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IMPROVING THE FEDERAL WAGE AND 

HOUR REGULATORY STRUCTURE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON WORKFORCE PROTECTIONS 

COMMITTEE ON EDUCATION 

AND THE WORKFORCE 

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

HEARING HELD IN WASHINGTON, DC, JULY 23, 2014 

Serial No. 113–63 

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

( 

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

committee.action?chamber=house&committee=education 

or 

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

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(II) 

COMMITTEE ON EDUCATION AND THE WORKFORCE 

JOHN KLINE, Minnesota, Chairman 

Thomas E. Petri, Wisconsin 

Howard P. ‘‘Buck’’ McKeon, California 

Joe Wilson, South Carolina 

Virginia Foxx, North Carolina 

Tom Price, Georgia 

Kenny Marchant, Texas 

Duncan Hunter, California 

David P. Roe, Tennessee 

Glenn Thompson, Pennsylvania 

Tim Walberg, Michigan 

Matt Salmon, Arizona 

Brett Guthrie, Kentucky 

Scott DesJarlais, Tennessee 

Todd Rokita, Indiana 

Larry Bucshon, Indiana 

Trey Gowdy, South Carolina 

Lou Barletta, Pennsylvania 

Joseph J. Heck, Nevada 

Mike Kelly, Pennsylvania 

Susan W. Brooks, Indiana 

Richard Hudson, North Carolina 

Luke Messer, Indiana 

Bradley Byrne, Alabama 

George Miller, California, 

Senior Democratic Member 

Robert C. ‘‘Bobby’’ Scott, Virginia 

Rube ́n Hinojosa, Texas 

Carolyn McCarthy, New York 

John F. Tierney, Massachusetts 

Rush Holt, New Jersey 

Susan A. Davis, California 

Rau ́l M. Grijalva, Arizona 

Timothy H. Bishop, New York 

David Loebsack, Iowa 

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 

Juliane Sullivan, Staff Director 

Megan O’Reilly, Minority Staff Director 

SUBCOMMITTEE ON WORKFORCE PROTECTIONS 

TIM WALBERG, Michigan, Chairman 

John Kline, Minnesota 

Tom Price, Georgia 

Duncan Hunter, California 

Scott DesJarlais, Tennessee 

Todd Rokita, Indiana 

Larry Bucshon, Indiana 

Richard Hudson, North Carolina 

Joe Courtney, Connecticut, 

Ranking Member 

Rau ́l M. Grijalva, Arizona 

Timothy H. Bishop, New York 

Marcia L. Fudge, Ohio 

Mark Pocan, Wisconsin 

Mark Takano, California 

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(III) 

C O N T E N T S 

Page 

Hearing held on July 23, 2014 ............................................................................... 1 

Statement of Members: 

Courtney, Hon. Joe, Ranking member, Subcommittee on Workforce Protections ........................................................................................................... 3 

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

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

Prepared statement of ............................................................................... 3 

Statement of Witnesses: 

Conti, Judith, Federal Advocacy Coordinator, National Employment Law 

Project, Washington, DC .............................................................................. 41 

Prepared statement of ............................................................................... 43 

Decamp, Hon. Paul, Shareholder, Jackson Lewis P.C., Washington, DC .... 55 

Prepared statement of ............................................................................... 57 

McKeague, Nancy, Senior Vice President of Employer and Community 

Strategies, and Chief Human Resources Officer, Michigan Health & 

Hospital Association ..................................................................................... 29 

Prepared statement of ............................................................................... 31 

Sherrill, Andrew, Dr., Director of Education, Workforce and Income Security, U.S. Government Accountability Office, Washington, DC ................ 8 

Prepared statement of ............................................................................... 11 

Additional Submissions: 

Mr. Courtney: 

Letter from Weil, David, Dr., Administrator, Wage and Hour Division .......................................................................................................... 71 

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(1) 

IMPROVING THE FEDERAL WAGE AND HOUR 

REGULATORY STRUCTURE 

Wednesday, July 23, 2014 

House of Representatives, 

Subcommittee on Workforce Protections, 

Committee on Education and the Workforce, 

Washington, D.C. 

The Subcommittee met, pursuant to call, at 10:04 a.m., in Room 

2175, Rayburn House Office Building, Hon. Tim Walberg [chairman of the Subcommittee] presiding. 

Present: Representatives Walberg, Kline, Rokita, Hudson, Courtney, Pocan, and Takano. 

Staff present: Janelle Belland, Coalitions and Members Services 

Coordinator; Ed Gilroy, Director of Workforce Policy; Christie Herman, Professional Staff Member; Nancy Locke, Chief Clerk; James 

Martin, Professional Staff Member; Daniel Murner, Deputy Press 

Secretary; Krisann Pearce, General Counsel; Molly McLaughlin 

Salmi, Deputy Director of Workforce Policy; Alissa Strawcutter, 

Deputy Clerk; Loren Sweatt, Senior Policy Advisor; Alexa Turner, 

Legislative Assistant; Tylease Alli, Minority Clerk/Intern and Fellow Coordinator; Melissa Greenberg, Minority Labor Policy Associate; Eunice Ikene, Minority Labor Policy Associate; Brian Kennedy, Minority General Counsel; Leticia Mederos, Minority Director of Labor Policy; and Richard Miller, Minority Senior Labor Policy Advisor. 

Chairman WALBERG. Good morning. A quorum being present, the 

Subcommittee on Workforce Protections will come to order. 

Let me begin by welcoming our guests and thanking our witnesses for joining us today. At the very least, it is a way to get in 

out of the humidity outside. Coming from Michigan, I am not used 

to the humidity being inside along with air conditioning. But we 

adjust to it, and I am sure my colleagues at the dais here would 

recognize the same issue. 

The issue today, we probably continue some heat to be generated; 

discussion of creative juices flowing. And that is a good thing to 

take place in this room. So thank you for joining us. 

For more than 75 years, the Fair Labor Standards Act has provided America’s workforce with crucial federal wage and hour protections. Every day, the vast majority of employers do their part— 

and I say that again—every day, the vast majority of employers do 

their part to ensure workers enjoy these vital protections. Unfortunately, that is becoming an increasingly difficult challenge. 

CEWDOCROOM with DISTILLER

2 

The current rules and regulations surrounding the law are exceptionally complex and outdated. Too often, a maze of confusing regulatory requirements promotes the interests of trial lawyers rather 

than working families. A report issued by the nonpartisan Government Accountability Office reveals a broken regulatory structure 

that fosters unnecessary and costly litigation. According to the report, and I quote—‘‘The number of FLSA lawsuits filed nationwide 

in federal district courts has increased substantially, with most of 

these increases occurring in the last decade.’’ 

The GAO report continues, ‘‘Since 1991, the number of FLSA 

lawsuits filed has increased by 514 percent, with a total of 8,148 

FLSA lawsuits filed in fiscal year 2012.’’ A more than 500 percent 

increase in litigation during the last two decades; clearly, something isn’t right. You would think employers are engaged in some 

coordinated national conspiracy to deny workers their rights. The 

truth is, the vast majority of employers want to do the right thing 

and follow the law. But too often, they unknowingly step into a regulatory trap. Even the Department of Labor has run afoul of wage 

and hour regulations, and they are responsible for writing the rules 

and enforcing the law. 

As litigation has increased, the number of guidance documents 

issued by the department has sharply declined. Between 2001 and 

2009, the department released an average of 37 guidance documents each year, yet in the last three years the Obama administration has issued a total of seven; just seven during the last three 

years. As GAO notes, improving guidance could increase the efficiency and effectiveness of the department’s efforts to help employers voluntarily comply with the law. 

What is the harm in assisting employers in understanding their 

legal responsibilities? Why wouldn’t we want to help employers understand their obligations so they can stop spending time inside a 

courtroom and, instead, invest their resources in growing a successful business and creating jobs? 

We have heard a lot in recent months and years about executive 

authority. We are told this is supposed to be a so-called ‘‘year of 

action.’’ Too often, these actions stretch the limits of the law and 

even our Constitution. Yet when it comes to using a pen and a 

phone to help employers understand a complex and confusing regulatory scheme, the Department of Labor can’t be bothered. 

Earlier this year, the President issued an executive memorandum directing the Secretary of Labor to revise federal wage and 

hour regulations. There is obviously some agreement the rules are 

outdated and need to be improved. 

At that time, Chairman Kline and I said that if the President 

was beginning a sincere attempt to modernize current regulations, 

then the Committee would support such an effort. In fact, we hope 

we can be a partner in that effort, and today’s hearing should certainly inform that work. We need responsible change that will 

bring these rules into the 21st century, while also safeguarding 

worker protections. 

The Committee stands ready to assist, but more can be done to 

help employers comply with the law. The department has a job to 

do, and we hope this government accountability report will encourCEWDOCROOM with DISTILLER

3 

age the agency to get to work. Again, I want to thank our witnesses for joining us today. 

With that, I will now yield to the senior Democrat of the Subcommittee, my friend and colleague, Representative Joe Courtney, 

for his opening remarks. 

[The statement of Chairman Walberg follows:] 

Prepared Statement of Hon. Tim Walberg, Chairman, Subcommittee on 

Workforce Protections 

Good morning. Let me begin by welcoming our guests and thanking our witnesses 

for joining us. 

For more than 75 years, the Fair Labor Standards Act has provided America’s 

workforce with crucial federal wage and hour protections. Every day the vast majority of employers do their part to ensure workers enjoy these vital protections. Unfortunately, that is becoming an increasingly difficult challenge. 

The current rules and regulations surrounding the law are exceptionally complex 

and outdated. Too often a maze of confusing regulatory requirements promotes the 

interests of trial lawyers, rather than working families. A report issued by the nonpartisan Government Accountability Office reveals a broken regulatory structure 

that fosters unnecessary and costly litigation. 

According to the report, ‘‘The number of FLSA lawsuits filed nationwide in federal 

district courts has increased substantially, with most of this increase occurring in 

the last decade.’’ The GAO report continues, ‘‘Since 1991, the number of FLSA lawsuits filed has increased by 514 percent, with a total of 8,148 FLSA lawsuits filed 

in fiscal year 2012.’’ A more than 500 percent increase in litigation during the last 

two decades; clearly something isn’t right. 

You would think employers are engaged in some coordinated national conspiracy 

to deny workers their rights. The truth is the vast majority of employers want to 

do the right thing and follow the law, but too often they unknowingly step into a 

regulatory trap. Even the Department of Labor has run afoul of wage and hour regulations and they are responsible for writing the rules and enforcing the law. 

As litigation has increased, the number of guidance documents issued by the department has sharply declined. Between 2001 and 2009, the department released 

an average of 37 guidance documents each year. Yet in the last three years, the 

Obama administration has issued a total of seven – just seven during the last three 

years. 

As the GAO notes, improving guidance ‘‘could increase the efficiency and effectiveness of [the department’s] efforts to help employers voluntarily comply with the 

law.’’ What’s the harm in assisting employers in understanding their legal responsibilities? Why wouldn’t we want to help employers understand their obligations, so 

they can stop spending time inside a courtroom and instead invest their resources 

into growing a successful business and creating jobs? 

We’ve heard a lot in recent months and years about executive authority. We are 

told this is supposed to be a so-called year of action. Too often these actions stretch 

the limits of the law and even our Constitution. Yet when it comes to using a pen 

and phone to help employers understand a complex and confusing regulatory 

scheme, the Department of Labor can’t be bothered. 

Earlier this year, the president issued an executive memorandum directing the 

secretary of labor to revise federal wage and hour regulations. There is obviously 

some agreement the rules are outdated and need to be improved. At that time, 

Chairman Kline and I said that if the president was beginning a sincere attempt 

to modernize current regulations, then the committee would support such an effort. 

In fact, we hope we can be a partner in that effort and today’s hearing should 

certainly inform that work. We need responsible change that will bring these rules 

into the 21st century, while also safeguarding worker protections. The committee 

stands ready to assist, but more can be done to help employers comply with the law. 

The department has a job to do and we hope this government accountability report 

will encourage the agency to get to work. 

Again, I want to thank our witnesses for joining us. With that, I will now yield 

to the senior Democrat of the subcommittee, my colleague Representative Joe Courtney, for his opening remarks. 

Mr. COURTNEY. Thank you, Chairman Walberg, and I want to 

thank you for calling today’s hearing to examine the important 

CEWDOCROOM with DISTILLER

4 

work of the Wage and Hour Division at the Department of Labor. 

I also want to thank the witnesses for their participation and testimony today, regarding the department’s efforts to ensure workers 

are fairly compensated for their hard work. 

The Wage and Hour Division at the Department of Labor plays 

a vital role in enforcing our nation’s wage and hour laws. This division is responsible for enforcing the federal minimum wage, overtime pay, recordkeeping and child labor requirements of the Fair 

Labor Standards Act as well other important laws like the Family 

and Medical Leave Act; in essence, bedrock protections that have 

a direct impact on workers’ quality of life and economic security. 

Hardworking Americans who are cheated out of their wages need 

to be able to turn to the Department of Labor for help when their 

employers are refusing to give them their due. Wage theft is most 

common in low-wage industries and, as a result, disproportionately 

impacts the workers who are the least able to afford to take action 

on their own. For many of these low-wage workers, any diminishment of their take-home pay can make the difference between getting by and not being able to provide for their families. As a result, 

the department’s actions on behalf of low-wage workers is critically 

important. Since 2009, the department has recovered over $1 billion in 

wages to more than 1.2 million workers, including helping 108,000 

low-wage workers recover nearly $83 million in back wages. This 

represents a 44 percent increase in the amount of back wages recovered, and a 40 percent increase in the number of low-wage 

workers being provided compensation. And just last month, the Department of Labor announced the result of a multiyear initiative 

resulting in the recovery of over $1 million in wages and damages 

for 1,518 restaurant workers in the Tampa area. 

I understand that one focus of today’s hearing will be a recent 

GAO report on the increase in the number of wage and hour lawsuits over the past 10 years. While there has been a dramatic increase over this period, the reasons for this increase are unclear. 

The department initiated suits comprise only a small fraction of 

the total FLSA lawsuits brought against employers, and the GAO 

study did not conclusively point to the cause for this increase. I 

also understand, though, that the GAO report focused on improving 

the department’s approach to developing guidance through a more 

data-driven approach. 

The department has agreed to this recommendation and is working on its implementation. And I want to emphasize this point at 

the outset. If you read the GAO report, like any other GAO report—whether it is on the House Armed Services Committee or any 

other committee—the department is asked to react to the GAO recommendations. And the reaction, which is in the report, says that 

the department agrees with the conclusions of the GAO report and 

is willing to work to address the issues that GAO has recognized. 

I can say from personal experience in terms of GAO studies on 

the Navy, on the Air Force, that is not always the case. That 

there—in many instances, there is strong pushback by administrative agencies and departments by GAO reports. 

But Secretary Perez in the Department of Labor has said, we 

agree. So, you know, I think it is important at the outset here to 

CEWDOCROOM with DISTILLER

5 

make sure that we aren’t drawing lines in the sand here between 

what GAO is recommending and the Department of Labor. And I 

would point out that this is not atypical. Since Secretary Perez has 

taken over, he agreed with this Committee’s criticisms on the Office of Contract Compliance enforcement actions against hospitals; 

terminated the initiative that the department had been following 

for a number of years; withdrew an enforcement lawsuit in federal 

district court in Florida; and issued a five year moratorium, again 

based on the legitimate questions that this department—this Committee raised. 

Secondly, in terms of the Service Compliance Act—which, again, 

was an issue that was raised in the Armed Services Committee— 

that DOL was forcing an unreasonable level of compensation for 

fringe benefits at contractor services at military bases around the 

country. The Navy appealed DOL’s report, and they cut their recommendation to like a quarter of what was initially the case. This 

Secretary listens, and I really think it is important for people to 

understand. 

And this Subcommittee has had direct experience. And frankly, 

I think the GAO report, which shows that DOL accepts the findings in the GAO report, and agrees to work with it, is just another 

indication of the Secretary’s willingness to work with outside parties, members of Congress, you name it in terms of tying to show 

that this department is, in the give and take of an administrative 

agency, actually responsive. 

Perhaps, I would suggest, a more fruitful use of today’s hearing 

would be to examine proposals that would strengthen wages for 

hardworking Americans to assure that no one who is working fulltime has to live in poverty. And that is the issue of the day out 

there for low-income Americans across the country. This administration has taken steps to raise the minimum wage for federal contract workers, supports the Miller-Harkin Minimum Wage Act, 

which has roughly 200 cosponsors in the House, expanded FLSA 

protections to home health care workers, taking them out of below 

minimum wage status to the protections of minimum wage, taken 

steps to ensure pay equity for women, and is in the process of updating their overtime regulations. 

We should build on these efforts by passing H.R. 1010, the Fair 

Minimum Wage Act. Raising the minimum wage is not only good 

for millions of workers that would directly benefit, but also for our 

economy as a whole. And again, as a member of the House Agriculture Committee, we just went through this Farm Bill agony over 

the level of spending on food stamps in this country. You want to 

cut food stamps in this country? Raise the minimum wage. That 

will reduce the allotment that, again, low-income workers today 

have to use in food stamps to put food on the table for themselves 

and their kids. Again the CBO has verified this. 

You want to cut the deficit in the agriculture account, in food 

stamps accounts, SNAP? Raise the minimum wage. You will reduce 

spending for SNAP overnight by doing that. And you won’t do it 

by denying people access to critically needed nutrition. In fact, data 

from the Department of Labor shows that 13 states that have 

raised the minimum wage have higher job growth than those that 

do not. Including my own state of Connecticut, which recently 

CEWDOCROOM with DISTILLER

6 

passed a minimum wage increase to $10.10. We just had our job 

numbers come out for the month of June. Again, thousands of new 

jobs added in the Connecticut economy after the minimum wage 

bill was passed by the state legislature under Governor Malloy’s 

leadership. 

The poster to my right shows the hundreds of thousands of constituents represented by members of this subcommittee who would 

benefit from this important legislation. In my district, a total of 

42,000 workers would benefit, including 24,000 women. Again, 

luckily, Connecticut is ahead of the curve. So that is happening as 

we speak. Passing this law would make a real difference in the 

lives of many people who we represent. And as a result, it deserves 

to be debated and a hearing at least needs to be held on this subcommittee. And hopefully, at some point, voted on in this chamber 

before the end of the 113th Congress. 

Thank you, Mr. Chairman, and thanks again to our witnesses for 

your participation. 

[The statement of Mr. Courtney follows:] 

Prepared Statement of Hon. Joe Courtney, Senior Democratic Member, 

Subcommittee on Workforce Protections 

Good morning. I want to thank Chairman Walberg for calling today’s hearing to 

examine the important work of the Wage and Hour Division at the Department of 

Labor. 

I also want to thank the witnesses for their participation and testimony today regarding the Department’s efforts to ensure workers are fairly compensated for their 

hard work. 

The Wage and Hour Division at the Department of Labor plays a vital role in enforcing our nation’s wage and hour laws. This division is responsible for enforcing 

the Federal minimum wage, overtime pay, recordkeeping, and child labor requirements of the Fair Labor Standards Act, as well as other important laws like the 

Family and Medical Leave Act – in essence, bedrock protections that have a direct 

impact on workers’ quality of life and economic security. 

Hard-working Americans who are cheated out of their wages need to be able to 

turn to the Department of Labor for help when their employers are refusing to give 

them their due. 

Wage theft is most common in low-wage industries and as a result, disproportionately impacts the workers who are the least able to afford to take action on their 

own. For many of these low-wage workers, any diminishment of their take-home pay 

can make the difference between getting by and not being able to provide for their 

families. As a result, the Department’s action on behalf of low-wage workers is particularly important. Since 2009, the Department has recovered over $1 billion in wages to more than 1.2 million workers, including helping 108,000 low-wage workers recover nearly $83 

million in back wages. This represents a 44 percent increase in the amount of back 

wages recovered and a 40 percent increase in the number of low-wage workers provided compensation. And just last month, the Department of Labor announced the 

results of a multi-year initiative resulting in the recovery of more than $1 million 

in wages and damages for 1,518 restaurant workers in the Tampa area. 

I understand that one focus of today’s hearing will be to a recent GAO report on 

the increase in the number of wage and hour lawsuits in the past ten years. While 

there has been a dramatic increase over this period, the reason for this increase is 

unclear. Department initiated suits comprise only a small fraction of total FLSA 

lawsuits brought against employers and the GAO study could not conclusively pinpoint the cause for this increase. 

I also understand that the GAO report focused on improving the Department’s approach to developing guidance through a more data driven approach. The Department has agreed with this recommendation and is working on its implementation. 

Perhaps, a more fruitful use of today’s hearing time would be to examine proposals that would strengthen wages for hard-working Americans to ensure that no 

one working full-time has to live in poverty. 

This administration has taken steps to raise the minimum wage for federal contract workers, supported the Miller-Harkin Minimum Wage Act, expanded FLSA 

CEWDOCROOM with DISTILLER

7 

protections to home health care workers, taken steps to ensure pay equity for 

women and is in the process of updating their overtime regulations. 

We should build on these efforts by passing H.R. 1010, the Fair Minimum Wage 

Act. Raising the minimum wage is not only good for the millions of workers that 

would directly benefit, but also for our economy as a whole. 

In fact, data from the Department of Labor shows that the 13 states that have 

raised the minimum wage have higher job growth than those that do not, including 

my own state of Connecticut – which recently passed a minimum wage increase to 

$10.10. 

The poster to my right shows the hundreds of thousands of constituents represented by members of this subcommittee who would benefit from this important 

legislation. 

In my district, a total of 42,000 workers would benefit, including 24,000 women 

who disproportionately make up the low-wage workforce. 55% of minimum wage 

workers who would benefit from a $10.10 increase are women, and raising the minimum wage to $10.10 would also close roughly 5% of the gender pay gap. 

Passing this law would make a real difference in the lives of many people who 

we represent, and as a result, it at least deserves to be debated and voted on by 

this chamber. 

Thank you Mr. Chairman. And thanks again to our witnesses for your participation. 

Chairman WALBERG. I thank the gentleman. 

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 

official hearing record. 

It is now my pleasure to introduce our panel of distinguished witnesses. First, with us today is Dr. Andrew Sherrill; he is the director of education, workforce and income security at the U.S. Government Accountability Office here in Washington, D.C. Dr. Sherrill’s 

responsibilities with the agency include GAO’s work on employment and training programs and worker protection issues. Welcome. 

Ms. Nancy McKeague is senior vice president of employer and 

community strategies, and chief human resources officer with the 

Michigan Health and Hospital Association in Okemos, Michigan. 

Ms. McKeague will testify on behalf of the Society for Human Resource Management. It is a pleasure to have Nancy, you, in front 

of us. Long-time experience together watching you give leadership 

to a number of crucial organizations supplying jobs, opportunity in 

Michigan, both in the public and private sector. 

Ms. Judith M. Conti, welcome. You are familiar with this subcommittee. Glad to have you back. She is the federal advocacy coordinator at the National Employment Law Project here in Washington, D.C., where she advocates on issues related to unemployment insurance, enforcement of workplace standards, and civil 

rights. 

The Honorable Paul DeCamp is a shareholder with Jackson 

Lewis PC here in Washington, D.C., within the firm’s wage and 

hour practice group. Prior to joining the firm in 2008, he served as 

administrator of the U.S. Department of Labor’s Wage and Hour 

Division. Welcome. 

Before I recognize each of you to provide your testimony, let me 

briefly explain our lighting system. It is simple. Think of your time 

at the wheel, coming to a stoplight, the same thing. Green, go, keep 

CEWDOCROOM with DISTILLER

8 

proceeding, you have five minutes to give your testimony. We hope 

to keep as close to that as possible due to the number of witnesses 

here and the questions I am sure that will want to be asked. When 

you see the yellow, you have a minute remaining. When it turns 

red, wrap up as quickly as you can your thought, and then we will 

go on. And there will be plenty of opportunity for questions, I am 

sure. Members will be kept to that same policy as strictly as I can 

swing the gavel on that. But we want to give opportunity for good 

review of our discussion topics today. 

And so having said that, let me recognize now, for five minutes 

of testimony, Dr. Sherrill. 

STATEMENT OF DR. ANDREW SHERRILL, DIRECTOR OF EDUCATION, WORKFORCE, AND INCOME SECURITY, U.S. GOVERNMENT ACCOUNTABILITY OFFICE, WASHINGTON, D.C. 

Dr. SHERRILL. Chairman Walberg, Ranking Member Courtney, 

and members of the Subcommittee, I am pleased to be here today 

to discuss our work on the recent increase in the number of lawsuits filed by individuals or groups alleging violations of the Fair 

Labor Standards Act. GAO reviewed this increase and examined 

the factors that potentially affected the number of lawsuits filed. 

GAO also examined the Department of Labor’s Wage and Hour Division’s plan; how it plans its Fair Labor Standards Act enforcement and compliance assistance efforts. 

Using data compiled by the Federal Judicial Center, the Research and Education Agency of the federal judicial system, we reported the number of lawsuits filed in district court over the past 

two decades that allege violations of the FLSA. To obtain more information about these lawsuits, we also reviewed a nationally representative sample of all FLSA-related lawsuits filed in fiscal year 

2012. Over the past two decades, there has been a substantial increase in the number of lawsuits filed, with most of the increase 

occurring in the last 10 years. 

In 1991, the total number of lawsuits filed was around 1,300. In 

2012, that number had increased over 500 percent, to over 8,100. 

FLSA lawsuits can be filed by the Department of Labor on behalf 

of employees, by individuals, or by a group of individuals known as 

a ‘‘collective action.’’ Lawsuits filed by a group of individuals, collective actions, must be certified by the court. And if a collective action is decertified, the members of the group may then file separate 

lawsuits as individuals. Fifty-eight percent of all FLSA lawsuits 

filed in fiscal year 2012 were filed by individuals and 40 percent 

were collective actions. 

Large increases in FLSA were concentrated in three states: Florida, New York, and Alabama. In 2012, these three states accounted 

for 53 percent of all FLSA lawsuits. Since 2001, the number of lawsuits filed in both Florida and New York rose steadily. But in Alabama, the increases were concentrated in two years—2007 and 

2012—and were generally thought to be related to the decertification of collective actions, which later resulted in many individual 

lawsuits being filed by individuals involved in those actions. 

We also looked at the types of FLSA violations alleged in the 

lawsuits filed in 2012; 95 percent of them alleged violations of the 

overtime payment provision, and almost a third alleged violation of 

CEWDOCROOM with DISTILLER

9 

the minimum wage provision. While it was not possible to determine the exact cause of the increase in the number of lawsuits, we 

interviewed a number of stakeholders to obtain their views, including federal judges, Wage and Hour Division officials, and plaintiff 

and defense attorneys who specialize in these cases. The most frequently cited factor for the increases was attorneys’ increased willingness to take on such cases. 

Financial incentives, combined with the fairly straightforward 

nature of many FLSA cases, may make attorneys receptive to taking these cases. In Florida, for example, where nearly 30 percent 

of all the FLSA lawsuits were filed in 2012, several stakeholders 

told us that plaintiffs’ attorneys advertise for wage and hour cases 

via billboards, radio, foreign language press, and other methods. 

Stakeholders cited several other potential factors for the increase 

in lawsuits. Evolving case law: stakeholders cited the 1989 Supreme Court decision in the Hoffman case, which made it easier for 

plaintiffs’ attorneys to identify potential plaintiffs and reduce the 

work needed for them to form collective actions. 

Recent economic conditions: stakeholders said these may have 

led to reduced payment of the minimum wage or overtime, as required, or to an increased likelihood that workers would file lawsuits. 

State wage and hour laws: while the federal statute of limitations for filing these claims is two years, or three years if the violation is willful, New York State law provides a six-year statute of 

limitations for filing wage and hour lawsuits, which may increase 

potential damages in such cases. 

Ambiguity in applying laws and regulations: ambiguity, particularly the exemption for executive administrative and professional 

workers, the white collar workers, was cited as a factor by a number of stakeholders. 

Department of Labor updated its regulations in 2004 to provide 

more guidance on this topic. But a few stakeholders told us there 

is still significant confusion among employers about which workers 

should be classified as exempt. 

Finally, we reviewed the Wage and Hour Division’s annual process for determining how to target its enforcement and compliance 

assistance resources. Using its recent enforcement data, the agency 

targets industries for enforcement that have a higher likelihood of 

FLSA violations. However, in developing its guidance on the FLSA, 

Wage and Hour Division does not use a systematic approach that 

includes identifying data on the subjects or the number of requests 

for assistance it receives from employers and workers. 

In addition, Wage and Hour Division does not have a routine 

database process for assessing the adequacy of its guidance. Because of these issues, we recommended that Wage and Hour Division develop a systematic approach for identifying areas of confusion about the requirements that contribute to possible violations, 

and improving the guidance it provides to employers and workers. 

Wage and Hour Division agreed with our recommendation, and 

stated that it is in the process of developing systems to further 

analyze trends in communications received from stakeholders, such 

as workers and employers. 

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That concludes my statement. I would be happy to answer any 

questions you may have. 

[The statement of Dr. Sherrill follows:] 

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Chairman WALBERG. Thank you. 

I recognize Ms. McKeague now for your five minutes. 

STATEMENT OF MS. NANCY MCKEAGUE, SENIOR VICE PRESIDENT OF EMPLOYER AND COMMUNITY STRATEGIES, AND 

CHIEF HUMAN RESOURCES OFFICER, MICHIGAN HEALTH 

AND HOSPITAL ASSOCIATION, EAST LANSING, MICHIGAN, 

TESTIFYING ON BEHALF OF THE SOCIETY FOR HUMAN RESOURCE MANAGEMENT 

Ms. MCKEAGUE. Thank you, Chairman Walberg, Ranking Member Courtney and distinguished members of the Subcommittee. My 

name is Nancy McKeague, and I am the senior vice president of 

employer and community strategies and the chief human resources 

officer for the Michigan Health and Hospital Association, also 

known as the MHA. And I am appearing before you today on behalf 

of the Society for Human Resource Management. 

Thank you for the opportunity to testify today on how to improve 

the federal wage and hour regulatory structure. Mr. Chairman, as 

you stated, employers of all sizes diligently work to classify employees correctly and remain in compliance with the Fair Labor Standards Act. However, classification decisions for positions are particularly challenging, as they are based on both objective and subjective criteria. Therefore, on occasion an employer acting in good 

faith could mistakenly classify employees as exempt who, in reality, should be non-exempt or vice versa. 

Allow me to tell you a little bit about the MHA. We are a nonprofit association advocating for hospitals and the patients they 

serve. We are an employer of choice, having received several workplace awards, referenced in my written statement. Yet even some 

of the best employers face practical challenges with the FLSA. 

First, let me suggest that additional guidance will certainly be 

helpful for H.R. professionals, given the practical challenges most 

employers face with FLSA compliance. 

Complying with the statute can create high legal costs for employers, which is particularly difficult for an organization like the 

MHA on a tight budget. Unfortunately, increased litigation related 

to alleged FLSA violations leads to less funding for a non-profit’s 

core mission; whether that is providing patient treatment, caring 

for children, or conducting research. Non-profits like MHA must 

make challenging employee classification determinations because 

employees are often performing a mix of duties which includes both 

exempt and non-exempt functions. 

For example, we sometimes find one of our employees will fit all 

of the executive employee exemptions under the FLSA, with the exception of supervising two or more employees. Take the instance of 

the MHA Foundation. Our executive director there supervises only 

one employee, but she otherwise fits all of the tests. So determining 

her classification was challenging. In the end, we determined that 

she should be classified as exempt because of her autonomy, her 

experience, and our confidence in her personal judgment. 

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acted, the MHA had to allocate additional funding to retain counsel 

in order to assure our practices were compliant. In the end, a nonprofit hospital’s decision to direct limited funds to defending 

against lawsuits means less money for patient care and treatment. 

As an employer in the health care sector, our member hospitals are 

working 24 hours a day, seven days a week providing critical treatment and care to patients. 

Because of the nature of our work, we must have the ability to 

respond as quickly as possible and utilize flexible hours, especially 

for our clinicians. The FLSA makes this difficult for certain employees. While non-exempt employees can receive time and a half 

pay, they cannot be afforded the same workplace flexibility benefits 

as an exempt employee. 

The FLSA further impedes workplace flexibility by prohibiting 

private sector employers from offering non-exempt employees the 

option of paid time off rather than overtime pay for hours worked 

over 40 hours per week, even though all public sector employees 

are offered this type of flexibility, commonly referred to as ‘‘comp 

time.’’ 

Mr. Chairman, today’s examination of the FLSA is particularly 

timely, given President Obama’s recent directive to modernize the 

overtime regulations. While SHRM appreciates the President’s interest in clarifying the regulations—and, parenthetically, we have 

been pleased by Secretary Perez’s responsiveness—we remain concerned that revisions could significantly impact employers and employees. Employers and employees are just now finally understanding the full impact of the 2004 overtime changes, so any 

changes to the regulations should be carefully constructed to prevent a new wave of litigation and additional confusion. The current 

regulations may not be perfect, but they are the regulations we are 

accustomed to as a profession. 

In closing, SHRM and its members are committed to working 

with this Subcommittee and other members of Congress to address 

the FLSA in a manner that balances the needs of both employees 

and employers, and does not produce requirements that could limit 

workplace flexibility. 

Mr. Chairman, thank you again for allowing me to share SHRM’s 

views on the FLSA, and I welcome your questions. 

[The statement of Ms. McKeague follows:] 

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Chairman WALBERG. Thank you. 

I now recognize Ms. Conti for your five minutes of testimony. 

STATEMENT OF MS. JUDITH CONTI, FEDERAL ADVOCACY COORDINATOR, NATIONAL EMPLOYMENT LAW PROJECT, 

WASHINGTON, D.C., MINORITY WITNESS. 

Ms. CONTI. Thank you, sir. And thanks to you and the committee 

for inviting the National Employment Law Project to share this 

testimony today. 

NELP is a non-profit organization that advocates for low-wage 

and unemployed workers, and few things matter to us as much as 

the FLSA’s promise of a fair day’s wage for a full day’s work. My 

written testimony goes into extensive detail about the nature and 

extent of wage theft in this country, especially as it applies to lowwage workers. Without a strong Wage and Hour Division as the 

most prominent opponent of wage theft, it does, and will, run 

rampant in certain industries. Not only to the detriment of workers, but to the detriment of many good and honest businesses that 

don’t cut corners and don’t cheat their workers. 

Of course, there are principal differences in opinion as how to 

best run and staff the Wage and Hour Division. As was its prerogative, the Bush administration placed heavy emphasis on compliance assistance. That is, giving employers the tools they need to 

follow the mandates of the FLSA. Indeed, this has always been a 

central component of the Wage and Hour Division’s work, and must 

always remain so. But in 2008 and 2009, the GAO issued a series 

of three reports that were extremely critical of the Wage and Hour 

Division’s investigative and enforcement functions. 

They detailed systemic problems of calls that were never returned, cases that were never investigated, and the workers who 

lost their opportunities to even pursue their claims in court because the investigations took so long that the statute of limitations 

had run. Clearly, the balance had shifted too far in one direction. 

As of May of this year, for the first time in a decade, we have 

a confirmed administrator of the Wage and Hour Division. And in 

Dr. David Weil, we have the rare occasion of someone who has 

spent the majority of his career thinking about and working on this 

very topic of the hearing today; how to best use the limited resources of the Wage and Hour Division to enforce the FLSA to the 

maximum extent possible. 

You can accurately say about Dr. David Weil that he has literally 

written the book. His recently published book, the Fissured Workplace, and his 2010 report to the Department of Labor on how it 

can better conduct strategic enforcement of the FLSA, is mandatory reading in my field, certainly, and for anyone interested in 

wanting to know how to best operate the Wage and Hour Division. 

The recommendations in his report and book are too numerous to 

cite but, in short, he is someone who appreciates the role of data 

and analysis in driving an effective enforcement strategy. 

At NELP, we are quite certain he will lead the Wage and Hour 

Division in a rigorous examination of all the relevant data to figure 

out how to best prioritize and balance all of its work whether it be 

investigation, enforcement, education for workers or compliance assistance for employers. 

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And just briefly, I would like to address the compliance assistance that the Wage and Hour Division does provide. It is true it 

stopped the practice of issuing opinion letters, which often turned 

on a very narrow specific set of facts relevant to one employer only. 

But one only needs to look at the Wage and Hour Division’s Web 

site to see the extensive amount of compliance assistance it produces, including numerous fact sheets that are in English and nine 

other languages; regular conference calls with stakeholders about 

compliance with numerous laws and regulations; webinars on new 

and current rules and regulations; interactive e-tools that help employers calculate what wages they owe workers; field bulletins; administrative interpretations; and PowerPoint presentations in eight 

different languages that the department produces to ensure that 

employers have extensive resources to comply with the FLSA. 

In addition, the Wage and Hour Division employees routinely 

take phone calls from employers and/or their attorneys, and provide individualized guidance over the phone, as well. Looking 

ahead, NELP anticipates a strong Wage and Hour Division, which 

will soon be enforcing the President’s executive order that all federal contract workers begin receiving a minimum wage of $10.10 

with all new contracts starting on or after January 1, 2015; a department that will be updating and further classifying the rules 

surrounding the payment of overtime; and most of all, we hope that 

they will be soon be overseeing implementation of a nationwide 

minimum wage increase. 

Thank you again for the opportunity to testify at today’s hearing, 

and I am happy to answer any questions about my written or oral 

testimony. Thank you. 

[The statement of Ms. Conti follows:] 

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Chairman WALBERG. Thank you. 

And now we turn to Paul DeCamp for your five minutes. 

STATEMENT OF HON. PAUL DECAMP, SHAREHOLDER, 

JACKSON LEWIS P.C., WASHINGTON, D.C. 

Mr. DECAMP. Good morning, Chairman Walberg, Ranking Member Courtney and distinguished members of the Subcommittee. 

The Fair Labor Standards Act seems straightforward. Just pay workers at least $7.25 an hour plus time-and-a-half for hours beyond 40 in a work week, unless an exemption applies that would 

change or eliminate one or both of those requirements. But the 

devil is in the details, as set forth at some length in my written 

testimony, which I ask to be made a part of the hearing record. 

There is a reason why violation rates under the FLSA are so high, 

with Wage and Hour consistently reporting violations by 70 percent 

or more of the employers it contacts. The statute itself does not 

provide useful definitions of such key terms as ‘‘employee’’ or 

‘‘work.’’ 

And the agency’s regulations attempting to shed light on these 

issues and many more take up roughly 1,000 pages in the Code of 

Federal Regulations. In my time at Wage and Hour, as well as in 

my experience in private law practice, I have seen employers repeatedly struggle with identifying which workers are their employees under the law; which activities constitute compensible work; 

what types of compensation factor into the regular rate for purposes of calculating overtime; and which employees are exempt 

from the law’s overtime requirements. There are certainly many instances where the answers to these types of questions are straightforward. And it is reasonable to expect employers to understand 

and to follow those clear legal standards. 

But in the surprisingly broad array of circumstances, the legal 

requirements are vague and confusing. These are serious, realworld problems for employers dealing with tight operating margins, 

especially in today’s economy. These companies are often competing 

with businesses that take more aggressive positions on these same 

issues, such that simply defaulting to the most conservative approach where there is ambiguity can have crippling consequences 

by virtue of imposing a competitive disadvantage. A rule of ‘‘when 

in doubt just pay the workers more,’’ is not a recipe for remaining 

in business. So employers must make choices about how to manage 

the gray zone between clear compliance and clear noncompliance 

while, at the same time, often facing strong economic pressures 

weighing in favor of a more aggressive approach. 

By and large, over the past five and a half years, Wage and Hour 

has been all but completely uninterested in providing employers 

with guidance to assist them in complying with the FLSA. The 

agency has closed its doors to employers, abandoning the process 

it followed for more than half a century of issuing opinion letters 

in response to requests from the public for guidance regarding specific questions under the law. Instead, the agency has turned to 

highly punitive enforcement, focusing on civil money penalties, liquidated damages, litigation, and publicly shaming employers in 

lieu of helping employers comply with the law and thereby avoid 

violations in the first place. 

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As things now stand, many employers have nowhere to turn for 

guidance regarding FLSA compliance. Wage and Hour is providing 

little, if any, information. So the main alternative is to hire lawyers. Large companies can usually afford to pay at least some 

amount of money on attorneys. But many smaller and medium-size 

businesses simply do not have either the resources to expend on 

compliance or even the awareness that serious liabilities lurk beneath the surface of a seemingly simple and innocuous statute. 

Wage and Hour can do better. 

There will always be employers who want to comply with their 

legal obligations, just as there will always be willful violators who 

intentionally skirt the law. The manner in which Wage and Hour 

carries out its charge to secure compliance with the FLSA depends 

largely on how the agency and, more specifically, its leadership and 

the leadership in the department more generally views the relative 

proportions of these two types of employers in the economy. If one 

believes that the vast majority of employers act in good faith and 

try to comply with the law—though perhaps through no evil intent 

they do not always get it right—then one must think that there is 

real value in providing clarity via education and interpretive guidance to give employers a fighting chance to pay their workers correctly. 

If, instead, one believes that most employers are out to cheat 

their workers and to violate the FLSA if they think that they can 

do so without getting caught, then one will see such guidance as 

having little value; with heavy-handed enforcement appearing to be 

the most effective way to obtain compliance. What does the current 

leadership in Wage and Hour believe? The agency should return to 

its historical practice of treating employers as stakeholders and 

partners in compliance, rather than as lawbreakers. This starts 

with recognizing the need to issue many more guidance documents 

than the agency now produces. 

Moreover, Wage and Hour has the ability to gather and to examine information regarding the types of issues that give rise to frequent violations, as well as questions that employers commonly ask 

when seeing informal guidance. The agency should use that information to drive its choices in topics for guidance. If Wage and Hour 

pursues this path the result will be more compliance, more workers 

receiving proper pay under the law, and fewer violations. All of the 

relevant stakeholders win. 

Mr. Chairman, this concludes my prepared remarks. I will be 

happy to answer any questions you or the members of the Subcommittee may have. 

[The statement of Mr. DeCamp follows:] 

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Chairman WALBERG. Well, thank you. I thank each of the panel 

members for your efficiency in keeping within the time limits and 

giving us information we need. And I would call attention to myself 

and my colleagues on that example, as well. 

Having said that, let me recognize Representative Rokita, my 

good friend from Indiana, for your five minutes of questioning. 

Mr. ROKITA. Thank you, Chair. I appreciate that, appreciate you 

holding this hearing, and I thank the witnesses for their testimony 

this morning. I am going to concentrate, at least initially, on Mr. 

DeCamp. I thank you for your service to this country, by the way. 

Your written testimony, if I understand it right, highlights an issue 

that employers face when determining an employee’s regular rate 

for the purposes of calculating overtime pay. And having been an 

employee in some of these places, and then knowing other employers, I know that a lot of employers try to do the right thing by, you 

know, offering their workers—allowing them to share in the success of a company through a bonus structure or some kind of equity 

or non-equity provision, mostly non-equity. 

Yet even this well-intentioned action can result in an employer 

running afoul of the FLSA, or it can be a deterrent to employers 

who want to provide bonuses. Can you elaborate for about 30 seconds to a minute on that? 

Mr. DECAMP. Well, sure. What we are talking about, really, is 

one of the regular rate exclusions under the statute. And under the 

FLSA, a discretionary bonus does not have to go into the regular 

rate. So the employer does not have to pay overtime on top of that 

bonus. A non-discretionary bonus however does go into the regular 

rate. If an employer guesses wrong as to whether a bonus is discretionary or non-discretionary it can find itself after the fact, after it 

has paid bonuses, subject to an enforcement action. There is a 

great example of that. There is an oil and gas company in the 

Southwest that awarded bonuses that it regarded as discretionary 

under the standards and the regulations to about 5,000 of its nonexempt employees. 

The Department of Labor came in afterwards and said no, we 

think that was a non-discretionary bonus and, in fact, you have to 

pay overtime on that. This resulted in the Department of Labor filing a lawsuit in federal court accusing the company of violating the 

law with respect to over 5,000 workers. 

Mr. ROKITA. Yet these people got bonuses. 

Mr. DECAMP. They got bonuses. This is sort of the no good deed 

goes unpunished theory of employment. 

Mr. ROKITA. Right. 

Mr. DECAMP. And this led to litigation and, ultimately, a large 

award. 

Mr. ROKITA. Well, surely the company explained and showed 

that, you know, consideration was given. And I don’t know if it was 

less or more, but assume it was about the same. Or you tell me 

if it is different. And what was the department’s response? A lawsuit? And then what was their legal argument? Strict noncompliance? 

Mr. DECAMP. The Department’s argument was, well, look, you 

gave this benefit to just about all of your people, you have given 

this bonus before. Therefore, even though you retained, under the 

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terms of the bonus plan, the discretion not to award a bonus we 

are gonna treat it as non-discretionary. We are gonna say that you 

really were promising to give this money, even though you said you 

didn’t have to give it. And so the department said it goes into the 

regular rate, and they sued. 

Mr. ROKITA. What adjective would you use for something like 

this, an action like this? 

Mr. DECAMP. I am sorry. Say again? 

Mr. ROKITA. What adjective would you use for an action like 

that? 

Mr. DECAMP. I can’t say it in this room. 

[Laughter.] 

Mr. ROKITA. Well, church it up. Go ahead. 

Mr. DECAMP. Well, it is heavy-handed and punitive. And— 

Mr. ROKITA. I was going to say punitive. Absurd might be another one. Going on with something else, I assume you might be 

aware of an amendment that was recently filed here in the House 

of Representatives during a floor debate on several appropriations 

measures. I was surprised by it, actually. But the amendment 

would prevent contractors found to have violated the FLSA from 

continuing to receive federal contracts. So can your explain how 

this amendment could impact companies that you have experience 

with where, through no, you know, intentional action they would, 

again, punitively be prohibited from getting employed by the federal government. 

Mr. DECAMP. Well, the great example is that same oil and gas 

company I was talking about. They happen to be a federal contractor. So under the standards of the amendment, that company 

would arguably be barred from federal contracting. It would be 

blacklisted under the Appropriations amendment. Because there 

was an award that was in excess of—whether it is $5,000 or 

$100,000, depending on which provision of the statute we are talking about—it was a six-figure award ultimately. That company that 

their only violation was paying their non-exempt employees too 

much, giving them bonuses could result in them being kicked out 

of the federal contracting program. 

Mr. ROKITA. Okay. Is it also true, in your experience both as a 

practitioner now, but in your public experience, that union contracts are tied to minimum wage rates? 

Mr. DECAMP. They can be. They are not always it depends on the 

contract. 

Mr. ROKITA. Do you have a one out of 10 how many it would be. 

Can you—any kind of— 

Mr. DECAMP. I wouldn’t be able to estimate, frankly. Most union 

jobs that I have seen are well above minimum wage, and so tend 

not to— 

Mr. ROKITA. Anywhere, right? 

Mr. DECAMP. Right. 

Mr. ROKITA. All right, fair enough. 

Mr. Chairman, thanks for the time again. I yield back. 

Chairman WALBERG. I thank the gentleman. 

Now I recognize the ranking member, Mr. Courtney, for your five 

minutes. 

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Mr. COURTNEY. Thank you, Mr. Chairman. Again, as was stated 

in the opening remarks and also in Dr. Sherrill’s testimony, the department’s reaction or response to the GAO study was that they 

agreed with its findings and pledged to, again, come up with an action plan to follow up in terms of changes to comply with the recommendations that GAO found. 

I would also ask, Mr. Chairman, we received a letter last night 

from Dr. Weil, that Ms. Conti referred to, that again was a follow 

up, again, to the initial reaction that was included in the report. 

I would ask that this letter be added to the record. 

And it clearly states that contrary to, you know, comments here 

about closing its doors to the employer community that the Wage 

and Hours Division is currently engaged in a national outreach effort to provide guidance, information and training prior to the new 

home care regulations. 

In addition, in the area of agriculture they are, again, issuing 

compliance information and even pocket cards for people in terms 

of giving them handy ways to, again, respond to some of the issues 

that people deal with every single day in the workplace. 

So, again, as Ms. Conti’s testimony indicates, and I think, you 

know, under the new leadership of Secretary Perez we have a department that is actively following up with employers to try and 

give them the help that they need. So again, I would ask that this 

be made part of the record. 

[The information follows:] 

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Chairman WALBERG. Without objection, and hearing none, it will 

be added. 

Mr. COURTNEY. And, Ms. Conti, I thank you for bringing up the 

2008–2009 GAO report. I guess I have been around here long 

enough that I remember that hearing. And again, the report, frankly, was not, in my opinion a, you know, great report card for the 

Wage and Hour Division as it was presently operating right then. 

I mean, again, just looking at it and refreshing my recollection, 

some of the headings: undercover tests reveal inadequate investigations and poor complaint intake process; case studies show that 

Wage and Hours Division inadequately investigated complaints; 

Wage and Hours Division complaint intake process, conciliations 

and other investigative tools do not provide assurance of a timely 

and thorough response to wage theft complaints. 

So clearly we were not living in wage and hour paradise prior to 

the new leadership that is at the department right now. Frankly, 

that is not trying to take a cheap shot at people that—our predecessors. I mean, frankly, you know, that is the—we are all human 

beings and we all have to deal with challenges. 

But the fact of the matter is, the notion that—you know, that 

there was some bright line that took place on January of 2009 in 

terms of the way the Department of Labor treats this critical area 

for low-income Americans has sort of cast us into this dark period. 

I mean, the fact is the report goes back 10 years that we have here 

today, and frankly doesn’t identify any sort of change of—sea 

change that has occurred with the department in terms of explaining the spike and the number of lawsuits. 

In fact, I mean, that report back in 2008–2009 showed a lot of 

workers were forced almost to go to private remedies because of the 

fact that the department was not picking up the ball. And that is 

a part of the record. I mean, that is not a partisan talking point. 

You deal with low-income workers in that population day in and 

day out. It has been 2007—the last time Congress passed a minimum wage increase. Can you talk about what is happening to the 

people that you see, that your agency represents? 

Ms. CONTI. Absolutely. Tomorrow will actually mark the fifth anniversary of the last time the minimum wage has increased. During that period, we of course have gone through a recession and a 

recovery, which is not as robust as anybody would like. But the fact 

of the matter is, the price of housing has increased over the past 

5 years. The price of our utility bills has increased. The price of 

food, clothing, consumer goods, gasoline has all increased over the 

last 5 years. Yet the lowest-wage workers in this country have not 

received a raise in 5 years. And when we look at the rates of wage 

growth, while it is certainly true that the federal government only 

mandates the floor, doesn’t apply a ceiling, there is absolutely stagnant wage growth among the lowest-wage workers in this country. 

Quite frankly, among many middle class workers, as well, but 

particularly among the low-wage force. Because there is no upward 

pressure being put on wages from Congress, among other things. 

So those folks have not only stood still, but while the cost of living 

has gotten greater and their wages have stayed relatively the 

same, or, to the extent they have gone up, they certainly haven’t 

gone up anything commensurate with the cost of living, they are 

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falling further and further behind. And as you noted, that only increases their reliance on public benefits programs like SNAP as 

just one example. 

So it has been very dark times for them. And as they have seen 

companies recover, as they have seen shareholders recover, as they 

have seen the stock market boom and executive compensation 

boom and they have stayed the same, it has been very hard times 

for workers. 

Mr. COURTNEY. Thank you. 

Yield back. 

Chairman WALBERG. I thank the gentleman. 

Now I have the pleasure of—I guess we go to—from a beautiful 

part of Wisconsin, my colleague, Mr. Pocan. 

Mr. POCAN. Thank you, Mr. Chairman. I appreciate it. 

Let me just offer a little, I guess, perspective as I look at this. 

I am a new member of Congress, but I have been a small business 

owner for over half my life. I opened a small business when I had 

hair 27 years ago, just to give you a little idea. And when I look 

at, you know, my expenses as a business, outside of my cost of sale 

of goods the single largest expense I have is—my operating cost— 

is labor cost. So what that means is, I am gonna try to follow the 

law really well because I don’t want to spend a lot of money having 

other problems. So I would look at my insurance bill, I would look 

at my legal costs with the same thing—how do I find cost savings, 

make sure I am doing it efficiently. 

But when it comes to labor law, you know, it is pretty straightforward. And if I am going in an area where it is not straightforward—for example, one of the things I considered was should I 

hire an independent contractor to go out and do some sales on the 

outside. Then I have to make sure I am doing the right definition 

of independent contractor. I will take the time to look into it. So 

I think somewhat—this isn’t in the category of rocket science, it is 

in the category of what is best for my business, for my pocketbook 

and complying with the law. And I also have a firm that does my 

payroll that also keeps me in contact. 

I am a small employer, five employees. So it is something that 

I think that some of the complaints maybe should fall in a different 

realm of maybe some compliments to the agency right now on what 

is getting done. I look at the scale of the agency: 1,100 employees, 

and in 2012 it is estimated there is $280 million in wage theft. If 

you look at robberies for the same year, it is estimated that is 

around $139 million. Yet we have about 780,000 law enforcement 

offices in this country. I am not saying it is the only thing they do, 

but when you have 700 times the people for compliance for half the 

money maybe we are getting a pretty good result for the dollars 

that we put into this area. 

And I think when I look at the GAO study, you had one recommendation, if I am correct, Dr. Sherrill. And it is being complied 

with and followed. It seems to be that we are in a pretty good place 

here. And when you look at some of the past problems agencies had 

to where it is at today perhaps the question—if I could, I guess Dr. 

Sherrill just to really clarify this a little more—while there is a significant increase in these lawsuits the reason for the increase is 

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difficult to determine was, I think the words that you used in the 

report. Is that correct? 

Mr. SHERRILL. That is correct. 

Mr. POCAN. So it is not that the agency necessarily is doing 

something different. And as far as you know, not having the opinion letters, when I look at the vast number of other resources I can 

go to get the information about what the law is, including calling 

directly—I think there are still 26 people in the compliance division 

that I can reach out to ask these questions—I still have plenty of 

resources to be able to do that. 

So I guess, Mr. Chairman, as much as I appreciate, you know, 

the conversation we are having today, I wish the conversation probably were around things like raising the minimum wage. Because 

the vast majority of low—low-income workers, who many of these 

people are affected not getting overtime, not getting their minimum 

wage, which is where these lawsuits come, could really benefit from 

a wage increase. 

But at least the department right now is helping them get some 

of their resources. And I know Mr. Rokita brought up the example 

of the oil company with the bonuses, and there is confusion around 

that. I mean, if I am an oil company, I am gonna give out bonuses 

that is gonna put me in a different part of the law I am gonna 

probably make sure I am in the correct part of the law. Because 

let’s face it, Wal-Mart and McDonald’s aren’t offering bonuses to 

workers. 

We got issues around overtime and minimum wage whether or 

not they are getting that. So, Mr. DeCamp, if I can just ask you 

a quick question. I know you were in the department. But specifically, I mean, I am an employer. I know the vast majority of employers are following the law. But don’t we need something in place 

for those who aren’t, especially when it is—you know, we are talking $280 million just in the year 2012. 

Mr. DECAMP. Well, sure. Absolutely. I mean, there has to be enforcement. There will be some employers out there, a relatively 

small proportion of employers, who no matter what guidance you 

provide are going to, on purpose, cheat their workers. That is going 

to happen. We need enforcement to deal with that. The challenge 

that has raised is, right now what we have seen of the department 

over the last five and a half years is the same enforcement approach taken to those employers, the willful bad actors, and to the 

non-willful employers, the vast majority of employers who are good 

employers. To every— 

Mr. POCAN. Now, you are referring specific to these letters, policy 

letters? 

Mr. DECAMP. Well, I am talking about we need vigorous enforcement, but we need calibrated enforcement. I mean, to a hammer 

everything looks like a nail. And that’s— 

Mr. POCAN. Sure, but I think there is—you will agree there are 

certain industries and certain areas—three states where we saw 

most of these—that seem to have more problems. And I want the 

department to be doing what they are doing. And they are not 

bringing up most of the lawsuits. These are coming from individuals, correct? 

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Mr. DECAMP. Well, from individuals and class actions. That is 

where most of the litigation is coming from. There is a great value 

in more guidance documents. We—it doesn’t who up in terms of— 

it is very difficult to prove that a violation was prevented because 

the department issued an opinion letter. 

Mr. POCAN. Just because I see the yellow light, let me just ask 

this. As an employer, though, isn’t it my job—the law, I think, is 

fairly straightforward unless you deviate into some interesting 

areas of how you pay your employee. If I am gonna go into one of 

those areas, shouldn’t I do my due diligence before I put my toe 

into that water? 

Mr. DECAMP. With all due respect, your assumption is incorrect. 

The law is not that straightforward. There are lots and lots of gray 

areas. There are clear areas, too, for sure. But there is a very broad 

array of issues that are gray like these bonus issues, like who is 

an employee, like what counts as work. We have a case going to 

the Supreme Court right now on that. Really basic issues that employers are continuing to struggle with. Employers that are doing 

their best to comply with the law. I am not just talking about willful violators or employers that don’t think about the law. I am talking about employers that are trying. Even they find it difficult to 

get it right. 

Mr. POCAN. Thank you, Mr. Chairman. 

Chairman WALBERG. I thank the gentleman. 

And I recognize the gentleman from California, Mr. Takano. 

Mr. TAKANO. Thank you, Mr. Chairman. And thank you to our 

witnesses for their time today. You know, the Wage and Hour Division is the Department of Labor’s most important tool to ensure 

that workers are receiving the pay and protections they are entitled to under the Fair Labor Standards Act. 

Since 2008, the Wage and Hour Division has helped recover $1 billion in wages for more than 1.2 million workers. That is $1 billion these workers can use to pay for necessities such as food, housing, health care and transportation; $1 billion that workers can put 

back into their local communities. 

Now, people who are head of corporations, with their vast network of relationships and interlocking boards, have no problem in 

getting their salaries incremented, even if there is questionable results that they do for their shareholders. I think it is common 

sense that Americans believe in a vigorous enforcement, especially 

of our low-wage workers. And that is why even with the Republican majority controlling the House of Representatives, we have 

passed four appropriations bills in the House with amendments 

that call for preventing the contracting with businesses that have 

a history of wage theft. 

And I don’t think the Congress intended for those amendments 

to go to these gray areas that were mentioned by Mr. DeCamp, but 

by people who do cheat our low-wage workers. I mean, I think that 

is the relationship. Let’s not kind of confuse this issue about what 

these amendments were about. 

Ms. Conti, could you comment on just what it means to have a 

fully confirmed director? We haven’t had a fully confirmed director 

for eight years and how that might bring balance to this department. 

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Ms. CONTI. You know, it is something we are really excited 

about. And this is with no disrespect to Mr. DeCamp and the many 

other learned people who have filled the job in the interim between 

confirmed administrators. But they were often holding a seat for 

somebody else who was officially nominated for that job. You know, 

it stands to reason when you are an acting administrator it is not 

that time stands still, it is not that you don’t look to continue to 

do better work, whatever your philosophy of enforcement and managing the division is. 

But the fact of the matter is that someone with Senate confirmation and the full reins of power over the Wage and Hour Division 

has authority vested in him or her to really move the agenda forward. And as I stated in my testimony, you know, Dr. Weil has 

spent his entire career thinking about these very issues; data-driven enforcement compliance, and what to do to get the best bang for 

the buck. 

As Mr. DeCamp could tell you better than I ever could, under the 

best of circumstances the Wage and Hour Division will always have 

limited resources, it will always have to do way too much with way 

too little because that is just the nature of the beast. 

So we need to look for the ways to get the biggest bang for the 

buck. To use enforcement not just to remedy abuses, but to create 

the greatest deterrent effect. And to structure compliance assistance and education for workers in ways that will reach the greatest 

number of people. And a fully-confirmed administrator will have 

the full authority to really go about that very aggressively. So we 

are looking forward to seeing what the next few years are going to 

look like for the Wage and Hour department. 

Mr. TAKANO. Thank you. Dr. Sherrill, the GAO recommended 

that the department be more strategic in its use of resources. And 

specifically the department is trying to comply by offering more 

general advice. And can you comment more about that? 

Dr. SHERRILL. Yes. Our recommendation saw the need for improvements in the Wage and Hour Division’s provision of compliance assistance in two key areas. One, first, they didn’t have a sufficiently routine and systematic approach to getting information on 

where are the areas in which employers and others are requesting 

more guidance. So they need to—so our thought was, they need 

better information and a more systematic way to analyze where the 

inquiries for more clarification of the guidance is one aspect of that. 

And second, the Wage and Hour Division doesn’t really have a 

data-driven approach to determining how adequate is the guidance 

that it actually issues. For example, it doesn’t look at trends over 

time. Is it getting after an issues guidance, is it getting less requests for assistance in certain areas? So it agreed with both of 

those recommendations that we think are two key areas that could 

help it really better target the interpretive guidance that it provides. 

Mr. TAKANO. Yes. So devoting all of its resources into these very 

specific compliance—narrow, these narrow opinions—is not necessarily the best use of their time. 

Dr. SHERRILL. Well, the interpretive guidance is a key part of 

their compliance assistance. So it is not like we are necessarily arguing that they need to do more or less or different types. But our 

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argument is basically you need to have a more systematic approach 

for how they do their interpretive guidance based on what information. So that helps target it, and to have information to assess 

what effect is it having. 

Mr. TAKANO. Okay, thank you. 

My time is up, thank you. 

Chairman WALBERG. I thank the gentleman. I recognize myself 

for my five minutes of questioning. Ms. McKeague, would you like 

to comment further on DOL’s decision to forego providing opinion 

letters containing fact-specific guidance to employees and its impact? 

Ms. MCKEAGUE. Yes, Mr. Chairman. The opinion letters are very 

helpful to those of us who are doing what Mr. Pocan just discussed, 

trying to work our way through the issues and make sure we do 

the right thing. And the use of examples, specific examples that a 

lot of us see in the workplace, helps us facilitate that process. For 

instance, calculating travel time and what payment we make for 

travel time is not easy, even if you do the work all the time like 

most of us do. And so the use of examples in those letters is very 

helpful. 

So I would welcome any sort of guidance we got in that manner. 

Chairman WALBERG. The fact sheets aren’t adequate for that? 

Ms. MCKEAGUE. The fact sheets help also, but sometimes an 

opinion letter gets attention from higher up in the department and 

pays more attention to current issues which may be problematic. 

Chairman WALBERG. You mentioned in your testimony employee 

morale, workplace flexibility and several other things relative to 

your concerns about the employees that you are attempting to service well, as well as use well in their areas. Why do many employees 

prefer to be exempt? 

Ms. MCKEAGUE. You have hit on the key point and, for me, the 

biggest concern. They prefer to be exempt because they have more 

control over their work schedule. And it makes it easy for them to 

fulfill both their work and family obligations without feeling that 

they are letting either down. And as a non-profit or a small business, usually your org chart is pretty flat. And so people have widespread responsibilities. It is not uncommon to have only one person 

hold a specific job. So it is not like an administrative assistant, 

where you might have eight of them. 

But I might have, you know, a clinical specialist who is the only 

one. That is one of the things that makes MHA the good place to 

work that it is, the ability that we give our employees to determine 

how to do the work, when to do the work. And in our case, since 

we are servicing hospitals and across time zones, it makes sense 

to let people make those decisions. 

Chairman WALBERG. Does it supply any prestige to employees to 

be in that particular classification? 

Ms. MCKEAGUE. Absolutely. You know, one of the things is.. 

Chairman WALBERG. And that is important to them beyond remuneration or it is just another component? 

Ms. MCKEAGUE. If a person is already fairly compensated, I 

would say it is important to them beyond remuneration. One of the 

toughest discussions I have with an employee is going back to review their job description and how they spent their usual day at 

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work to determine whether they still met the test to be either exempt or non-exempt. And if I have to tell an employee who has 

been exempt that we are moving them to non-exempt status, they 

still hear the old language. 

Chairman WALBERG. It is a step backwards. 

Ms. MCKEAGUE. From professional to non-professional staff, that 

is how they view it. 

Chairman WALBERG. Dr. Sherrill, could you elaborate—relatively 

briefly, but could you elaborate on the information GAO reviewed 

in order to draw conclusions about the reasons for increased FLSA 

litigation? 

Dr. SHERRILL. Yes. We basically relied on obtaining perspectives 

from experts in the area; judges, plaintiffs and employers’ attorneys who defend these kinds of Fair Labor Standards Act lawsuits, 

academics, et cetera. And we basically asked these stakeholders 

who are very familiar with the area, in their view what are the key 

factors that have contributed to this substantial rise in lawsuits 

over the years, especially in the last decade. So we weren’t able to 

definitively quantify or sort of make an exact determination here. 

But what we found is that the most frequently cited factor was increased awareness of these lawsuits. And increased, attorneys’ increased willingness to take on these lawsuits, over time, was the 

most frequently cited factor across the stakeholders we talked to. 

In addition, we found a range of other factors that I mentioned; 

evolving case law, recent economic conditions, state wage and hour 

laws, and ambiguity in applying some of the laws and regulations, 

especially with the white collar exemptions. So it was a range of 

factors that people cited. 

Chairman WALBERG. Okay. Quickly, Mr. DeCamp, could you just 

point out a few activities used more frequently by this administration and its impact upon the stakeholders? 

Mr. DECAMP. Well, sure. They have been very aggressive with 

using civil money penalties for what they regard as repeated violations. In other words, an employer could have a small violation 

three, 5 years ago affecting a handful of employees or even one employee. And then in the current year, they have a totally different 

type of violation, but also under Fair Labor Standards Act. It could 

be at a different facility, a different state. The employer now will 

face civil money penalties as a repeat violator of up to $1,100 per 

affected employee now. And that can be hundreds of thousands of 

dollars or more of penalties for a non-willful violation. 

Chairman WALBERG. Confused and uncertain and stepped over 

the line. 

Mr. DECAMP. Yes. And you can also see a very aggressive use of 

liquidated damages, which is double the back pay. The department 

has been increasingly insisting on liquidated damages as a condition of settling a case administratively, even when there is no willful misconduct. It has made it very challenging for employers to 

settle cases. 

They have also been very aggressive with bringing litigation and 

with public press releases to shame employers that the department 

feels violated the FLSA. It is a very adversarial relationship that 

is not calibrating between drawing the distinction between willful 

bad actors and employers who made a good faith mistake. 

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Chairman WALBERG. Hammer and nail. 

Mr. DECAMP. Yes. 

Chairman WALBERG. Well, thank you. My time has expired. And 

I certainly appreciate the testimony given, as well as the answers 

and the questions from the committee. So now let me recognize the 

ranking member for any closing comments that you might have. 

Mr. COURTNEY. Thank you, Mr. Chairman. I want to thank all 

the witnesses for your testimony today, and particularly Dr. 

Sherrill who, again, GAO is no stranger to this part of the law or 

department. Again, you have looked at Wage and Hour over the 

years. Again, the last time this committee did it, in 2008 and 2009, 

I would characterize the GAO report as stinging in terms of its conclusions and its recommendations. 

And again, just to read a very short portion of, again, the GAO 

report back in 2009, this is what it said: ‘‘This investigation clearly 

shows that the Department of Labor has left thousands of actual 

victims of wage theft who sought federal government assistance 

with nowhere to turn. Our work has shown that when Wage and 

Hours Division adequately investigates and follows through on 

cases they are often successful. However, far too often many of 

America’s most vulnerable workers find themselves dealing with an 

agency concerned about resource limitations with ineffective processes and without certain tools necessary to perform timely and effective investigations of wage theft complaints. Unfortunately, far 

too often the result is unscrupulous employers taking advantage of 

our country’s low-wage workers.’’ 

Again, that was in 2009. We had a change of administration. Secretary Solis did beef up the department, brought on more staff. Because that was, frankly, the department’s sort of response back 

in—when GAO did the last report. And they did beef up protections 

for workers, which GAO was telling Congress in pretty strong language was leaving some of the most vulnerable workers in America’s economy basically without any remedy to deal with what was 

clearly violations. 

Again, move, fast-forwarding to today’s GAO report, you know, 

there is no question there probably needs to be some rebalancing 

here in terms of giving employer guidance. But the good news is, 

the department is not contesting that. Again, they are not here to 

speak for themselves. You know, I frankly don’t understand that 

myself personally. But nonetheless, the record is clear. They agreed 

with the findings, they are moving forward in terms of trying to respond to those findings. We even had an updated report here this 

morning that is entered to the record that confirms that fact. 

But again, in the meantime we are dealing at a time in America’s economy where income disparity is growing, where the cost of 

living for people who are out there every day, particularly single 

parents with kids are struggling to keep up with putting food on 

the table. Where public budgets are being, I think, unnecessarily 

expended because of trying to make up for the gap in that. 

And this Congress needs to move on H.R. 1010. Yesterday, we 

had a wonderful bill signing at the White House that had almost 

no press coverage. The Workforce Investment Act. But it was a 

beautiful sight to see a bipartisan array of legislators who someCEWDOCROOM with DISTILLER

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times debate very passionately, behind the President signing an 

update to The Workforce Investment Act. 

Hadn’t happened since 1998. So the fact is, it is— 

Chairman WALBERG. Not noteworthy, not noteworthy. Bipartisan. 

Mr. COURTNEY. And it is possible, you know, for people to come 

together. And as these numbers show over here, I mean, the fact 

is, is that there are thousands of Americans that frankly need help. 

And that they are begging this Congress to move forward on. So 

again, the good news is today I think we actually have positive 

movement, based on what GAO came forward with. Let’s build on 

that. Let’s pass H.R. 1010. 

And with that, I yield back the balance of my time. 

Chairman WALBERG. I thank the gentleman. 

And it is challenging to come up with a understanding of why 

something as bipartisan as that yesterday with the President, joining with members of both parties, both houses, working together to 

do something of significance that pushes forward the opportunity 

for job growth, for the growth of, as we said in the Declaration of 

Independence, ‘‘the pursuit of happiness’’ in this country, of individuals having that training and opportunity—that that isn’t noteworthy. But there are questions in my life I will never have answered, and that will just be one of them maybe. 

I would also echo some of the statements that my Democrat colleagues have about Secretary Perez and his openness to take our 

phone calls, to respond to some of our concerns. Not sometimes as 

completely as we would like, but nonetheless there is response. 

And I certainly want to add my kudos to his efforts. 

And yet, we want to continue pushing forward. And this hearing 

today is for that purpose; to add our support, our encouragement 

to continue working in an area that is causing challenges. And, in 

some ways I will remember the use of—to a hammer, everything 

is seen as a nail—and probably use that more. 

Because that is an approach that is of a concern in an economy 

that I don’t think we can say has turned around. That continues 

to struggle, that the economic indicators that we saw as recently 

as last week that are building again, if they continue as history 

says they will continue is indicating we are going into another recession. We are not coming out of this appropriately. And so to not 

be careful how we deal with both the employee and the employer, 

you know, I appreciate the chart that has been put up here. But 

that chart doesn’t talk about what CBO, what GAO I believe as 

well in the report said that to increase it to this level will cost 

500,000 jobs. 

I am concerned about that in my district. When I see the numbers here, I also don’t see the numbers of jobs that will be lost as 

a result of doing this. Do we want people to expand in their income 

capabilities? Absolutely yes. We want living income that goes on. 

And so I am concerned about my middle class, as well. People that 

are in these type of jobs, exempt and non-exempt, having the opportunity, an employer base that generally, across the board, is attempting to work together. Not violate the system, not be punitive 

to individuals, not hold people back. But to expand. That we make 

sure that we do not have the adversarial relationship, based upon 

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a law that is outdated, outmoded, doesn’t identify with the present 

situation that we have in place. 

We want to grow the middle class, we want to grow the economy, 

we want to give opportunity for flexibility in the workplace, we 

want to give opportunity for advancement as well. And that comes 

with identifying issues as partners in the process, and not adversarial relationship of regulation by shaming. So we will keep working on this. I think it is an important question. There are plenty 

of other questions we can deal with, but this is one we want to deal 

with today. 

And I want to say to our panel I appreciate all of you sharing 

your point of view, your background, your experience with us 

today. It will be important data put into our record, giving us direction on where we go from here. Having said that, with no further 

action coming before this Subcommittee, we will call it adjourned. 

[Whereupon, at 11:17 a.m., the Subcommittee was adjourned.] 

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