some of the macro issues. 

Of course, it is critically important that our veterans, that the 

clients you serve, Ms. Sharby, are able to talk to their case manager when they are in crisis and that the students—and that we 

are lucky enough just yesterday to join K.U. in a discussion of the 

critical importance of funding scientific research at our incredible 

universities across the country, including Kansas. But it is not the 

overtime regulations that are going to cause a loss of life, as my 

colleague just stated. It is so many other economic pressures. And 

if we want to create a robust economy one of the best ways to do 

it is to help address income disparity, to help address stagnant 

wages, the overwhelming cost for many families of child care and 

of housing and transportation. 

These are the big macro factors that are coming to play, and 

really causing a hard time for many nonprofits to deliver their critical services, of which Easter Seals, certainly in New Hampshire 

and around the country, delivers critical services as do our institutions of higher education, and those issues are the ones that we 

need to offer this critical relief. 

In Massachusetts, with the overtime, new regulations are going 

to mean for working people in my State are 262,000 people are 

going to get a raise. That is a real benefit. That is a real help to 

all of you at the table. In Mr. Thompson’s state of Pennsylvania, 

459,000 people will be able to have a raise due to these regulations. 

So, I think that we have to remember to look at the overall economic picture and what are those levers that we need to move to 

bring that relief. Because I don’t believe that it is the overtime 

rules that are going to cause your ultimate staffing and your ultimate woes at K.U. 

Dr. Bernstein, I wanted to start large and then go to detail. But 

I do believe that this is a critical piece of addressing income inequality as you mentioned in your testimony. What are some other 

factors and policies that we should be looking at to address that? 

Mr. BERNSTEIN. The minimum wage has been stuck at $7.25, 

this was mentioned earlier, at a Federal level since 2009. Raising 

that would certainly help lift the fortunes of low-income workers. 

There is some bipartisan support for another idea that would help 

low-income workers, which is expanding their earned income tax 

credit to reach childless adults who now get very little from that. 

In terms of tightening up the job market, we really could use a 

deep dive into infrastructure investment. The erosion of unions has 

really hurt the bargaining power of lots of middle class workers. 

But I very much take your point about the connection to the overtime rule as well. You remember the chart from my testimony 

shows that when inequality was a lot lower than it was today the 

threshold was a lot higher, and vice versa. 

Ms. CLARK. And specifically, I also think that one of the pieces 

that we are going to help address is the pay equity gap for women. 

What do you see the role of these new rules in helping with that 

as well? 

Mr. BERNSTEIN. Well, a slight majority of those affected by the 

new rule are women. By the way, a much more significant majority 

affected by a higher minimum wage are women, because women 

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are disproportionally low wage workers as well. So I do think that 

this is a help in terms of gender pay equity. 

I would also note, not on the gender side, but Mr. Rounds might 

appreciate this, according to DOL numbers, 80 percent of the workers, of the affected workers, helped by this increase have at least 

some college education. So it is actually a real boon to the people 

that K.U. and other institutes are training and sending out into the 

workforce, where they will be compensated for their overtime by 

dint of the new rule. 

Ms. CLARK. And I have certainly heard—I appreciate you mentioning the minimum wage. It is something I certainly support, but 

we also have to look beyond that and look at our higher and midincome earners. 

Mr. BERNSTEIN. Absolutely. 

Ms. CLARK. And I think this gets to that point. 

Thank you very much and I yield back. 

Chairman KLINE. The gentlelady yields back. Mr. Grothman, you 

are recognized. 

Mr. GROTHMAN. Okay, I am sorry. I am updating my notes here. 

I am just finishing up on the questions of Congressman Takano. I 

got to talk to him later about how many men are going to be 

helped by this new rule. Maybe I missed it. 

Okay, questions. I am trying to think how this rule would impact—I look at past jobs I have had. I have heard from the golfing 

industry, but there could be a variety of jobs that you have it is 

a lot busier one time of year than another time of year. Maybe it 

gets busy at the end of the year. Maybe it gets busy during tax season, whatever. 

And, you know, when you go into the job there is sometimes you 

are going working 50 hours a week and other times you might just 

be hanging around the office and not getting a lot done. Well, that 

is because of the expert on the bill. 

Dr. Bernstein, how do you think this affects how those sort of 

jobs work if I hire somebody knowing that some days are going to 

be super busy, other days not so busy? I think it is kind of going 

to mess up those businesses and hurt those employees. What do 

you think about that there? 

Mr. BERNSTEIN. Well, I disagree. I mean, I think you have to look 

at the record. Certainly, the last time we increased the threshold, 

the slight increase in 2004, you can see that on my chart, we didn’t 

see those kinds of impacts. I do think that when it comes to people 

with variable schedules, as you suggested before, remember the 

rule does not get invoked until they cross 40 hours. So there are 

ways to work around that for employers. 

Mr. GROTHMAN. Right, well, not to cut you off, I think there are 

jobs in which you are expected sometimes to work 55 hours a week 

and other times you can take off and work 28 hours a week. And 

that is the nature of the real world. You know, there are times that 

are busy, times not so busy. You know getting involved, you are a 

salaried employee. There are sometimes you are going to work and 

get it done and sometimes they don’t. It seems it is going to make 

it very difficult for those sort of workers. 

Mr. BERNSTEIN. Again, I mean, I think you make great points 

and I agree with your points— 

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Mr. GROTHMAN. I think so, too. 

Mr. BERNSTEIN.—and I agree with the way you characterize this, 

but if you go back to the 1960s, 1970s, remember the threshold was 

$1,100 in today’s dollars and the unemployment rate was lower 

than it was today. Productivity growth was faster. So there is no 

evidence of the kinds of disruptions that you are suggesting. 

Mr. GROTHMAN. Okay, I will give you another thing that concerns me when I think of people in these jobs. What it is going to 

do is it is going to put pressure on to get out the door at 4:30 or 

5:00, or whatever. There are times when you are working on a 

project where you might say, jeez, in another half-hour, hour I 

might get this right. I just want to make sure I get it done right. 

Instead, you are going to get pressure from your employer to get 

out the door. Are you afraid it is going to result in a worse work 

product because this is what is going to happen? 

Mr. BERNSTEIN. Well, again, if we are talking about—the kind of 

workers you are talking about sound a lot to me like people like 

myself and maybe yourself as well. You know, we are exempt, so 

that is not really relevant. 

Mr. GROTHMAN. No, no, no. All sorts of people under $52-, whatever it is, $51,000 want to get their job done right. 

Mr. BERNSTEIN. Forty-seven. 

Mr. GROTHMAN. Want to get their job done right. Okay, if I am 

making 46 grand a year and I am hired to do something and I feel 

things are not getting done right and I want to hang around another hour to make sure that report is right— 

Mr. BERNSTEIN. So I guess I don’t see anything inconsistent with 

what you are saying. And again, I think you are raising great 

points. And the idea that worker has to be paid time and a half 

for that extra hour because there is something called the 40-hour 

work week that was enshrined in the Fair Labor Standards Act of 

1938, and is more relevant today than it was then in my view, 

given the issues around bargaining power and the extent to which 

middle-wage workers have been hurt. 

Mr. GROTHMAN. Look, if I have a job I want to make sure I get 

those things done right, Okay? 

Mr. BERNSTEIN. Mm-hmm. 

Mr. GROTHMAN. In part because of the customers, in part because of my boss. Okay, what you are doing here, or the people who 

put together this rule, are you creating an environment in which 

the boss feels you better get out the door at 4:30 p.m. 

So, put your employee in a position in which either I submit the 

report on a so-so, not sure it is right basis or get my boss mad by 

hanging around until 5:30 p.m. to go over it again to get it right? 

I mean, there are certain jobs that are salaried by nature, in which 

you work until you get it done. Are you not afraid you are putting 

those employees in a bad situation? 

If I am an employee like that, I want to hang around that business as long as I can, I want to grow with the business. I don’t 

want to be in a position in which I have to choose between turning 

in a lousy report at 4:30 or getting my boss mad at me because I 

had to hang around until 5:00. 

Mr. BERNSTEIN. Well, with respect, I think we have to distinguish between the kind of compelling story you are telling me and 

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the actual numbers about who is going to be affected here. We are 

talking about 3/100 of a percent of the national payroll. 

Now, you may just believe that we should not have a 40-hour 

work rule for covered workers under the FLSA and that is just a 

fundamental disagreement between us, but in fact the economy has 

performed perfectly well with thresholds far above today’s levels. 

Mr. GROTHMAN. I will give you another question. It occurs to me 

that what is going to happen here is you are going to make the 

workplace less friendly. Okay. Right now, I think sometimes people 

may hang around past 4:30, maybe it is a more easy going workplace. Maybe at the end of the day employees are talking with each 

other about who knows and they know they can hang around until 

5:30 p.m. and 6:00 p.m. and get the job done, if they have to work 

to 5:15 they can talk about, I don’t know where you are from here, 

the Redskins or whatever. 

Instead it is going to be, we have to get out the door by 4:30 pm. 

Do you not think it is going to make for a less friendly, more intense work environment? 

Chairman KLINE. All right, the gentlemen’s time has expired. 

Ms. Davis. 

Ms. DAVIS. Thank you, Mr. Chairman, and sticking with some of 

the flexibility issues there, because I think that we have the notion 

that somehow because we are in the 21st century and that we do 

use electronics and we do provide different ways of flexibility that 

this would all stop. And, you know, Dr. Bernstein, you were starting to comment on that. 

Mr. BERNSTEIN. Yeah. 

Ms. DAVIS. Can you tell us why is that not going to be the case? 

Mr. BERNSTEIN. Well, I mean, I guess I would say first of all, following up on the discussion we were just having, it does not really 

create a flexible or high morale or welcoming workplace when 

somebody is misclassified as an exempt worker because they are 

called an assistant manager and they work 5, 10, 20 hours for zero 

extra pay when they should be getting time and a half overtime. 

In fact, as I discussed earlier in my testimony, instead of assertions 

about these flexibility issues, research done by Professor Lonnie 

Golden has found that if you actually look from survey research at 

the kinds of flexibility, the sort of work-family balance flexibility 

that hourly and salaried workers have at around the cap, around 

$50,000, it is about the same. So there is no evidence that moving 

someone from nonexempt to exempt coverage would reduce their 

flexibility. What it would increase is their pay when they work 

overtime and that is critically important. 

Ms. DAVIS. Yeah, I think one of the points made also with the 

NIH is that many of our young scientists are going to be affected 

in a more positive way with this new rule rather than negatively. 

Mr. BERNSTEIN. Well, that is a good point. I have talked to at 

least one postdoc who said he likes the rule a lot, in no small part 

because the NSF, as I have mentioned, is raising the grant level 

to meet the higher cap. 

Ms. DAVIS. Right. One of the articles—The New York Times had 

an article, just the other day. You all may be familiar with it without talking about the Prada Economy or the Prada Industry, and 

the fact that we do have a lot of low-wage but high-potential jobs 

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that young 20-somethings, for example, might be willing to take. 

They are obviously engaging with people in a way that pushes 

them. 

They want to show their aggression. They want to show that 

they are ambitious and they are going to stay on the job just as 

long as they can in the hopes of looking good, quite frankly. That 

is what people do, and that is perfectly acceptable. But we also 

have to know that those kinds of jobs may possibly affect demographics differently by those who can afford to do that more than 

those who cannot. Maybe young people can do it more, especially 

if they have a lot of support at home, versus people who have a 

family at home and trying to work in that fashion does not suit 

them. Do you think that, in fact, as we are looking at these issues 

that some of these new overtime rules could possibly change the socioeconomic diversity of the workforce in this so-called Prada Industry? 

Mr. BERNSTEIN. Well, I certainly think it is possible. I think it 

is important. I don’t know that we have quite gotten to this in the 

hearing so far, to note the rule will disproportionally help some of 

the types of workers you are talking about; black and Hispanic 

workers are disproportionally affected. They are 21 percent of the 

salaried workers, but 28 percent of those who would directly benefit from the new threshold, and millennials between the ages of 

16 and 34 will also disproportionally benefit. They are 36 percent 

of the affected group and 28 percent of the workforce. More than 

a third of all workers with less than a college degree will be directly affected and that will also help over seven million children. 

And as I mentioned there is a slight majority of workers who are 

helped who are women. 

Ms. DAVIS. Right. What is the benefit of that? Of diversifying? 

Mr. BERNSTEIN. Well, I think there is a tremendous benefit to 

that diversity. If I may wax philosophical for a slight second here, 

I am struck by the fact that we are now in a country that has twice 

elected an African-American President and now has nominated to 

a major party for the first time a woman. I think this type of diversity is extremely healthy and I also think the extent to which minority workers have been hurt through the erosion of labor standards, whether it is minimum wages or the overtime threshold, cannot be over-exaggerated either. And this rule is an important correction to that. 

Ms. DAVIS. Thank you. I appreciate that and I know others have 

talked a little bit about the work-life balance and whether there is 

something to be said for having people be more productive when 

that work-life balance does come into consideration. Would you all 

agree that there is something to be said for that? 

Mr. BERNSTEIN. I would. 

Ms. DAVIS. I see some nods, but, okay, all right, thank you. We 

do need to, I think, realize that in some ways this really is forcing 

people to manage the productivity in businesses and I think that 

is very positive for all of us. 

Chairman KLINE. The gentlelady’s time has expired. 

Ms. DAVIS. Thank you, Mr. Chairman. 

Chairman KLINE. Mr. Rokita. 

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Mr. ROKITA. I thank the Chairman. Mr. Passantino, what do you 

think the best way is to manage productivity in a business? 

Mr. PASSANTINO. To let people work. 

Mr. ROKITA. Manage to a profit motive perhaps? 

Mr. PASSANTINO. Sure. I mean they want to be profitable. That 

is the point of the business. 

Mr. ROKITA. Efficiency, manage to effectiveness, those kinds of 

things. 

Mr. PASSANTINO. Sure. 

Mr. ROKITA. Those principles apply to urban areas as well as 

rural areas, I grasp, correct? 

Mr. PASSANTINO. True. 

Mr. ROKITA. I represent a lot of rural areas, a lot of suburban 

areas, a lot of small towns I am very proud of and they are great 

places. What is the effect of this rule on places like that? 

Mr. PASSANTINO. I think it disproportionally affects those rural, 

nonurban areas. We have already seen clients who have—it is the 

same position, people are performing the same work. So, there is 

no question the duties qualify for the exemption. Right? So the duties tests have not changed. They are exempt now; they will be exempt under the revised salary test. 

But some of their workers work in urban areas and earn an excess of $47,000, and some work less—I am sorry, earn less because 

they live in rural areas. So what you have is the same exact position and people earn above and below the new threshold, which 

fundamentally indicates that not everybody earning under $47,000 

is not performing exempt work. There are plenty of people under 

47,000 who are performing exempt work, which is sort of the point 

of the salary test. 

The salary test is supposed to screen out all of the clearly nonexempt people and then you go to the duties test to see whether 

they meet the rest of it. 

So, what you have is a situation where you are including people 

who clearly meet the duties test and now employers have to decide 

what is, frankly, not a great decision. They have to raise everybody 

up to that $47,000, which means that they are going to have to 

raise the people over $47,000 as well. They can convert the entire 

workforce to nonexempt in that position, which is not the best solution for them, or they can have a split position and they can have 

some people being nonexempt and some being exempt and that is 

a recipe for disaster. 

Mr. ROKITA. Yeah, because in your experience inside that workforce, folks that you represent, what would that do? 

Mr. PASSANTINO. Well, you are going to run into situations where 

the exempt person can stay until 5:30 or 6:00 p.m. and get the job 

done. The nonexempt person is going to be limited in their overtime hours. 

Mr. ROKITA. To Mr. Grothman’s earlier point, that cannot be 

good for morale. I mean, that cannot be good for running a business or working at one like that. 

Ms. Sharby you are nodding your head. I will indicate that for 

the record. Do you want to add something? 

Ms. SHARBY. Well, I struggle because I am honestly not sure how 

Easter Sales is going to be able to absorb these changes. We run 

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with maybe a 1 percent budget margin. The difference between in 

the black and being in the red, so— 

Mr. ROKITA. And just to be clear in my opening comments you 

are a nonprofit. 

Ms. SHARBY. Nonprofit. 

Mr. ROKITA. So the ‘‘profit motive’’ is the ability to stay in business, right? 

Ms. SHARBY. Correct. 

Mr. ROKITA. If you are not making positive revenue—if you are 

nonprofit you cannot be there. Correct? 

Ms. SHARBY. Correct. And currently in the State of New Hampshire we have a 2.6 percent unemployment rate. So it is not a matter of saying that I will bring in more employees and not pay the 

overtime. I just do not have employees to bring in, into the State. 

So the moral issue with our staff is significant. We have people 

who feel that, just yesterday, said, what does that mean to me? I 

am used to going and helping out at certain events. I like to go to 

some of the kids’ birthday parties or graduations. 

Mr. ROKITA. Nope. Nope, cannot do that. 

Ms. SHARBY. I cannot pay you to do that now. And that is really 

very tough to be—and it impacts the quality of the services we are 

able to provide. 

Mr. ROKITA. And so my question about the rule nature of my district, I think, correct me if I am wrong, either the two of you that 

spoke already, applies regionally? 

Ms. SHARBY. Right. 

Mr. ROKITA. I mean, there are differences in regions of this country that rule or not that would—what you are testifying to would 

have the same effect. Is that correct, Ms. Sharby? 

Ms. SHARBY. That is correct. So if an average salary in New 

Hampshire is $35,000 and we used to have business in New York 

that same salary would equate out to a little over $50,000 in New 

York. But yet, New Hampshire is forced to comply with the higher 

salary. 

Mr. ROKITA. Unbelievable. Mr. Passantino, last word. 

Mr. PASSANTINO. I think that is exactly right. You are going to 

see differences in how people are treated based on where they are 

or employers are going to have to make some very difficult decisions. 

Mr. ROKITA. Central planning at its worst. I yield, Mr. Chairman. 

Chairman KLINE. The gentleman yields back, Ms. Adams. 

Ms. ADAMS. Thank you, Mr. Chairman, and thank you for your 

testimony. The Department of Labor’s update to the overtime rule 

is long overdue. And according to the Economic Policy Institute, it 

would benefit 425,000 working people in my home State of North 

Carolina. I want to begin by asking Mr. Passantino, you served in 

the Labor Department under President Bush. How much time were 

employers given to comply with the 2004 change to the rule? 

Mr. PASSANTINO. I believe the effective day on the 2004 rule was 

120 days. But that rule was really catching up, fixing some issues 

that had existed in the salary test. There were two tests at that 

time. One of them was basically nonfunctioning. No one used it. So 

it really was a catch-up whereas this is clearly jumping over a 

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large number of people who perform exempt duties. And so it is 

going to be far more difficult under the current rule for employers 

to come into compliance. 

Ms. ADAMS. But the current rule, though, does provide an additional two months to come up with compliance, which was beyond 

what the Bush Administration provided for, is that not correct? 

Mr. PASSANTINO. The current rule provides approximately six 

months, I believe, for employers to get into compliance. 

Ms. ADAMS. Okay, so that is more. Mr. Bernstein, we talk about 

a better outcome for employees. You have made some comments 

about that. Can we, with the better outcomes for employees, can 

we expect that this will lead to better outcomes for employers? 

Mr. BERNSTEIN. Well, certainly in the past, as I have mentioned, 

in fact, I would take issue with one of the things my co-witness Mr. 

Passantino just said. The new rule simply partially replaces the extent to which inflation has eroded its value since the mid-1970s. If 

you look at the value in today’s dollars of the overtime threshold, 

the level, it would have been about $1,100, $57-, $58,000 per year. 

Now we are talking about $913 per week or about $47,000 per 

year. So it is a partial adjustment. And, in fact, to speak to your 

question, when the rule was in effect unemployment was low, GDP 

growth was faster than it is today. Productivity growth was faster 

than it was today. I don’t know that worker morale was negatively 

impacted at all. 

In fact, one of the things that numerous analysts predicted from 

looking at the rule based on past history— not based on assertion, 

not based on what you think might happen, but based on research 

driven by what has happened in the past when we have changed 

thresholds— the expectation is that there will be some number of 

new jobs created at straight-time pay. Maybe 100,000 according to 

Goldman Sachs, maybe 150 or so according to the National Retail 

Federation. I think this is positive for the economy and positive for 

the workplace. 

Ms. DAVIS. Thank you, Mr. Rounds, and thank you for your service, sir. You mentioned that workers cared more about their exempt status than getting paid for the time they work. Well, I find 

all the discussion around higher education fascinating because I 

served 30 years, 40 years in academia. But, you know, the people 

that I talk to really find it demeaning and demoralizing to be asked 

to put in extra hours at work for no pay. What would your response 

be to that? 

Mr. ROUNDS. First, I would like to say thanks for your service 

in academia. Obviously it is essential to the country and we appreciate your willingness to work in the academic sector. I would say 

that as I look at the employees at the University of Kansas and I 

look at the ones that we are talking about who are primarily responsible for providing services to students, the ones that would be 

impacted by this legislation is that their passion is for positive outcomes for students. They will lose some of their workplace flexibility and their lack of ability to meet the needs of students will 

be of great concern to them. I have talked in my testimony that is 

most important, the culture of higher education and being able to 

serve our primary customer, our students. That will be eroded. 

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Ms. ADAMS. Thank you, Mr. Chairman. I believe I am out of 

time. I yield. 

Chairman KLINE. The gentlelady yields. Mr. Jeffries. 

Mr. JEFFRIES. Thank you, Mr. Chair. Mr. Passantino, would you 

agree that the 40-hour work week has become a classic part of the 

American Dream? 

Mr. PASSANTINO. I do not know that I would describe it as that. 

Mr. JEFFRIES. So it was enacted into law in the late 1930s as 

part of the New Deal, which was part of the effort to make sure 

that we have a more even playing field in terms of working class, 

middle class Americans. Correct? 

Mr. PASSANTINO. It was enacted in the late 1930s, I think, to 

make it more expensive for people to work more than 40 hours. 

Mr. JEFFRIES. You think the objective of President Franklin 

Delano Roosevelt was to make it more expensive for people to work 

more than 40 hours a week? That was his objective, part of the 

New Deal? 

Mr. PASSANTINO. Well, the second part of that is that makes 

more people work for the same amount. So you can pay at a 

straight time. 

Mr. JEFFRIES. Now, you were part of the Bush administration, 

correct? 

Mr. PASSANTINO. That is correct. 

Mr. JEFFRIES. And do you think that President Obama and his 

administration, his policies— whether that the Affordable Care 

Act, whether that is the Dodd-Frank legislation that was passed 

into law, whether that is the overtime rule –have been job killing? 

Mr. PASSANTINO. Have they been job killing? 

Mr. JEFFRIES. Right. 

Mr. PASSANTINO. I think that they have. 

Mr. JEFFRIES. They have? 

Mr. PASSANTINO. Yes. 

Mr. JEFFRIES. So, you spent time in the Bush administration, 

which brought us two unfortunate wars and tax cuts to benefit the 

wealthy and the well-off. But also, presumably, you made your best 

efforts to be part of an administration that was going to improve 

the employment situation in this country. Correct? 

Mr. PASSANTINO. Correct. 

Mr. JEFFRIES. But the eight years under President Bush we lost 

650,000 jobs, correct? 

Mr. PASSANTINO. I do not know the figures. 

Mr. JEFFRIES. Okay. Under President Obama’s seven and a half 

years we have actually gained 14 plus million jobs in the private 

sector, correct? 

Mr. PASSANTINO. I do not know the numbers on that either. 

Mr. JEFFRIES. But you are here as an expert to talk to us about 

employment and the impact of this rule and you do not know these 

basic numbers, including the ones that relate to your time being 

spent in the Bush administration. Is that your testimony? 

Mr. PASSANTINO. My testimony and my expertise is on advising 

clients how to deal with these issues and so on, on a very micro 

level. I have a very good understanding of how that works. On a 

macro level I don’t have that data. 

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Mr. JEFFRIES. So on a micro level, you think that the 40-hour 

work week, which is working five days a week, presumably Monday 

through Friday, 9:00 to 5:00, is not part of the basic American 

Dream in terms of being able to work hard, earn a good living, but 

also be there as a father, as a mother, as a son or daughter to a 

parent or grandparent that may be ailing to have a good work— 

life balance? You have a problem with that? 

Mr. PASSANTINO. I believe that I am living the American Dream 

and I am not subject to a 40-hour work week, so, yeah, I think it’s 

possible that the 40-hour work week is not an inherent part of 

that. 

Mr. JEFFRIES. Okay. Mr. Rounds, thank you for service in terms 

of working in the academic realm. Higher education is incredibly 

important. A few things you talked about that in the limited time 

I have I would like to touch on, you said that the University of 

Kansas is a not-for-profit public university. Is that correct? 

Mr. ROUNDS. That is correct. 

Mr. JEFFRIES. And so presumably, what you ultimately strive to 

do is provide some form of public benefit to your students, but also 

in the context of being part of the State government out in Kansas. 

Is that correct? 

Mr. ROUNDS. Correct. 

Mr. JEFFRIES. And you said 262 employees of Kansas University 

would be impacted by the overtime rule, is that right? 

Mr. ROUNDS. Actually 354, 92 of those are postdoctoral employees who we have made the determination to raise their salaries to 

the new threshold. 

Mr. JEFFRIES. Okay, so that means that they are actually going 

to put more money in their pocket at the end of the day. That will 

either go into the economy or go to the benefit of their families. Is 

that right? 

Mr. ROUNDS. That is correct. But at the same time, as we looked 

at the fixed grants that their principal investigators are responsible 

for managing is the concern. This has also been expressed by the 

Postdoctoral Association as we are not going to be able to maintain 

the same number that we have had in the past, which you can 

argue will have an impact on research. 

Mr. JEFFRIES. Okay. I mean, I would simply say I think K.U. is 

a great university, great basketball program. I mean, it does interest me that, I believe, Bill Self earns about $230,000 directly from 

the university and as I understand it $3 million in total salary, and 

that the chancellor of the university earns approximately $510,000 

per year. So I think maybe there needs to be a reassessment of priorities before the complaint is directed at the effort of the Obama 

administration just to make life better for working families. 

Chairman KLINE. And the gentleman’s time has expired. All time 

for questions has expired. I want to thank the witnesses and turn 

to Mr. Scott for any closing remarks he might have. 

Mr. SCOTT. Thank you, Mr. Chairman. As the gentleman from 

New York just indicated, in 1938,— 1938— Congress established 

40 hours as a normal work week. And if you make more than that, 

you are supposed to get time and a half. After 40 hours, if you 

work more, you are supposed to get more. The law covered about 

60 percent of salaried employees back then, but because we have 

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not updated the laws we should have, now only 7 percent of salaried workers are covered. This new regulation will increase it to 33 

percent. 

We’ve heard a lot from colleges. We have not heard enough about 

all the exemptions in colleges: teachers, grad students, many coaches, many academic administrators, all hourly employees not affected by this law. In fact, Department of Labor estimates that only 

3.4 percent of college workers will be affected. In 0.5— one-half of 

1 percent would be both affected and usually work overtime. Onehalf of 1 percent of college workers. To honor the 40-hour work 

week you are only talking about one-half of 1 percent— of workers 

that will get a little extra when they work over 40 hours. 

We also heard from Easter Seals honoring the 40-hour work 

week, rather than working people without pay after 40 hours would 

cost less than 1 percent of the budget. Suggesting that people are 

going to die because you cannot work people more than 40 hours 

is obviously absurd. And also you could be more honest; if you expect them to work 60 hours a week, you can restate their salary, 

expect them to make the overtime and they would get the eventual 

salary that they are expecting to get. But it would be more honest 

to say what it is for the 40 hours and more than that after that. 

Now, some of this Committee think that we should honor the 40- 

hour work week, and if people work more than 40 hours they 

should get paid for additional hours. The rule means, as I said, 

one-third of salaried employees will benefit from the 40-hour work 

week: up from 7 percent, but way under the 60 percent who were 

covered in the 1970s. And incidentally, businesses, colleges, and 

nonprofits complied with those regulations without complaint. 

So, Mr. Chairman, I hope that we will honor the 40-hour work 

week. We actually ought to get above the 33 percent I would have 

hoped they would have done more, but they’ve done what they’ve 

done. 

Chairman KLINE. And the gentleman yields back. I thank him 

for his comments. It has been a good discussion today. I am always 

fascinated how we hear statistics here. We’ve had a number of my 

colleagues on this side of the aisle have been citing how many more 

people are going to be getting raises and work from a far left-leaning think tank. But that is just the world we live in here. 

I very much appreciate the expertise of the witnesses. You are 

all very, very fine witnesses. We, and most of my colleagues on this 

side, are entirely for people getting fair pay for their work, but we 

have great concerns, as we heard from some of my colleagues 

today, that this rule is going to have a negative impact. 

And I appreciate Mr. Passantino talking about the differences in 

response to Mr. Rokita’s question. Ms. Sharby as well addressed it. 

We have a very different pay scale in Manhattan than you do, for 

example, in the center of Minnesota, as so $47,000 means one thing 

in one part of the country and something else in another. This rule 

does not recognize demographic differences. Anyway, thank you all 

very much for the witnesses being—yes? Mr. Scott. 

Mr. SCOTT. I was just going to ask to submit to the record a fact 

sheet from the Economic Policy Institute that shows the effect on 

jobs, hours, and salaries. 

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Chairman KLINE. The aforementioned left-leaning think tank 

and, without objection, it will be entered. I thank the witnesses. 

We are adjourned. 

[Additional submission by Mr. Hinojosa follow:] 

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