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[Senate Hearing 108-406]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 108-406

                      NOMINATION OF STEVEN J. LAW

=======================================================================

                                HEARING

                                 OF THE

                    COMMITTEE ON HEALTH, EDUCATION,
                          LABOR, AND PENSIONS
                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                                   ON

 STEVEN J. LAW, OF THE DISTRICT OF COLUMBIA, TO BE DEPUTY SECRETARY OF 
                                 LABOR

                               __________

                           NOVEMBER 21, 2003

                               __________

 Printed for the use of the Committee on Health, Education, Labor, and 
                                Pensions

91-302              U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 2003
____________________________________________________________________________
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          COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS

                  JUDD GREGG, New Hampshire, Chairman

BILL FRIST, Tennessee                EDWARD M. KENNEDY, Massachusetts
MICHAEL B. ENZI, Wyoming             CHRISTOPHER J. DODD, Connecticut
LAMAR ALEXANDER, Tennessee           TOM HARKIN, Iowa
CHRISTOPHER S. BOND, Missouri        BARBARA A. MIKULSKI, Maryland
MIKE DeWINE, Ohio                    JAMES M. JEFFORDS (I), Vermont
PAT ROBERTS, Kansas                  JEFF BINGAMAN, New Mexico
JEFF SESSIONS, Alabama               PATTY MURRAY, Washington
JOHN ENSIGN, Nevada                  JACK REED, Rhode Island
LINDSEY O. GRAHAM, South Carolina    JOHN EDWARDS, North Carolina
JOHN W. WARNER, Virginia             HILLARY RODHAM CLINTON, New York

                  Sharon R. Soderstrom, Staff Director

      J. Michael Myers, Minority Staff Director and Chief Counsel

                                  (ii)

                            C O N T E N T S

                               __________

                               STATEMENTS

                       Friday, November 21, 2003

                                                                   Page
Sessions, Hon. Jeff, a U.S. Senator from the State of Alabma.....     1
Kennedy, Hon. Edward M., a U.S. Senator from the State of 
  Massachusetts..................................................     2
Law, Steven J., nominee to be Deputy Secretary, Department of 
  Labor..........................................................     5

                          ADDITIONAL MATERIAL

Statements, articles, publications, letters, etc.:
    Steven J. Law................................................    16

                                 (iii)

  

 
                      NOMINATION OF STEVEN J. LAW

                              ----------                              --

                       FRIDAY, NOVEMBER 21, 2003

                                       U.S. Senate,
       Committee on Health, Education, Labor, and Pensions,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:04 a.m., in 
room SD-430, Dirksen Senate Office Building, Senator Sessions, 
presiding.
    Present: Senators Sessions, Kennedy, and Clinton.

                 Opening Statement of Senator Sessions

    Senator Sessions. We will come to order.
    Today's hearing focuses on the nomination of Steven J. Law 
to serve as Deputy Secretary of Labor. The Deputy Secretary is 
the second highest position in the Department of Labor. The 
Department is the Government agency principally tasked with 
improving working conditions for tens of millions of American 
workers, protecting retirees' pension plans and health care 
benefits, and helping employers find workers and comply with 
the law. In carrying out this mission, the Department of Labor 
administers a variety of Federal labor laws, including the Fair 
Labor Standards Act, the Davis-Bacon Act, the Labor-Management 
Reporting and Disclosure Act, the Occupational Safety and 
Health Act, the Federal Mine Safety and Health Act, and the 
Employee Retirement Income Security Act, among others.
    Mr. Law has served as Chief of Staff of the Labor 
Department since February 2001. In this role, he has led 
Secretary Chao's staff and has overseen budget and policy 
development, congressional and public affairs, and strategic 
planning for this important Federal agency.
    I am very proud of Secretary Chao. I think she is one of 
the finest members of the Cabinet, a person of integrity and 
commitment to public service that few can exceed in Government, 
in my experience.
    Mr. Law has participated in crafting major administration 
initiatives such as post 9/11 economic recovery, retirement 
security, and regulatory reform. Steven Law in many respects is 
the perfect choice for Deputy Secretary. He is knowledgeable 
about the issues, knows the key players, and has had managerial 
responsibility. And having worked here in the Senate, he 
understands the prerogatives of Congress and the headaches 
sometimes Congress can present.
    More importantly, he is respected by people he had worked 
with on both sides of the aisle. He is fair and open-minded. He 
has good relationships with the major stakeholders in the 
issues relating to labor. He is a man of good judgment who is 
respected by his colleagues.
    He understands the need for balance at the Department of 
Labor. He knows that regulation cannot come at the expense of 
jobs and economic growth and that workers depend on the 
Department of Labor for the enforcement of worker protections.
    I hope that we will be able to confirm him expeditiously. I 
also hope that this hearing will focus on this nominee and his 
excellent credentials, and hopefully we will not have a debate 
on the Bush administration's regulatory policies, but I know we 
will have some comments about those.
    I do not believe that Mr. Law's qualifications for the 
position of the Deputy Secretary of Labor are in dispute. He is 
clearly qualified, and I hope that we in the Senate will 
confirm him before we recess this year.
    I will just note that looking at his bio was particularly 
impressive to me. Senator Kennedy, I did not realize his honors 
graduate degree at the University of California was in arts and 
music. So I don't know what that means, but it is unusual in 
the Deputy Secretary of Labor's position perhaps. He is also an 
honors graduate at Columbia School of Law and was an editor of 
the Columbia Journal of Law and Arts.
    Senator Kennedy?

                  Opening Statement of Senator Kennedy

    Senator Kennedy. Thank you. Thank you very much, Mr. 
Chairman. Let me thank you for chairing the hearing, and our 
overall Chairman, Senator Gregg, for setting these hearings up. 
We are in the final hours of this part of the session, and 
there are many important responsibilities that members have and 
important considerations on the floor. And I am grateful for 
the fact that we have a chance to talk to the number two person 
at the Labor Department because one of the great challenges we 
are facing in the country is the state of our economy and how 
it impacts and affects workers. And the Labor Department is the 
friend, or should be the friend, of workers, and we want to try 
and understand better at least what the Department's views are 
on some of these important matters, because the overarching 
issues of unemployment and jobs and joblessness still are 
matters of great interest and concern.
    I join in the Chairman's recognition of Mr. Law's 
outstanding background, both academically at college and also 
in law school. There have been a number of individuals who are 
strong friends of the Department and who speak for workers that 
have urged our favorable consideration of the nominee. I will 
include at the appropriate place those communications that we 
have. So I thank you.
    I will include my full opening statement in the record. It 
points out that we are facing increasing numbers of American 
workers without health insurance. We now have the Department of 
Agriculture pointing out we have 13 million children who are 
going hungry every day or are on the verge of hunger. Nine 
million Americas are unemployed; 80,000 of them are going to be 
losing their unemployment benefits at the end of December. And 
7 million workers still wait year in and year out for a minimum 
wage increase. And now at the end of this year, if we fail to 
act, purchasing power of the minimum wage will be the lowest 
perhaps it has ever been. It's been 7 years since we have 
raised it, a fact that is obvious for the millions of people 
who rely on it primarily women, many of whom have children. It 
is a civil rights issue because of the fact that so many of the 
people that earn minimum wage are men and women of color, and 
it is a fairness issue. And we have worked hard and long to try 
to get the Department to look into this.
    As I mentioned, we should look at unemployment benefits, 
the decline of the minimum wage, the rising number of working 
families in poverty, and also the proposal by the Department 
for taking away the overtime protections for 8 million 
Americans, and recognize that great numbers of those Americans 
who would be benefiting from the overtime would be fire 
fighters, police, and nurses, who are really on the front lines 
of dealing with the homeland security issues. It raises, 
obviously, very serious concern, and I am sure you know, Mr. 
Law, that Congress has gone on record on the overtime issue and 
even as we are here, we understand it is a matter of 
consideration even in the omnibus bill, but the Congress has 
gone on record here with the 54-45 in opposition to the 
regulations, the instruction in the House, 221-203, 
Republicans, Democrats, both House and Senate, saying we ought 
to give this up for the time being. And at the same time we 
have the statement of the administration that they would even 
go so far as to veto the appropriations bill that carries the 
funding for the NIH, with all of the needs that they have and 
the responsibilities, the funding for our education programs, 
the funding for our neighborhood health centers. The list goes 
on.
    And yet it has been the administration's position that if 
this provision is included that the President has indicated 
that he would veto it. And we know that a President takes into 
consideration his senior advisers. When they put out that the 
President would veto this, on the basis of advice from his 
senior advisers, he is talking about you and the Secretary, 
because it is the Department of Labor that makes that 
recommendation.
    That is enormously troublesome, certainly to me, and I 
think to many, particularly those on this committee, who have 
worked long and hard on these programs in education and health 
and others and see that they are being threatened.
    These are going to be two issues, obviously, overtime and 
unemployment insurance. I will mention this now. We have not 
heard a single word from the Department on the unemployment 
insurance. We have tried to extend it. We have modified it. We 
are going to face the 80,000 people that are going to be losing 
it at the end of December. I know that some in the 
administration say, well, the economy is coming back. Most 
economists believe that unemployment is going to remain high 
through the first quarter of next year. That is the bipartisan 
testimony of the Joint Economic Committee.
    Even if we have the rate of return of jobs that we had last 
month, it would take 19 months to get back to pre-recession job 
levels, and these people are going to be long gone, 80,000 a 
month long gone, not being able to keep a hold of their 
unemployment compensation. And we wonder why.
    At the same time, it seems that the administration is 
tireless in pursuit of its LM-2 regulations, which are going to 
put in place very, very restrictive provisions in terms of 
reporting. And it seems to me what is sauce for the goose is 
sauce for the gander. And whatever we are going to do in terms 
of labor ought to be done in terms of business as well.
    The fact that the software needed to comply with these 
regulations doesn't yet exist, as well as the burdensome 
aspects of these provisions lead one to believe that the 
principal focus of the Department has been more in terms of 
sort of hassling and harassing workers and workers' leaders 
than trying to be helpful and responsive to some of their 
needs.
    So those are the basic issues. I know we are going to vote 
at 10:35, and I know my good friend, Senator Clinton, who is 
here, is going to want to ask you questions. So I don't want to 
unduly take your time, but let's come back.
    Given the fact that the House and the Senate both voted to 
include it, can you tell us now what the Department's position 
will be if the comference report includes a provision that 
would prevent the Department from implementing the new rules 
and regs? What would be the position of the Department on 
overtime if the rest of the labor appropriations bill was 
satisfactory?
    Senator Sessions. Before we begin I have a statement from 
Senator Enzi.
    [The prepared statement of Senator Enzi follows:]

                   Prepared Statement of Senator Enzi

    Thank you Mr. Chairman. Today we will be reviewing the 
qualifications of the President's nominee for Deputy Secretary 
of Labor. This position is of great interest and importance to 
me personally because of my service as Chairman of the 
Subcommittee on Employment, Safety, and Training. I am pleased 
to announce my support for the appointment of Steven Law to be 
Deputy Secretary of Labor.
    The Department of Labor plays a critical role in the lives 
of the American workforce as well as the operations of our 
business community. The Deputy Secretary of Labor, the second-
highest position in the Department, plays a critical role in 
ensuring that the Department is functioning effectively and 
accomplishing its mission.
    Steven Law possesses the background that makes him well-
suited to face the rigors of the position. He has served as 
Chief of Staff for the Secretary of Labor since February 2001. 
As Chief of Staff, he has coordinated the Secretary's senior 
management team and has overseen strategic planning for the 
Department. Prior to joining the Department of Labor, Mr. Law 
was Executive Director of the National Republican Senatorial 
Committee and Chief of Staff for Senator Mitch McConnell.
    Mr. Law's knowledge of the inner workings of the Department 
and Congress will serve him very well as Deputy Secretary of 
Labor. He knows the issues, he knows the players, and he knows 
the process. He understands the important role the Department 
of Labor plays in protecting the workers of this Nation as well 
the impact of regulation of economic growth and job creation.
    Mr. Law also possesses outstanding academic credentials. He 
received his Juris Doctor degree from Columbia University 
School of Law and graduated cum laude from the University of 
California, Davis. He is a member of the Bars of the United 
States Supreme Court, New York, and the District of Columbia.
    Steven Law has demonstrated the ability to build 
relationships with key stakeholders and on both sides of the 
aisle. His professional and academic qualifications--as well as 
his fair and open-minded approach to issues--make him a strong 
choice for the position of Deputy Secretary of Labor.
    One of our most important duties on this committee is to 
provide our advice and consent to the President's nominees for 
those positions that fall under our jurisdiction. The President 
has chosen an individual with excellent qualifications and sent 
him to us for our review and consideration. His choice of 
Steven Law as Deputy Secretary of Labor is a good one, and I 
strongly support his nomination. I look forward to his speedy 
confirmation by the full Senate.

  STATEMENT OF STEVEN J. LAW, NOMINEE TO BE DEPUTY SECRETARY, 
                    U.S. DEPARTMENT OF LABOR

    Mr. Law. Senator Kennedy, it would be the hope of the 
Department that Congress would not attach a restrictive 
amendment that would prevent the Department from proceeding 
with its rulemaking on the Fair Labor Standards Act white-
collar exemptions. The goal of the rule that we put forth was 
to expand overtime eligibility for, we estimate, upwards of 1.3 
million low-wage workers and make overtime rights much clearer 
for another 10.7 million American workers. We have received 
nearly 80,000 comments, very many of them constructive and very 
good, and by I do not just mean comments that were supportive 
of the proposal but comments that pointed out weaknesses, 
unintended consequences. And we have been reviewing those. We 
continue to. We think that the best outcome of this would be 
for us to proceed to incorporate the comments that we have 
received, to rely upon them, to produce a rule that achieves 
the goal that we set out to pursue, which is not to move 
boundary lines but to make them clearer so that employees and 
employers and our own enforcement people will be able to better 
enforce the law and guarantee overtime rights.
    And our concern is that adding the proposed language would 
only make the system worse and create additional complexity. We 
believe the best course of action would simply be to allow us 
to proceed and complete the rulemaking.
    Senator Kennedy. Well, one of these bulletins that has been 
out indicates that the Department of Labor refuses to even sit 
down to try and work this out--quotes I will just read. This is 
in Congress Daily, page 5 out of 20. ``The White House rejected 
any compromise, however, and has not come back to the 
negotiating table. `Labor Secretary Chao won't even meet us,' a 
GOP appropriation aide said.''
    Is that currently the position of the Department?
    Mr. Law. I am not aware of what that is referring to, 
Senator.
    Senator Kennedy. These are the negotiations now that are 
taking place that Senator Specter is a part of for the Labor, 
HHS.
    Mr. Law. I am not aware of that report.
    Senator Kennedy. But even in spite of the fact of the 
actions that have been taken in the House and the Senate, would 
it be your recommendation then that the President would be 
advised to veto that bill if it blocks your ability to change 
the overtime regulation?
    Mr. Law. Senator, my understanding is that the senior 
advisers have recommended a veto and that veto recommendation 
remains in force. Again, it is the opinion of the Department 
that the best course of action for us would be to allow us to 
proceed with the rulemaking, to put forth a rule that takes 
into account the many comments we have received from both 
sides, and then after that process, obviously would allow for 
Congress to render further judgment on whether we struck the 
appropriate balance in responding to those comments and putting 
forth a rule that protects workers better.
    Senator Kennedy. With regard to the LM-2'--have you thought 
about whether this could be applicable as well to the business 
community? Because I am sure they have given a good deal of 
thought to it.
    Let me come back to the issue on the unemployment 
insurance. Is there anything you want to say about the 
Department's position on unemployment insurance, on extending 
unemployment insurance?
    Mr. Law. The Department is carefully monitoring the 
situation and puts out a lot of information on what is going on 
in the employment situation. As we all know, we have 
experienced really remarkable economic growth in the last month 
or so, and in the last 3 months we have created 286,000 new 
jobs, and unemployment is clearly falling, as are initial 
unemployment claims, to a considerably low level last month, to 
355,000.
    At the same time, we are not feeling like we are out of the 
woods, in particular with respect to the issue that this would 
address, which is long-term unemployed. The long-term 
unemployed number continues to be high, although it, too, 
dropped last month and shows signs of starting to come down.
    So our best approach to this right now as a Department is 
to provide the information that BLS and the Employment Training 
Administration provides to make the proper assessment.
    Senator Kennedy. Well, you are right, because you collect 
the data about the unemployment. You run the programs with the 
State. And so the question is: What is the public position on 
the extension of the program when we are facing 80,000 people 
that are going to lose their unemployment every week after 
December and we are into the last hours of this congressional 
session?
    Mr. Law. I know the administration is willing to work with 
Congress toward an appropriate resolution of the unemployment 
insurance extension issue.
    Senator Kennedy. What is your general sense about providing 
help and assistance to the long-term unemployed?
    Mr. Law. One of the proposals that the administration has 
put forth, which we recommended in our previous budget and are 
continuing advocate, is personal reemployment accounts, which 
would both provide an innovative approach to giving direct 
income support to people who are long-term unemployed, while 
also creating economic incentives to encourage people to find 
work and also to find the training that will lead them to 
specific employment opportunities.
    Senator Kennedy. Well, I do not have the figures right 
here. But the amounts that were being considered were--I would 
use the word ``modest'' given the numbers of people that are 
going to be losing their unemployment compensation at the end 
of this month. It is completely inadequate to try and deal with 
the magnitude of the problem and the fact we have not heard 
from the Department on this is troublesome.
    Let me go into the LM-2 issue and just ask you where we are 
on this. My understanding is that we have had a number of our 
colleagues, bipartisan, both from this committee and from the 
House of Representatives, including 22 Republican members who 
have signed a letter to OMB emphasizing that requiring 
compliance with the rule, which software does not exist yet, 
will provide a very heavy and undue burden.
    If that is the case, why aren't we just trying to work out 
reasonable kinds of accommodations like they worked out for the 
SEC and other agencies in the past? Why do they insist on going 
ahead when we know that the software is not there?
    Mr. Law. Senator, the Office of Labor Management Standards 
has been engaged in extensive compliance assistance efforts all 
across the country. In fact, even today OLMS is sitting down 
with roughly 200 union accountants from across the country to 
work together with them to explain how the new rule would work 
and how compliance would work.
    I am also told that as of today we will have reached out to 
over 80 percent of all LM-2 filers to discuss what compliance 
would entail. I would not say that everybody greets the 
proposal with warm anticipation, but, on the other hand, there 
is a general view that we have encountered that the regulated 
community can respond and can step up to the plate with what 
the new rule would require.
    Senator Kennedy. Well, as I understand, the recent rule 
requires that unions file papers--it could be hundreds of pages 
long--itemized lists of all payments above $5,000, agrees that 
unions--I guess the Department acknowledged the rule is 
burdensome, that unions will have to spend 710 hours and over 
$116 million the first year in complying with the rule.
    Are you familiar with those figures?
    Mr. Law. Yes.
    Senator Kennedy. $116 million in complying with this, and 
they do not have the software. They have to reconfigure their 
current software, there will be additional costs as well, as I 
understand it.
    Well, I thank you, Mr. Law. My understanding is that 
meetings are taking place in November and December, and that 
between now and January unions have to review the rule, meet 
with their accounting staff, to learn what the rule requires, 
train the office personnel to keep the records under the rule, 
hire a software engineer to begin redesigning their current 
accounting program, and adopt and test the redesigned 
accounting systems.
    Have you gotten word back from OMB about how this complies 
with the paperwork initiative?
    Mr. Law. As I understand it, the final rule went through 
OMB through OIRA, and those issues, Paperwork Reduction Act 
compliance, were reviewed and the rule was approved for being 
in compliance with the Paperwork Reduction Act.
    In addition to that, I would just say with regard to the 
software, which has been the source of some concern, the 
software that the Department of Labor would provide free of 
charge to labor unions who would need to file the revised LM-2 
forms is for the purpose of taking data at the end of a union's 
fiscal year and organizing it for submission in the report that 
is actually given to the Department of Labor. And because of 
that, the software does not actually need to be used until, at 
the earliest, January of 2005 for a report that would have to 
be filed, again, at the earliest, in March of 2005.
    The Department has also put out well in advance the 
technical specifications of what that software would need, and 
we also are planning to get the software out to unions early 
next year, early enough for unions to see how it works and to 
make sure that it works well.
    So there really is a much longer lead time than has been 
suggested because the function of the particular software that 
the Department of Labor is to provide is not actually needed 
until the reports have to start to be compiled for the 
Department of Labor's purposes, which is not until 2005.
    Senator Kennedy. Well, we are going to have a chance to 
come back and revisit this. My time is up. I thank the Chair, 
and I thank you very much.
    Mr. Law. Thank you, Senator.
    Senator Sessions. Thank you.
    Mr. Law, I failed to offer you the opportunity to introduce 
your family or to make any brief comments you have. Anything 
you want to say before I recognize Senator Clinton?
    Mr. Law. If the Senator from New York would beg me a brief 
indulgence, I would like to just briefly do that. I do want to 
thank the entire committee for convening this hearing on short 
notice and at an unbelievably busy time of year. I remember as 
a staffer these particular months of October and November and, 
occasionally December being among the worst, and I appreciate 
the time that you are devoting to it.
    I will submit my comments for the record as if read, but I 
do want to at least take the opportunity to introduce my wife 
of over 12 years, Elizabeth Law, who is with me. Thank you. She 
is a great source of comfort and wisdom and encouragement in a 
high-pressure environment. And I would be introducing my two 
children, Charlotte, who is 9, and John James, who is 6, but 
they decided that school would be more fun than joining me here 
today. [Laughter.] Which shows that we have got some work on 
reordering their priorities, but, nevertheless, that is where 
they are.
    That is all I will say for opening remarks for the moment.
    Senator Session. All right. Very good.
    Senator Clinton?
    Senator Clinton. Thank you, Mr. Chairman, and thank you for 
holding this hearing, and thank you, Mr. Law, for being here 
with us. And I appreciate your willingness to assume 
responsibilities that are quite significant. I think the second 
in command at the Department of Labor is a very important 
position. The Department, as you know, commands a $56 billion 
budget and almost 20,000 employees, so that is quite an 
undertaking.
    I just want to follow up briefly on Senator Kennedy's point 
concerning overtime, and I think, Mr. Law, you must be aware of 
the debate and the discrepancy over the impact that the 
proposed rules would have. I assume you have been intimately 
involved in following this and keeping up with it. Is that 
right?
    Mr. Law. Fair to say, yes.
    Senator Clinton. And because of the high stakes of this 
rule, the fact that reputable analysts outside the Labor 
Department are concerned that it could deny overtime 
eligibility to 8 million Americans--and that would include 
450,000 New Yorkers I have a particular concern. And that is 
that the kind of people who would be denied overtime are fire 
fighters, police officers, nurses, and others, so I find it 
difficult to understand why the Department and the 
administration will not go along with Senator Specter's 
proposal for what would be a compromise and it would break the 
logjam in the negotiations over the omnibus, as I understand 
it. And basically Senator Specter, as reported in the 
newspapers this morning and among our colleagues, has asked 
Secretary Chao to accept a proposal that would postpone the 
effective date of the new rules by 3 months, while a blue-
ribbon commission that presumably would have people on it that 
would be above politics, above partisanship, unrelated, 
frankly, to either the administration or organized labor, but, 
you know, maybe labor economists and other experts to actually 
review these rules and then Congress could vote to uphold or 
overturn the regulations.
    Now, that strikes me as a very common-sense approach, and 
it represents the bipartisan concern that exists in the Senate 
and the House over the implementation of these overtime rule 
changes.
    Could you explain why this is not an appropriate 
resolution? Because, I know that I and many other Democrats, as 
well as Republicans like Senator Specter, are deeply concerned. 
We would like our concerns assuaged one way or the other, and 
this would provide us the means for doing that.
    Mr. Law. Absolutely. The reason why we are not in agreement 
with the proposal that has been put forth is because we think 
that a blue-ribbon commission has already been convened, and 
that consists of the nearly 80,000 stakeholders who have 
already commented on our proposal.
    The commission proposal advanced by Senator Specter 
outlines 12 different subject areas that that commission could 
take a look at, and, in fact, all 12 of those areas are 
addressed in the notice of proposed rulemaking, and they have 
all been subject to comment by those who have responded to the 
proposal. And we think that the best possible approach is, 
rather than have a commission that would debate broad policy 
and theoretical analyses, the blue-ribbon commission that has 
been convened essentially, by analogy, through the 
Administrative Procedures Act process has allowed huge numbers 
of stakeholders from all sides of the spectrum to offer comment 
on very specific proposals.
    And we are aware of the concerns of the unintended 
consequences of the proposal and the differing views on how 
many employees might be impacted. And our goal is to take all 
those comments into consideration, to very seriously treat them 
and rely upon them in coming forth with a final rule that would 
do what we have said we really wanted to do, which is to 
guarantee overtime rights for more workers and clarify the 
rules so that more workers will know what their rights are, and 
hopefully many millions of workers will have overtime who did 
not in the past.
    And once that final rule is put forth, Congress can 
exercise its judgment again as to whether or not we struck that 
balance that we set out to do and can either sustain our 
proposal or not. But we believe this issue has been studied 
extensively. I am told that even the Dunlop Commission looked 
at this issue many years back. It has been on the Department's 
regulatory agenda since 1979, and we have great faith in the 
process that we are in now to yield a result of comments and 
discussion of a tangible proposal, with whatever strengths and 
weaknesses it may have currently, that we can then formulate a 
final proposal for Congress to take a look at.
    Senator Clinton. Mr. Law, I have not been around here as 
long as my colleagues, but my understanding is that the 
Congress has in the past assessed the impact and the need to 
modernize or amend the Fair Labor Standards Act, certainly 
overtime provisions. This comes really out of the normal course 
of events for the Labor Department to take this on itself.
    And it does strike me as unfortunate because it raises 
quite a bit of mistrust and concern on both sides of the aisle. 
And I know what the stated position as you have articulated it 
is, but it seems to me that it would be not in any way 
undermining the efforts to modernize overtime and do it in a 
way that takes into account legitimate concerns to try to 
respond to the well-thought-out objections of people like 
Senator Specter.
    Now, with respect to unemployment insurance, I am concerned 
because yesterday Congressman DeLay was quoted as saying that 
there would be no extension of unemployment insurance. Now, 
there are varying approaches. There is a more comprehensive 
approach and a more limited approach that are represented in 
legislation already filed in both the House and the Senate. I 
know that there are, I believe, three different Republican 
proposals for the extension of unemployment insurance in the 
House. There is one sponsored by Senator Smith in the Senate. 
And it is concerning that we would, on the threshold of going 
out before Thanksgiving, have such an adamant declaration by 
the Republican Whip. And, obviously, the only way that that can 
be overcome is by the administration supporting, again, a 
bipartisan proposal to provide for the extension of 
unemployment benefits before the holidays.
    We went through this last year. We did not act in time. We 
acted as soon as we got back, which was at least trying to 
resolve some of the hardships posed to people. But it seemed a 
little bit mean-spirited not to have done it before we enter 
into the holiday season, and once again, we are facing the same 
deadline.
    Now, I am hopeful and cautiously optimistic--not 
convinced--that the economy is picking up, but, nevertheless, I 
think even with the signs of some possible growth, the fair way 
to characterize the situation is that we are going to be 
confronted with very long-term unemployment and very slow job 
creation, and that unemployment insurance benefits will 
continue to play a necessary role in sustaining people. And the 
truth is that the unemployment rate is actually higher than it 
was when we passed the temporary extended unemployment 
insurance program back in March of 2002. Then we had 8.2 
million Americans out of work. Today we have 8.8 million. Back 
then we had 130.5 million jobs in the economy. Today we have 
130.1 million. Back then we had 1.32 million long-term 
unemployed Americans who had been out of work 6 months or more. 
Today there are more than 2 million.
    And, furthermore, the extended benefits program in the 
early 1990s did not end until the economy had created nearly 3 
million jobs compared to pre-recession levels. The current 
program is scheduled to end while the economy is still 
suffering a jobs deficit of 2.4 million fewer jobs.
    So I am having a hard time understanding why we cannot all 
work together and do what previous administrations did as a 
matter of course. I know under the first President Bush, 
unemployment insurance benefits were extended 3 times, and it 
seems to me, again, that we ought to be looking to try to 
provide this safety net for the long-term unemployed until the 
economy either does or does not begin to kick in with the 
number of jobs that is needed.
    There is a second problem that I would like your opinion 
about, and that is, there are differences within States, and I 
have a very clear example of that. You know, in my State of New 
York, the statewide rate is 6.2 percent, about the national 
average. The unemployment rate in New York City is 8.2 
percent--2 percentage points higher. It has never recovered 
from the horrible attacks of September the 11th. In fact, if 
New York City were a State, which it very well could be with 8 
million people, it would have the highest unemployment rate in 
the country by far. Oregon at 7.6 percent would be a distant 
second. And it is not just the rate of unemployment. The city 
also has the fourth highest raw number of individuals who are 
out of work. Yet unemployed workers in New York are only able 
to access 39 weeks of unemployment insurance benefits, while 
those who are unemployed in Oregon have access to more than 70 
weeks. And I certainly do not begrudge workers in Oregon those 
benefits. I am glad the system works for those individuals. But 
because New York City is embedded in a State that has an 
overall lower unemployment rate, workers in New York City, who 
have already borne a tremendous burden because of the attacks 
and their aftermath, are left out and cannot access the same 
benefits.
    So would you consider looking at an unemployment insurance 
benefit that takes into account significant regional 
differences, such as the one I have just described?
    Mr. Law. The situation you describe is disconcerting. I 
don't know to what extent States have flexibility on their own 
to create additional benefits within localities. And I don't 
know what currently would be available within the national 
system by which we extend unemployment benefits. But we can 
certainly take a look at the problem.
    It raises another issue, which is the lack of flexibility 
that States have in moving funds around through the workforce 
investment system, and that is another thing that we would like 
to see progress made on. In fact, I certainly commend this 
committee for moving ahead WIA reauthorization legislation that 
helps give States added flexibility so that when you have those 
disparities that you have in your State, that there can be a 
response through various mechanisms to get aid to the workers 
who need it most in those localities. But we will certainly 
take a look at what you are proposing and see what we can do on 
that. If I am confirmed, I will take a good look at it and see 
what is possible.
    Senator Clinton. Well, I would appreciate that because many 
individuals in New York have already exhausted all of their 
benefits because we have never been able to access these 
extended benefits or qualify for extra benefits as a high-
unemployment State. So we have a lot of so-called exhaustees 
who have been out of work for more than a year that cannot pick 
up and move. They have family responsibilities. They have other 
kinds of ties to New York. And, you know, we now know that we 
are going to start exhausting State benefits at a rate of about 
88,000 a week unless we pass an extension.
    So I am hoping that we will not go through what we went 
through last year. I am hoping that with the administration's 
help--and I would appreciate your taking this back to Secretary 
Chao and to the White House. I am hoping that we can try to do 
something before we leave here. And despite Congressman DeLay's 
adamant objection, there is strong bipartisan support for at 
least a simple extension to get people through the holidays, to 
get us into the new year. Hopefully, you know, we will see 
enough improvement that we will not have to revisit this again. 
But in the absence of that improvement, we are putting a lot of 
people at risk that I do not think anybody wants to see happen.
    Thank you, Mr. Chairman.
    Mr. Law. Thank you, Senator.
    Senator Sessions. Thank you very much.
    Mr. Law, just briefly, the labor reporting regulations that 
have been discussed are really designed to effectuate an 
existing requirement that labor unions report certain 
expenditures and business records, is it not?
    Mr. Law. That is right.
    Senator Sessions. I have seen some of the records that have 
been submitted, and they are just really totally nonresponsive 
to the Department of Labor. And the reason this is true, is it 
not, is that members are often required to be a part of the 
union, their money is held basically in trust for them and we 
have had a history of abuse. As a former Federal prosecutor, I 
have had the burden of prosecuting several unions and 
leadership for misusing the union members' money, sometimes 
significant amounts were misused. And that can happen in any 
business, but the design of the system was for them to report 
so that the union members would have a better understanding of 
where their money is going. Isn't that it?
    Mr. Law. That is true. The vast majority of union officials 
and staff are honorable, hard-working, honest, and dedicated to 
their members, certainly every one of them whom I know, and I 
know a lot of them and count a lot of them as friends. There 
are a few instances----
    Senator Sessions. Well, you have gotten support from a 
number of them, which I know you are proud to see, for this 
particular appointment to Deputy Secretary, and I know you are 
proud of that.
    Mr. Law. Well, thank you. But there are some instances of 
financial fraud and embezzlement that the Department has been 
concerned about from an enforcement point of view, and the 
purpose of the rule is simply to try to deter and detect that 
kind of fraud from occurring and, in addition to that, to give 
more quality information to union members so that they can 
exercise their democratic rights as envisioned by the Labor-
Management Reporting and Disclosure Act.
    Senator Sessions. Because they have to vote, and they have 
a right to know how their leadership is managing their money. 
So it might be an issue in the campaign as to who is going to 
be the next leader of a union.
    With regard to these overtime rules, I think I am probably 
the only member of the Senate that has filed overtime lawsuits 
on behalf of workers. I have never represented a business in an 
overtime case. But a friend of mine was a bulldozer operator, 
and he thought maybe he was entitled to overtime. We sat down 
and looked at the law, and I concluded he was and filed a 
lawsuit, and we won it.
    I will say it was confusing. I will say that if the rule 
had been clearer, the boss would probably have paid him 
overtime to begin with.
    Mr. Law. Right.
    Senator Sessions. But it was a quasi-contractual 
relationship, and it was his bulldozer. He was not working on 
someone else's equipment. And so it was a confusing matter.
    I represented another secretary, a clerk, and eventually 
prevailed on that one. That one was a little clearer. But I 
would just note that that lady worked for a union, and she was 
not paid proper overtime. And I filed a lawsuit, and we got her 
her overtime.
    These regulations have not been changed since 1954. 
Secretary Chao has put forth a regulation that clarifies these 
rules. I think they also need to be clarified because of the 
nature of work has changed today. Many traditional jobs have 
changed, and quite substantially.
    But isn't it true that under the current regulations today, 
the law today that you are looking at changing, a person 
earning $14,000 a year who works behind a counter at a fast-
food restaurant and has been called a manager, that person is 
not entitled to overtime? And under your regulations, if they 
were not paid at least $22,100 a year, no matter what their job 
title was, they get overtime?
    Mr. Law. That is true. One of the great injustices of the 
fact that there has not been action to update these rules is 
the very situation that you cite, where someone could be very 
low paid, they could have a little name tag that says 
``Manager'' on them, and it is not too hard for an employer to 
game the system and call that person somebody exempt from 
overtime.
    And then the other situations that you described are 
precisely the same. I think the Department has the view that it 
is just simply not a good situation when a worker has to avail 
themselves of legal help, although we are always in favor of 
legal help, but to have to avail themselves of a private 
attorney, spend money on that to find out what their overtime 
rights really are. We ought to make the rules clear enough that 
employers know what is expected of them, particularly small 
businesses who are not going to be inclined to hire a large 
labor and employment law firm, but, more importantly, the 
workers know what their rights are so they can defend 
themselves.
    And we have also found in our Department that our own 
investigators find the current rules so outdated and 
complicated, they are very, very difficult to carry out and 
effectively enforce.
    Senator Sessions. Well, you know, I keep hearing colleagues 
say, in the press and on the floor of the Senate, that they 
talk about policemen and firemen and all being hurt by these 
rules. But isn't it true that the president of the National 
Fraternal Order of Police, Chuck Canterbury, who represents 
police employees and union members, said this, ``Thanks to the 
leadership of Secretary Chao, we have no doubt that overtime 
pay will continue to be available to those officers currently 
receiving it, and if the new rules are approved, even more of 
our Nation's police officers, fire fighters, and EMTs will be 
eligible for overtime. This development was possible because 
this is an administration that listens to the concerns of the 
FOP and because of their commitment to our Nation's first 
responders.''
    So it is just not true that police and fire fighters are 
opposed to this and they are going to be losing overtime, is 
it?
    Mr. Law. That is true. There have been a number of concerns 
expressed about the rule, all of which we treat seriously, and 
many of them are highly valid. But there are also a lot of very 
serious misapprehensions and mis-information about the rules.
    Senator Sessions. Well, in that regard, what you have done 
is you have gone through a process in which you have proposed 
rules, and you have got 80,000-plus comments on them. Now it is 
your job to listen to those comments and alter the rule if 
there are any problems with it before presenting a final rule. 
Is that right?
    Mr. Law. That is true.
    Senator Sessions. And so now you are in the process of 
evaluating the comments, and you have never proposed a final 
rule as of this date. Is that right?
    Mr. Law. Not yet, no.
    Senator Sessions. Well, I think those are matters that are 
important for us to know. I just know that Secretary Chao is 
determined to make the lives of working men and women better. I 
was with her when we had a coal-mining accident in Alabama at 
10 o'clock at night, and she had a 5 o'clock plane the next 
morning, and she stayed down there and met every family member 
that was there at that union hall. And I know you share those 
same concerns for improving the lives and safety of labor union 
members.
    But having a union do a better job of reporting, as they 
are already required to do, their income and expenditures so 
that union members can evaluate their leadership is not a bad 
idea and is not anti-union. I believe a reform, the first since 
1954, of overtime rules is overdue. I believe you could make it 
more clear. I believe fewer people could be taken advantage of 
if we clarified those rules, and I think, as I understand it, 
the numbers are as much as 10 million workers will have their 
positions clarified without question that they are entitled to 
overtime today and that really are not so clear under present 
law.
    And I just would say this: We have had some good news on 
the employment front. Last week, we had a 12-percent drop in 
first-time claims for unemployment compensation. That is real 
number that I think is indisputably significant. Wouldn't you 
agree?
    Mr. Law. Very encouraging, yes.
    Senator Sessions. And we have also seen a surge of 300,000 
new jobs in the last 3 months, which is also good, a great 
growth rate. If we can keep this economy humming, I think we 
will see a lot of our problems go away and be reduced.
    And I will tell you, things like this energy bill, this 
energy bill is going to create employment. And it is being 
blocked on the floor today for reasons I do not fully 
understand. And so I tell you, that could create a million new 
jobs in the United States of America, reduce the amount of our 
wealth sent overseas to foreign countries for energy sources 
that could be produced here, creating jobs here, creating 
taxpayers here, creating families with health care and 
insurance benefits.
    So I thank you for your leadership, for undertaking this 
task, and I think you can tell from the comments that have been 
made today and from what I am hearing around the Senate, you 
are well respected from your time in the Senate. You have 
developed a reputation of integrity and good judgment and fair 
play, just the kind of person Secretary Chao would want at her 
right hand to help run the Department of Labor. I believe that 
you will do a great job, and we hope that we can move forward 
expeditiously.
    Is there anything else you would like to say?
    Mr. Law. Senator, thank you for those very kind remarks. If 
I am confirmed, I will work with both sides of the committee to 
make sure that what we are doing is receiving all the input of 
all of you and do my best to serve the President and the 
Secretary and American workers.
    Senator Sessions. Well, you are the best of the best, and 
you have a reputation of that already, so I think now that is 
going to be true.
    If there is nothing else, I will keep the record open for 7 
days. If there is nothing else, we will adjourn this meeting 
today. Thank you.
    Mr. Law. Thank you, Senator.
    [The prepared statement of Mr. Law may be found in 
additional material.]
    [Additional material follows.]

                          ADDITIONAL MATERIAL

                  Prepared Statement of Steven J. Law

    Mr. Chairman, Senator Kennedy, and Members of the Committee, I want 
to thank you for convening this hearing at a time that is so busy for 
all of you.
    In deference to your time, I will keep my statement very brief. I 
am joined this morning by my wife of over 12 years, Elizabeth Law, who 
is a tremendous source of strength, wisdom and perspective in this 
high-pressure environment. I have two children, Charlotte--who is 9--
and John James, 6, and they both decided that school would be more fun 
than joining me today.
    It is a privilege and an honor to be considered for the position of 
Deputy Secretary of Labor, and I am very grateful to the President for 
nominating me. I also appreciate the gracious support of the Secretary 
of Labor, Elaine Chao, for the chance to take on a new challenge and 
new responsibilities.
    There are several reasons why I hope to have the opportunity to 
serve in this new role, but the most important one is that the 
Department of Labor has more of a direct impact on the daily lives of 
all Americans than any other Cabinet Agency.
    The issues this Department handles are the ones people talk about 
around the kitchen table: Job security. Career goals. Am I making 
enough money? Do I have enough saved for retirement? How will I get 
health care coverage for my family? Do I feel safe at work?
    These everyday concerns are the Department of Labor's stock in 
trade. And if I am confirmed, I look forward to helping the Secretary 
of Labor fulfill her responsibility to protect and prepare America's 
workforce.
    The second reason I hope to have this opportunity is that I think 
the Department of Labor has a tremendous group of career 
professionals--at every level and all throughout the country. They are 
dedicated to what they do, they have a wealth of practical experience, 
they believe in the mission of the Agency, and they are open to new 
ways of doing our job better. I can't think of a better group of people 
to work closely with, for as long as I would be allowed the privilege 
of serving in this capacity.
    I am certain that many of you have questions and concerns, and I 
will try to respond to them as best as I can. Thank you again for the 
opportunity to be here this morning.

    [Whereupon, at 10:56 a.m., the committee was adjourned.]

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