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	<title> - FEDERAL WAGE AND HOUR POLICIES IN THE TWENTY-FIRST CENTURY ECONOMY</title>
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	[House Hearing, 115 Congress]
	[From the U.S. Government Publishing Office]


	FEDERAL WAGE AND HOUR POLICIES IN
	THE TWENTY FIRST CENTURY ECONOMY

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

	HEARING

	BEFORE THE

	SUBCOMMITTEE ON WORKFORCE PROTECTIONS

	COMMITTEE ON EDUCATION
	AND THE WORKFORCE

	U.S. House of Representatives

	ONE HUNDRED FIFTEENTH CONGRESS

	FIRST SESSION

	__________

	HEARING HELD IN WASHINGTON, DC, FEBRUARY 16, 2017


	__________

	Serial No. 115-6

	__________

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


	[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]


	Available via the World Wide Web:
	www.gpo.gov/fdsys/browse/
	committee.action?chamber=house&committee=education
	or
	Committee address: http://edworkforce.house.gov


	_____________


	U.S. GOVERNMENT PUBLISHING OFFICE
	24-498 PDF WASHINGTON : 2017

	________________________________________________________________________________________
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	COMMITTEE ON EDUCATION AND THE WORKFORCE

	VIRGINIA FOXX, North Carolina, Chairwoman

	Joe Wilson, South Carolina Robert C. ``Bobby'' Scott,
	Duncan Hunter, California Virginia
	David P. Roe, Tennessee Ranking Member
	Glenn ``GT'' Thompson, Pennsylvania Susan A. Davis, California
	Tim Walberg, Michigan Raul M. Grijalva, Arizona
	Brett Guthrie, Kentucky Joe Courtney, Connecticut
	Todd Rokita, Indiana Marcia L. Fudge, Ohio
	Lou Barletta, Pennsylvania Jared Polis, Colorado
	Luke Messer, Indiana Gregorio Kilili Camacho Sablan,
	Bradley Byrne, Alabama Northern Mariana Islands
	David Brat, Virginia Frederica S. Wilson, Florida
	Glenn Grothman, Wisconsin Suzanne Bonamici, Oregon
	Steve Russell, Oklahoma Mark Takano, California
	Elise Stefanik, New York Alma S. Adams, North Carolina
	Rick W. Allen, Georgia Mark DeSaulnier, California
	Jason Lewis, Minnesota Donald Norcross, New Jersey
	Francis Rooney, Florida Lisa Blunt Rochester, Delaware
	Paul Mitchell, Michigan Raja Krishnamoorthi, Illinois
	Tom Garrett, Jr., Virginia Carol Shea-Porter, New Hampshire
	Lloyd K. Smucker, Pennsylvania Adriano Espaillat, New York
	A. Drew Ferguson, IV, Georgia

	Brandon Renz, Staff Director
	Denise Forte, Minority Staff Director
	------

	SUBCOMMITTEE ON WORKFORCE PROTECTIONS

	BRADLEY BYRNE, Alabama, Chairman

	Joe Wilson, South Carolina Mark Takano, California,
	Duncan Hunter, California Ranking Member
	David Brat, Virginia Raul M. Grijalva, Arizona
	Glenn Grothman, Wisconsin Alma S. Adams, North Carolina
	Elise Stefanik, New York Mark DeSaulnier, California
	Francis Rooney, Florida Donald Norcross, New Jersey
	A. Drew Ferguson, IV, Georgia Raja Krishnamoorthi, Illinois
	Carol Shea-Porter, New Hampshire

	C O N T E N T S

	----------
	Page

	Hearing held on February 16, 2017................................ 1

	Statement of Members:
	Byrne, Hon. Bradley, Chairman, Subcommittee on Workforce
	Protections................................................ 1
	Prepared statement of.................................... 4
	Takano, Hon. Mark, Ranking Member, Subcommittee on Workforce
	Protections................................................ 5
	Prepared statement of.................................... 7

	Statement of Witnesses:
	Brantley, Mr. Andy, President and CEO, College and University
	Professional Association for Human Resources, Knoxville, TN 31
	Prepared statement of.................................... 33
	Riner, Ms. Rhea L., President, Rhea Lana's Franchise Systems,
	Inc., Conway, AR........................................... 9
	Prepared statement of.................................... 12
	Stettner, Mr. Andrew, Senior Fellow, The Century Foundation.. 19
	Prepared statement of.................................... 21
	Walters, Ms. Christine, Sole Proprietor, Fivel Company,
	Westminster, MD............................................ 42
	Prepared statement of.................................... 44

	Additional Submissions:
	Adams, Hon. Alma S., a Representative in Congress from the
	State of North Carolina:
	Letter dated February 16, 2017, from National Women's Law
	Center................................................. 57
	Chairman Byrne:
	Letter dated February 15, 2017, from Associated Builders
	and Contractors, Inc. (ABC)............................ 94
	Prepared statement of the National Association of
	Convenience Stores and the Society of Independent
	Gasoline Marketers of America.......................... 96
	DeSaulnier, Hon. Mark, a Representative in Congress from the
	State of California:
	Letter dated February 14, 2017, from Business for a Fair
	Minimum Wage........................................... 78
	Ms. Riner:
	Plaintiffs' Opposition to Defendant's Motion for Summary
	Judgment and Cross-motion for Summary Judgment......... 129
	Shea-Porter, Hon. Carol, a Representative in Congress from
	the State of New Hampshire:
	Letter dated February 16, 2017, from National Employment
	Law Project............................................ 64
	Mr. Takano:
	Letter dated February 13, 2017, from the American
	Sustainable Business Council........................... 92
	Letter dated February 14, 2017, from Jobs With Justice... 83
	Letter dated February 15, 2017, from the National
	Partnership for Women and Families..................... 89
	Letter dated February 16, 2017, from the Economic Policy
	Institute.............................................. 86


	FEDERAL WAGE AND HOUR POLICIES IN
	THE TWENTY-FIRST CENTURY ECONOMY

	----------


	Thursday, February 16, 2017

	U.S. House of Representatives

	Subcommittee on Workforce Protections

	Committee on Education and the Workforce

	Washington, D.C.

	----------

	The subcommittee met, pursuant to call, at 10:01 a.m., in
	room 2175, Rayburn House Office Building, Hon. Bradley Byrne
	[Chairman of the subcommittee] presiding.
	Present: Representatives Byrne, Grothman, Stefanik, Rooney,
	Takano, Adams, DeSaulnier, Norcross, Krishnamoorthi, and Shea-
	Porter.
	Also present: Chairwoman Foxx and Ranking Member Scott.
	Staff Present: Bethany Aronhalt, Press Secretary; Courtney
	Butcher, Director of Member Services and Coalitions; Ed Gilroy,
	Director of Workforce Policy, Jessica Goodman, Legislative
	Assistant; Callie Harman, Legislative Assistant; Nancy Locke,
	Chief Clerk; John Martin, Professional Staff Member; Dominique
	McKay, Deputy Press Secretary; James Mullen, Director of
	Information Technology; Krisann Pearce, General Counsel;
	Brandon Renz, Staff Director; Molly McLaughlin Salmi, Deputy
	Director of Workforce Policy; Alissa Strawcutter, Deputy Clerk;
	Olivia Voslow, Staff Assistant; Joseph Wheeler, Professional
	Staff Member; Tylease Alli, Minority Clerk/Intern and Fellow
	Coordinator; Austin Barbera, Minority Press Assistant; Michael
	DeMale, Minority Labor Detailee; Nicole Fries, Minority Labor
	Policy Associate; Christine Godinez, Minority Staff Assistant;
	Eunice Ikene, Labor Policy Advisor; Kevin McDermott, Minority
	Senior Labor Policy Advisor; Richard Miller, Minority Senior
	Labor Policy Advisor; Udochi Onwubiko, Minority Labor Policy
	Counsel; Veronique Pluviose, Minority Civil Rights Counsel; and
	Elizabeth Watson, Minority Director of Labor Policy.
	Chairman Byrne. The subcommittee will come to order.
	Everybody will take their seats. A quorum is present. The
	subcommittee is in order.
	Good morning. Welcome to the first hearing of the Workforce
	Protections Subcommittee in the 115th Congress.
	Now, it says ``workforce protections.'' Let's make sure we
	know exactly what we're talking about. We are talking about the
	good, hardworking people of the United States of America. And
	so all of us on this Committee, that's our focus. And we
	appreciate everyone who's come to be with us today, and we
	appreciate the fine members of the subcommittee.
	I'd like to begin by introducing my Republican colleagues
	on the subcommittee for this Congress. Not all of them are here
	yet, but let me go ahead and introduce them.
	Representative Joe Wilson from South Carolina's Second
	District. Joe has served on the Committee for 16 years. He's
	also served in the Army Reserves and the South Carolina Army
	National Guard. I'm pleased to also serve with him on the House
	Armed Services Committee.
	Representative Duncan Hunter represents East and Northern
	County San Diego. Duncan, who I also serve with on Armed
	Services, served our country in the United States Marine Corps
	and has since been an advocate for national security here in
	the United States Congress.
	Representative Dave Brat from Virginia's Seventh District.
	Dave served as chairman of the economics department at
	Randolph-Macon College before joining us here in Congress.
	Representative Mike Bishop from Michigan's Eighth District.
	Mike previously served as Michigan's Senate majority leader and
	as a practicing lawyer.
	Representative Glenn Grothman from Wisconsin's Sixth
	District. Glenn previously served in the Wisconsin State Senate
	and has been an advocate for effective government oversight in
	Congress.
	Representative Elise Stefanik represents the North Country
	of New York. Elise and I work together on many priorities,
	given the fact that we share service on Armed Services
	together. She has been a very effective member of that body and
	of this body.
	One of our new members, Representative Francis Rooney, who
	I know is here, from Florida's 19th District. Francis served as
	U.S. Ambassador to the Holy See under President George W. Bush,
	and has worked in the construction industry, creating jobs,
	since 1984, including creating a few jobs in my district, which
	I appreciate.
	Representative Drew Ferguson from Georgia's Third District.
	Drew established a family dental practice before coming to
	Congress and is the former mayor of West Point, Georgia.
	Now, not on anybody's list but perhaps very importantly to
	all of us, we have with us the chair of our full Committee, Dr.
	Virginia Foxx. Dr. Foxx has been in Congress for a number of
	years. She and I served together on the Rules Committee. If you
	want to really get to know somebody, serve on the Rules
	Committee, because we spend a lot of time together. And she's
	been a very effective member of this Committee and has done a
	great job for us as Chairwoman of the Committee.
	I would also like to congratulate the Ranking Member, Mark
	Takano, on his selection to serve as the subcommittee senior
	Democrat. He and I have traveled before on CODELs. We've worked
	together on a number of things. And we had a little meeting the
	other day, but I want to reiterate that I am looking forward to
	working with you.
	There are important issues under this subcommittee's
	jurisdiction, and I know that we won't always agree on how to
	tackle those issues, but as I said after our meeting the other
	day with Mr. Takano, I want to emphasize my commitment to
	working together, finding common ground, and advancing the
	positive solutions that the American people deserve.
	In recent years, working families and small businesses have
	faced significant challenges as they struggle through the
	slowest economic recovery since the Great Depression. Since
	2009, the economy grew at an average annual pace of just 1-1/2
	percent. The net result is limited opportunity for hardworking
	men and women.
	In fact, the labor force participation rate has dropped to
	62.9 percent, nearly the lowest level in decades. Wage growth
	remains largely stagnant, as the average hourly earnings for
	today's worker is roughly the same as in 2009. Meanwhile, 7.6
	million Americans are searching for work, and nearly six
	million individuals are working part-time hours when what they
	really need are full-time jobs. We cannot accept this as the
	new normal.
	The American people have clearly spoken, and they expect
	their leaders in Washington to put the country on a better path
	and finally get our economy moving again, which means more and
	better paying jobs. That's why Republicans are committed to
	advancing a bold agenda that will remove barriers to job
	creation and empower more Americans to reach their full
	potential.
	As part of that effort, this subcommittee will examine the
	policies impacting the American workforce so we can assure that
	those policies support rather than hinder the ability of
	workers to succeed and employers to grow and hire. A key part
	of this effort will be robust oversight of the policies under
	our jurisdiction, and as Chairwoman Foxx has made clear, a
	commitment to holding the administration accountable for how it
	enforces the law.
	There is too much at stake for families and small
	businesses to leave any stone unturned, whether it's examining
	policies that are intended to promote safety and health in the
	workplace, holding Federal contractors accountable, or assuring
	wage determinations under the Davis-Bacon Act are done
	accurately and fairly.
	We have a lot of ground to cover in the coming months and,
	of course, an important part of our agenda, and the reason for
	today's hearing, will be taking a close look at a law that
	affects practically every workplace and every worker in this
	country: The Fair Labor Standards Act. The law was signed over
	80 years ago to address the challenges that existed during the
	Great Depression. It established important protections for
	workers, and it has served as the foundation of our Nation's
	wage and hour policies ever since.
	A lot has changed over those 80 years. For starters, things
	that are part of our daily life didn't even exist back then,
	smartphones, iPads, and the internet, just to name a few.
	Advancements in technology have led to virtual workplaces,
	entire new industries, and flexible, innovative work
	arrangements. Most recently, we've seen the rapid rise in the
	so-called ``sharing'' economy.
	The point is the American workforce has transformed
	dramatically, and the challenges facing workers and employers
	today are different than they were in the 1930s. However, our
	labor policies have failed to adapt. The rules and regulations
	surrounding the Fair Labor Standards Act are simply outdated.
	At the same time, small business owners are getting tied up in
	a complex regulatory maze that forces them to confront costly
	litigation and limits their ability to expand. It's clear our
	Nation's wage and hour rules were designed for another era and
	no longer reflect the realities of the twenty-first century
	workforce.
	That's why it is so disappointing that the previous
	administration missed an opportunity to streamline and
	modernize these important worker protections. Instead, the
	Obama administration spent its time and resources advancing an
	extreme and partisan overtime rule that would stifle workplace
	flexibility and limit opportunities for career advancement.
	I can tell you that small businesses in my district are
	breathing a sigh of relief that this fundamentally flawed rule
	was blocked by a Federal judge. Countless small business owners
	were worried that they would have to cut their employees' hours
	or even lay people off. Colleges, universities, and nonprofits
	were bracing for an especially devastating impact. As an
	example for my home State, the rule would have cost the
	University of Alabama System $17 million in just the first
	year, costs that would have likely been passed on to students
	in the form of higher tuition and fees, a topic that is very
	important to our full Committee.
	Fortunately, we have a new administration that understands
	how misguided regulations often hurt the very individuals
	they're intended to help. We also have a new Congress that's
	working to advance an agenda that will foster economic growth
	and deliver results for the American people. Bringing our
	Nation's wage and hour rules into the twenty-first century will
	be an important part of that conversation.
	I look forward to hearing from our witnesses, who can speak
	more to the challenges resulting from an outdated law and the
	need for positive reforms that will improve the lives of
	hardworking Americans.
	With that, I will now yield to the Ranking Member for his
	opening remarks.
	[The statement of Chairman Byrne follows:]

	Prepared Statement of Hon. Bradley Byrne, Chairman, Subcommittee on
	Workforce Protections

	In recent years, working families and small businesses have faced
	significant challenges as they've struggled through the slowest
	economic recovery since the Great Depression. Since 2009, the economy
	grew at an average annual pace of just 1.5 percent. The net result is
	limited opportunity for hardworking men and women.
	In fact, the labor force participation rate has dropped to 62.9
	percent--nearly the lowest level in decades. Wage growth remains
	largely stagnant, as the average hourly earnings for today's worker is
	roughly the same as in 2009. Meanwhile, 7.6 million Americans are
	searching for work, and nearly six million individuals are working
	part-time hours when what they really need are full-time jobs.
	We cannot accept this as the new normal. The American people have
	clearly spoken, and they expect their leaders in Washington to put the
	country on a better path and finally get the economy moving again,
	which means more and better paying jobs.
	That's why Republicans are committed to advancing a bold agenda
	that will remove barriers to job creation and empower more Americans to
	reach their full potential. As part of that effort, this subcommittee
	will examine the policies impacting America's workforce, and ensure
	those policies support, rather than hinder, the ability of workers to
	succeed and employers to grow and hire.
	A key part of this effort will be robust oversight of the policies
	under our jurisdiction, and as Chairwoman Foxx has made clear, a
	commitment to holding the administration accountable for how it
	enforces the law. There is too much at stake for families and small
	businesses to leave any stone unturned, whether it's examining policies
	that are intended to promote safe and healthy workplaces, holding
	federal contractors accountable, or ensuring wage determinations under
	the Davis-Bacon Act are done accurately and fairly.
	We have a lot of ground to cover in the coming months. And of
	course, an important part of our agenda--and the reason for today's
	hearing--will be taking a close look at a law that affects practically
	every workplace in the country: the Fair Labor Standards Act. The law
	was signed over eighty years ago to address the challenges that existed
	during the Great Depression. It established important protections for
	workers, and has served as the foundation of our nation's wage and hour
	policies ever since.
	A lot has changed in those eighty years. For starters, things that
	are part of our daily life didn't even exist back then--smartphones,
	iPads, and the internet, just to name a few. Advancements in technology
	have led to virtual workplaces, entire new industries, and
	flexible, innovative work arrangements. Most recently, we've seen
	the rapid rise in the so-called ``sharing'' economy.
	The point is the American workforce has transformed dramatically,
	and the challenges facing workers and employers today are different
	than they were in the 1930s. However, our labor policies have failed to
	adapt. The rules and regulations surrounding the Fair Labor Standards
	Act are simply outdated. At the same time, small business owners are
	getting tied up in a complex regulatory maze that forces them to
	confront costly litigation and limits their ability to expand.
	It is clear our nation's wage and hour rules were designed for
	another era and no longer reflect the realities of the 21st century
	workforce. That's why it's so disappointing that the previous
	administration missed an opportunity to streamline and modernize these
	important worker protections. Instead, the Obama administration spent
	its time and resources advancing an extreme and partisan overtime rule
	that would stifle workplace flexibility and limit opportunities for
	career advancement.
	I can tell you that small businesses in my district are breathing a
	sigh of relief that this fundamentally flawed rule was blocked by a
	federal judge. Countless small business owners were worried that they
	would have to cut their employees' hours or even lay people off.
	Colleges, universities, and non-profits were bracing for an especially
	devastating impact. As an example for my home state, the rule would
	have cost the University of Alabama System 17 million dollars in just
	the first year, costs that would have likely been passed on to students
	in the form of higher tuition and fees.
	Fortunately, we have a new administration that understands how
	misguided regulations often hurt the very individuals they're intended
	to help. We also have a new Congress that is working to advance an
	agenda that will foster economic growth and deliver results for the
	American people.
	Bringing our nation's wage and hour rules into the 21st century
	will be an important part of the conversation. I look forward to
	hearing from our witnesses who can speak more to the challenges
	resulting from an outdated law and the need for positive reforms that
	will improve the lives of hardworking Americans.
	______

	Mr. Takano. Thank you, Chairman Byrne, and congratulations
	to you on your new position as chairman of this subcommittee.
	And I too want to express my full intention to work with you on
	areas where we can agree. Where there's common ground, we
	certainly should work together. But on areas where we disagree,
	we'll have to stand our ground. But let it be known that there
	is a spirit of comity between us, and look forward to--you are
	definitely indeed a gentleman of the south and a gentleman at
	that. So thank you.
	I would like to introduce the members of the--the
	Democratic members of the subcommittee, not all of whom are
	here.
	Raul Grijalva represents the Third District of Arizona.
	From 1974 to 1986, Mr. Grijalva served on the Tucson Unified
	School District Board--Tucson Unified School District Governing
	Board, including six years as chairman. In 1988, he was elected
	to the Pima County Board of Supervisors, where he served for
	the next 15 years.
	Alma Adams represents North Carolina's 12th District. She
	got her start serving on the Greensboro City Council as well
	as--excuse me. She started on the Greensboro City School Board
	as well as the Greensboro City Council. Before coming to
	Congress, she served a decade in the North Carolina House of
	Representatives, State House of Representatives.
	Mark DeSaulnier represents California's 11th District and
	is a veteran of California politics. He served on the Concord
	City Council from 1991 to 2006 and as mayor of Concord in 1993.
	He also served in the California State Assembly and State
	Senate.
	Donald Norcross, who is present with us, represents New
	Jersey's First District. His background as a member of the
	International Brotherhood of Electrical Workers, former
	president of the Southern New Jersey Building Trades Council,
	and president of the Southern New Jersey AFL-CIO Central Labor
	Council accords him a wealth of experience and knowledge that
	he can bring to the subcommittee. He served in both the New
	Jersey State Senate and Assembly before becoming a member of
	Congress.
	Raja Krishnamoorthi represents Illinois' Eighth District.
	He has previously held the positions both of Deputy State
	Treasurer and Special Assistant Attorney General for the State
	of Illinois.
	Carol Shea-Porter represents New Hampshire's First District
	and is returning to our Committee for her second tour of duty.
	During college, she worked in a factory. She also worked
	previously both as a social worker and community college
	professor.
	We look forward to working with our majority members on
	this subcommittee to find areas of common ground that allow us
	to move our Nation forward.
	And now, Mr. Chairman, I'll move on with my opening
	statement.
	I want to thank you again, Mr. Chairman. I do look forward
	to working with you to address the challenges facing America's
	workers. It is my hope that the work we do together in this
	subcommittee will ensure that the rules of our economy help
	American workers and businesses prosper together.
	Today's hearing is on wage and hour policy in the twenty-
	first century workplace. In the past three Congresses, the
	majority has called eight hearings on wage and hour policies,
	but in those hearings we have not considered a single policy to
	raise the pay for millions of hardworking Americans who are
	struggling to make ends meet.
	If past is prologue, I expect we are going to hear from our
	friends in the majority today about the Fair Labor Standards
	Act and how it is stifling America's job creators. But before
	we launch into that discussion, I'd like to take a moment to
	step back and look at the facts.
	Over the past four decades, worker productivity has grown
	by more than 70 percent. You might think a rising tide would
	lift all boats, but it hasn't happened. Since 1979, wages for
	the top one percent have grown by 138 percent, while wages for
	the bottom 90 percent have grown by only 15 percent. Now,
	workers are more productive than ever, but it's been a long
	time since most Americans have gotten a raise. So tell me, who
	is being stifled?
	I wholeheartedly agree with the title of this hearing. We
	do need to update wage and hour policy for the twenty-first
	century. That should mean strengthening our wage and hour
	policies to ensure that hardworking Americans get a fair day's
	pay for a fair day's work.
	Too many Americans today can't afford to buy a home, send
	their children to college, or save for retirement. It should
	not be this way. American workers' productivity has led to
	tremendous economic growth; but, unfortunately, the rules are
	written so that the economy delivers only for those at the very
	top. Here in Congress, we have the power and the responsibility
	to fix that. However, despite our requests, last Congress, the
	majority did not hold a single hearing on what we can do to
	ensure that Americans in the middle and the bottom rungs of the
	economic ladder get a fair shake.
	They refused to raise the minimum wage and fought against
	the update to the overtime threshold, which would have put more
	pay in the pockets of millions of hardworking Americans. And
	the majority refused to bring the twenty-first century
	workplace in line with the needs of the twenty-first century
	workforce by adopting sensible solutions to prevent
	predictable--not prevent, to provide--to provide predictable
	schedules, paid sick days, and paid family leave, and finally
	guarantee equal pay for equal work, which are long overdue.
	These are the updates to our wage and hour policy that
	would make a real difference to hardworking Americans. There is
	simply no need to make the false choice between employer
	innovation and rules that make our economy fair for everyone.
	We can have both.
	There are plenty of examples of businesses that do very
	well while playing by the rules. In fact, treating workers
	fairly has been shown again and again to promote employee
	retention and productivity. I hope our witnesses today will
	help us explore the future of work that is both innovative and
	fairly rewards all hardworking Americans.
	Thank you, Mr. Chairman. I yield back the remainder of my
	time.
	[The statement of Mr. Takano follows:]

	Prepared Statement of Hon. Mark Takano, Ranking Member, Subcommittee on
	Workforce Protections

	Thank you, Chairman Byrne. I look forward to working with you to
	address the challenges facing American workers. It is my hope that the
	work we do together in this subcommittee will ensure that the rules of
	our economy help American workers and businesses prosper together.
	Today's hearing is on wage and hour policy in the 21st century
	workplace. In the past three Congresses, the Majority has called eight
	hearing on wage and hour policies--but in those hearings we have not
	considered a single policy to raise the pay for millions of hardworking
	Americans who are struggling to make ends meet.
	If past is prologue, I expect we are going to hear from our friends
	in the Majority today that the Fair Labor Standards Act is stifling
	America's job creators.
	But before we launch into that discussion, I'd like to take a
	moment to step back and look at the facts. Over the past four decades
	worker productivity has grown by more than 70 percent.
	You might think a rising tide would lift all boats, but that hasn't
	happened. Since 1979, wages for the top 1 percent have grown by 138
	percent, while wages for the bottom 90 percent have grown by only 15
	percent.
	Workers are more productive than ever, but it's been a long time
	since most Americans have gotten a raise.
	So tell me, who is being stifled?
	I wholeheartedly agree with the title of this hearing - we need to
	update wage and hour policy for the 21st century. That should mean
	strengthening our wage and hour policies to ensure that hardworking
	Americans get a fair day's pay for a fair day's work.
	Too many Americans today can't afford to buy a home, send their
	children to college, or save for retirement. It should not be this way.
	American workers' productivity has led to tremendous economic growth.
	But unfortunately, the rules are written so that the economy delivers
	only for those at the very top. Here in Congress, we have the power -
	and a responsibility - to fix that.
	However, despite our requests, last Congress, the Majority did not
	hold a single hearing on what we can do to ensure that Americans in the
	middle and the bottom rungs of the economic ladder get a fair shake.
	They refused to raise the minimum wage and fought against the
	update to the overtime threshold - which would have put more pay into
	the pockets of millions of hardworking Americans. And the Majority
	refused to bring the 21st century workplace in line with the needs of
	the 21st century workforce by adopting sensible solutions to provide
	predictable schedules, paid sick days and paid family leave, and
	finally guarantee equal pay for equal work, which are long overdue.
	These are the updates to our wage and hour policy that would make a
	real difference to hardworking Americans.
	There is simply no need to make the false choice between employer
	innovation and rules that make our economy fair for everyone. We can
	have both. There are plenty of examples of businesses that do very well
	while playing by the rules. In fact, treating workers fairly has been
	shown again and again to promote employee retention and productivity.
	I hope our witnesses today will help us explore a future of work
	that is both innovative and fairly rewards all hardworking Americans.
	Thank you, Mr. Chairman. I yield back the remainder of my time.
	______

	Chairman Byrne. Thank you, Mr. Takano.
	And we welcome all of the Democratic members to the
	subcommittee. Many of them I've worked with in the past.
	Mr. Krishnamoorthi, I know you're new to Congress, but
	you've already made quite an impact and we appreciate having
	you here.
	Mr. Krishnamoorthi. Thank you.
	Chairman Byrne. Pursuant to committee rule 7(c), all
	subcommittee members will be permitted to submit written
	statements to be included in the permanent hearing record.
	And without objection, the hearing record will remain open
	for 14 days to allow statements, questions for the record, and
	other extraneous material referenced during the hearing to be
	submitted in the official hearing record.
	And now, it's my pleasure to introduce today's witnesses.
	Ms. Rhea Lana Riner is president of Rhea Lana's Franchise
	Systems, Inc. She will testify on behalf of the International
	Franchise Association. Mr. Andrew Stettner is a senior fellow
	with The Century Foundation. Mr. Andy Brantley is president and
	chief executive officer of the College and University
	Professional Association for Human Resources. Ms. Christine
	Walters is an independent human resources and employment law
	consultant and sole proprietor of the FiveL Company. She will
	testify on behalf of the Society for Human Resource Management
	that years ago I used to be a member of. So welcome.
	I will now ask our witnesses to raise your right hand.
	Do you solemnly swear or affirm that the testimony you are
	about to give will be the truth, the whole truth, and nothing
	but the truth?
	Let the record reflect the witnesses answered in the
	affirmative.
	Okay. Before I recognize you, I need to go through the
	lighting system so you understand how it works. And I apologize
	for having to do this, but it helps things go if we do this.
	You each will have five minutes to present your testimony.
	When you begin, the light in front of you will turn green. When
	one minute is left, the light will turn yellow. When your time
	has expired, the light will turn red. At that point, I will ask
	you to wrap up your remarks as best you are able. After you
	have testified, members will each have five minutes to ask
	questions.
	Now, I don't intend to be heavy with the gavel, by the way.
	If you're getting close, I'm going to try to let you finish up,
	and try to do the best you can, because we really want to hear
	your testimony. And I certainly want to let the members have
	their full five minutes. And if we go over a little bit, that's
	okay, but let's try to stay within that.
	Okay. We're going to start with Ms. Riner. You're
	recognized for five minutes. Welcome.

	TESTIMONY OF RHEA LANA RINER, PRESIDENT, RHEA LANA'S FRANCHISE
	SYSTEMS, INC., CONWAY, AR, TESTIFYING ON BEHALF OF THE
	INTERNATIONAL FRANCHISE ASSOCIATION

	Ms. Riner. Good morning, Chairman Byrne--and happy
	birthday, by the way--Ranking Member Takano. Congratulations to
	both of you on your first subcommittee hearings.
	And distinguished members of the subcommittee, my name is
	Rhea Lana Riner and I'm the CEO and founder of Rhea Lana, Inc.,
	and Rhea Lana's Franchise Systems. Thank you for taking an
	interest in my story and my struggle to protect the rights of
	small business owners and moms like myself across the Nation.
	It is my privilege to testify on behalf of the International
	Franchise Association today.
	In 1997, I began my small business as a young mom after my
	husband changed careers. Like many people, I had a passion for
	fashion, but on a limited budget. We simply could not afford to
	dress our children as I hoped. I also knew many other moms who
	experienced the same challenge, so I came up with an idea that
	would help all of us.
	I invited a few friends to a small event in my living room
	to buy and sell our children's used clothing. From that humble
	beginning of moms working together, Rhea Lana's was born and
	grew. From the positive feedback, we quickly realized that
	there was an eager market among families of all kinds for
	gently used children's clothing. My heart went out to families
	with budget struggles, trying to provide high-quality items for
	their kids.
	The moms, grandmoms, and husbands who join together to host
	Rhea Lana's consignment events create a marketplace in which
	their families can participate, with Rhea Lana's acting as the
	facilitator. In so doing, we play a small role in helping these
	families succeed. Today, we have 80 franchises operating in 23
	States, and we look forward to continued growth.
	Unfortunately, after many years of running our consignment
	events, our business model is in peril because we have been
	drawn into an extended legal battle that is now in its sixth
	year. In the spring of 2011, Arkansas Department of Labor
	officials began investigating Rhea Lana's to determine if we
	were violating any laws by inviting moms to volunteer at our
	events. We cooperated fully and spent a ton of money in legal
	fees, but we received a favorable response from the State of
	Arkansas and thought the story was over.
	But then in January of 2013, we were contacted by the U.S.
	Department of Labor informing us that it was opening its own
	investigation into whether our volunteers were, in fact,
	employees. Our initial meeting with the DOL was held in Little
	Rock on February 28, 2013. Once again, we fully cooperated and
	we provided the DOL with contact information for ten moms who
	had participated as consigner volunteers. We assumed that once
	DOL spoke with these women and recognized that they were
	participating on a very limited basis for their own benefit,
	DOL would naturally determine that they should not be
	considered employees.
	Unfortunately, the question was not so easily settled.
	Instead, DOL officials requested all of our payroll records
	going back two years, submitted formal questions that required
	more legal assistance to respond, and they showed up at one of
	our events to conduct interviews. Every consigner volunteer
	interviewed assured them they voluntarily chose to participate
	in order to help their families and they expected no
	compensation for doing so.
	In spite of this, DOL determined that the moms should be
	considered employees. Incredibly, DOL even sent letters to our
	consigner volunteers suggesting they had the right to sue Rhea
	Lana's for backpay. None of our volunteers took such action
	against us, despite DOL's encouragement to sue us. But DOL
	officials would not be deterred. Without a formal hearing or
	other procedural safeguards, the DOL arbitrarily determined
	that Rhea Lana's had violated the Fair Labor Standards Act.
	In August 2013, the DOL sent us a determination letter
	citing legal provisions that our attorney estimated penalties
	could reach $3.6 million. Receiving this letter was terrifying.
	It was then I decided I had to fight back and we challenged the
	DOL in court. The DOL initially won in district court, arguing
	that we could not challenge the agency's determination because
	it was not a final agency action. However, in a ruling last
	June, the D.C. Circuit Court reversed and held that DOL's
	action could be challenged in court. The D.C. Circuit's ruling
	was the first positive step in 4-1/2 years of fighting to
	protect the future of my small business.
	So we're continuing to fight for a mother's right to use
	her personal time as she sees fit to help her family. And if we
	lose, Rhea Lana's will no longer be able to provide its
	valuable service to families in need.
	Meanwhile, the Department of Labor has also aggressively
	been trying to apply broader joint employment liability to all
	small businesses. Some have minimized the joint employment
	concerns of franchise business owners, but expanded joint
	employment liability means more operating costs, more legal
	costs, decreased value of business, less compliance assistance,
	and less growth for locally owned franchise businesses.
	Mr. Chairman, no one can assure any franchise business
	owner that their business may not unintentionally violate a
	broad liability standard that is based on indirect and even
	unexercised control. We need the new DOL to rescind the January
	2016 interpretation and return to the preexisting joint
	employment test. But we also need Congress to clarify a
	definition of employer that thinks better of the motivations of
	franchise business owners.
	Mr. Chairman, I never intended to be a businessperson, but
	I have been sincerely thankful for the opportunity to build and
	grow a business that helps so many families have what they
	otherwise could not afford, but we need Congress' help to
	achieve fairness in our ever-evolving economy.
	Thank you for your leadership on behalf of all small
	businesses, and I would be happy to answer any questions.
	[The statement of Ms. Riner follows:]
	[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

	Chairman Byrne. Thank you, Ms. Riner.
	The chair now recognizes Mr. Stettner for five minutes.

	TESTIMONY OF ANDREW STETTNER, SENIOR FELLOW, THE CENTURY
	FOUNDATION, WASHINGTON, D.C.

	Mr. Stettner. Good morning, Chairman Byrne, Ranking Member
	Takano, and other members of the committee.
	I'm a senior fellow at The Century Foundation, an
	independent nonpartisan think tank with offices here in
	Washington and in New York City. Thank you for the opportunity
	to speak today to the Committee about the changing nature of
	the economy and the need to modernize our wage and hour laws.
	For decades, Americans have been afflicted by stagnating
	wages and a rise in low-wage work. Since 1976, as Mr. Takano
	said, workers have increased their productivity by 73.4
	percent, but hourly paychecks have only gone up by 11 percent.
	Next slide, please.
	The manufacturing sector has shrunk dramatically. In its
	place, working Americans have turned to what I call fast-
	growing RASHH sectors of the economy. These RASHH jobs--retail,
	administrative, social assistance, hospitality, and health
	care--pay less than $15 per hour and offer less than 30 hours
	per week. The Fair Labor Standards Act could be a powerful
	lever against this crisis of wage stagnation.
	In the 1960s, the minimum wage was equivalent to half of
	the average weekly wage. Today, it is just a third. An increase
	in the minimum wage to $12 an hour, phased in by 2020, would
	provide raises of $2,300 per worker to 35 million working
	Americans. This increase too can eliminate the discriminatory
	subminimum wage for tip workers.
	Meanwhile, the number of workers guaranteed overtime rights
	with a salary threshold plummeted from 12.6 million protected
	in 1979 to 3.5 million by 2014. The rule promulgated by the
	Labor Department to restore the salary threshold would deliver
	raises of $1.2 billion and cement overtime protections for 13.1
	million workers. The rules would have had the added benefit of
	providing a bright-line test that distinguishes those salary
	workers eligible for overtime.
	Now, the Department of Labor only has 1,000 investigators
	to enforce the law at 7.3 million establishments. Targeted
	enforcement focuses on industries where research has surfaced
	high levels of violations where the changing economy makes
	certain groups more vulnerable. This is the only way for the
	Department of Labor to use its resources to recover significant
	amounts of unpaid wages while moving industry practices. Using
	these targeted methods, the Department of Labor increased the
	amount recovered per investigation from $785 per worker in 2009
	to $1,000 in 2016. But more must be done.
	The twentieth century economy was dominated by large firms
	who used traditional employment relationships to control every
	aspect of production. Now, the twenty-first century management
	model increasingly entails the main firm retaining only the
	most essential aspect of its identity and outsourcing all other
	functions. These fissured arrangements have allowed firms to
	absolve themselves of their employment law responsibilities.
	The rise in subcontracting, use of third-party administrators,
	franchising, and staffing firms leaves workers' heads spinning
	when they try to find out who is ultimately responsible for
	their pay.
	The Department of Labor's Administrator's Interpretation on
	joint employment went a long way to clarifying what courts have
	said repeatedly. Those joint employers who have economic
	control over employees must ensure that wage and hour laws are
	followed. This is already causing welcome change. For example,
	the Department of Labor and Subway agreed to a voluntary
	program of compliance education and software-based flagging of
	possible violations at their locations.
	Now, as many as 30 percent of all workers are misclassified
	as independent contractors, forfeiting their wage and hour
	rights. The reality is that employers have moved millions of
	Americans into 1099 status who should not, by law, be paid that
	way. Too often, workers are misclassified as independent
	contractors based on one element, such as owning their own
	tools, even though they are not in business for themselves. The
	Department of Labor's recent AI on worker misclassification was
	put in place to give employers numerous examples of such cases
	to avoid.
	Now, there is much talk about the need for workplace
	flexibility. I assert that the Fair Labor Standards Act is a
	very flexible piece of law already that can be adapted to
	innovations in business, including telecommuting and, yes, the
	gig economy, without sacrificing workers' rights.
	Now, in this context of the need for strengthened wage and
	hour enforcement, the nomination of Mr. Andrew Puzder for
	Secretary of Labor raised deep concerns about the future
	ability of the Department of Labor to implement much-needed
	wage and hour reform. Every past Republican nominee for
	Secretary of Labor pledged to Congress that they would uphold
	the unique mission of the Department of Labor to enforce the
	Fair Labor Standards Act, as well as 180 other laws entrusted
	to the Department. Whoever Mr. Trump picks to replace Mr.
	Puzder should share that same commitment to fundamental
	employment laws and the rights of all workers, regardless of
	race, gender, or immigration status.
	In conclusion, in order for tens of millions of additional
	workers across the country to share in our Nation's economic
	prosperity, Federal wage and hour laws need to be strengthened
	and vigorously enforced.
	Thank you for your attention.
	[The statement of Mr. Stettner follows:]
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	Chairman Byrne. Thank you, Mr. Stettner.
	Mr. Brantley, you are recognized for five minutes.

	TESTIMONY OF ANDY BRANTLEY, PRESIDENT AND CEO, COLLEGE AND
	UNIVERSITY PROFESSIONAL ASSOCIATION FOR HUMAN RESOURCES,
	KNOXVILLE, TN

	Mr. Brantley. Good morning, Chairman Byrne, Ranking Member
	Takano, and distinguished members of the subcommittee. Thank
	you for holding the hearing today and for the opportunity to
	testify.
	CUPA-HR serves as the voice of higher education human
	resources, representing more than 22,000 human resources and
	other professionals on campus and almost 2,000 colleges and
	universities across the country. Higher ed employs over 3.9
	million employees with colleges and universities in all 50
	States.
	My testimony today will focus on higher ed's concerns with
	the Department of Labor's recent revisions to the FLSA, the
	overtime pay requirements, and our suggestions for moving
	forward. To say that these changes have been top of mind for
	higher education and higher education institutions would be an
	understatement. Before I explain why the overtime changes have
	garnered so much attention from higher ed, let me say that
	CUPA-HR and other higher education associations that advocated
	on this issue believe that an increase in the minimum salary
	threshold is due and that the DOL must update salary levels and
	regulations from time to time to ensure compliance and that the
	exemptions are not abused.
	The current salary threshold of $23,660 is overdue for a
	much-needed increase, but more than doubling the threshold to
	$47,476, as was proposed by President Obama's Department of
	Labor, would have had a tremendous negative impact for
	employers and employees across the country.
	As we outlined for the DOL, professionals in thousands of
	higher education positions that clearly met the duties test for
	exemption are paid less than $47,476. Positions that require
	bachelor's degrees and master's degrees, such as residence hall
	managers, academic advisors, mental health counselors,
	admissions counselors, financial aid counselors, student life
	professionals, alumni development professionals, and many
	athletics positions typically pay early and mid-career and
	sometimes even later career professionals annual salaries of
	less than $47,000 per year, particularly at smaller
	institutions in more rural parts of the country.
	Increasing the threshold by over 100 percent will increase
	annual expenses and lead to the reduction in services and
	positions. A quick sample from just 35 CUPA-HR member
	institutions estimated a cost of nearly $115 million to
	implement the rule in the first year alone. These institutions
	also shared with us that such an increase in expenses would
	trigger tuition hikes and reductions in services.
	When DOL issued the final rule, employers were just given
	six months to comply. Participation in our webinars that we
	held on this issue regarding the new regulations far surpassed
	any participation in CUPA-HR history. Also remarkable were the
	number of comments. For example, in just one webinar, over 400
	content questions on things that you would think most human
	resource professionals would know, but to add to the complexity
	of things like tracking time, salary calculations, comp time,
	part-time employees, and more.
	Although proponents of the rule argue that these changes
	could be made with the flip of a switch, the increased interest
	in our webinars, the extraordinary use of our resources that we
	created and the feedback that we received from across the
	country is evidence to the contrary.
	So what is a reasonable salary threshold? In a July 2015
	survey we conducted, the majority response shows a salary
	survey level of either $29,172, which, by the way, is the
	current level, adjusted for inflation, or $30,004, the salary
	level if the DOL applied the same formula used to update the
	salary threshold in 2004. Eighty-eight percent of the
	respondents indicated that a threshold over $40,352, which is
	the median of all wage and salary workers combined, would be
	too high. These salary levels were not picked randomly, but
	according to the notice of proposed rulemaking, the DOL
	actually considered these as part of their proposed update.
	Finally, while we are pleased with the court's injunction,
	the temporary injunction, it was issued just a few days before
	the December 1 implementation date. In an early December survey
	of our members, 28 percent had already implemented changes,
	while 71 percent either implemented some changes or delayed
	others or delayed all changes.
	As an example, one large public institution spent over a
	million dollars changing services, holding positions vacant,
	just to adjust their payroll cycle to move formerly exempt
	employees to nonexempt status. This institution is now facing
	significant challenges on working hours and services performed
	for those employees impacted.
	We need your help to create and implement a more reasonable
	salary threshold as quickly as possible.
	Mr. Chairman, thank you again for the opportunity to
	testify and offer CUPA-HR support for the Committee's focus on
	modernizing Federal wage and hour policies. I'll be happy to
	answer any questions from you or other members of the
	Committee. Thank you.
	[The statement of Mr. Brantley follows:]
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	Chairman Byrne. Thank you, Mr. Brantley.
	Ms. Walters, you are recognized for five minutes.

	TESTIMONY OF CHRISTINE WALTERS, SOLE PROPRIETOR, FIVEL COMPANY,
	WESTMINSTER, MD, TESTIFYING ON BEHALF OF THE SOCIETY FOR HUMAN
	RESOURCE MANAGEMENT

	Ms. Walters. Thank you.
	Good morning, Mr. Chairman, Ranking Member Takano, and
	Committee members. I am Christine Walters, sole proprietor of
	FiveL Company in Westminster, Maryland, where I serve as an
	independent human resources and employment law consultant. I'm
	appearing before you today on behalf of the Society for Human
	Resource Management, or SHRM, where I've been a member for 18
	years.
	I thank you for holding this hearing to examine Federal
	wage and hour policies under the FLSA. While this statute is a
	cornerstone of employment law, it is out of step with our
	modern technology-based economy, creating unnecessary
	regulatory burdens and hindering the ability of employers to be
	flexible and address contemporary employee needs. And let me
	explain just some of those challenges.
	Employers of all sizes work to classify employees correctly
	and remain in compliance with the FLSA. However, classification
	decisions for positions can be particularly challenging,
	because the statute includes both objective and subjective
	criteria. Therefore, an employer acting in good faith could
	mistakenly misclassify employees as exempt who, in reality,
	could be nonexempt or vice versa. Moreover, administrator's
	interpretations, or AIs, on both joint employment and employee
	versus independent contractor classification under the FLSA
	have contributed to this complexity.
	The AIs rely on a broad economic realities test, which is
	open to various interpretations and gives employers no
	objective criteria on which to rely. In order to provide more
	clarity, SHRM believes these AIs should be withdrawn and the
	Department of Labor should reinstate Department opinion letters
	as well as provide examples in regulatory text. Opinion letters
	and examples enable employers to understand the Department's
	view on how regulations might apply to their own actual and
	practical workplace situations.
	The stakes in improperly classifying employees are high. If
	an employer is determined to have misclassified employees, then
	the organization is required to award up to three years'
	backpay for overtime to those employees, plus attorneys' fees.
	That's why employers do work hard to ensure that employee
	classifications are in compliance with the FLSA. Many of the
	small businesses and nonprofits with whom I work have limited
	budgets and very tight margins, and so it's imperative that
	these organizations avoid lawsuits.
	Simply put, the FLSA has not kept pace with the realities
	of the twenty-first century workplace or its workforce. Today's
	modern technology allows many employers to perform job duties
	when and where they choose. And frankly, Mr. Chairman and
	Committee members, a growing number of employees have come to
	expect and enjoy that flexibility. For example, it's not
	uncommon for nonexempt employees to want to access online work
	platforms remotely after work hours. But because nonexempt
	employees must be paid for all hours worked, those hours must
	be closely tracked in order to remain in compliance with the
	FLSA. As a result, employers may implement policies to restrict
	the employees' ability to work from home because of the
	challenges associated with tracking.
	Additionally, the FLSA makes it very difficult for
	employers to offer nonexempt employees the flexibility of a
	biweekly workweek. Because employers are required to pay
	overtime for hours worked over 40 in a workweek, an employer's
	ability to offer employees the flexibility of, say, working 45
	hours in the first week of a pay period and then 35 hours in
	the second week, for a total of 80 hours in that pay period, is
	not an option without incurring overtime liability.
	Private sector employers are also prohibited under current
	law from offering nonexempt employees the option of paid time
	off or comp time in lieu of overtime pay for hours worked over
	40 in a workweek, even though public sector employees have
	enjoyed that flexibility for more than the last 30 years.
	Finally, let me turn to FLSA overtime regulations that were
	finalized in May of last year. SHRM continues to have serious
	concerns with the final overtime rule that, as we heard, more
	than doubled the salary threshold to over $47,000 and included
	automatic increases every three years. Throughout the
	rulemaking process, SHRM noted that a salary update was
	warranted, but a more than 100 percent increase was simply too
	much too fast and would curtail the workplace flexibility to
	which many employees have grown accustomed.
	Thankfully, the November 22 preliminary injunction brought
	relief to many employers who were inundated with questions and
	complaints from exempt employees about how the conversion would
	impact them. Going forward, SHRM believes the Trump
	administration should reexamine the overtime rule and utilize
	previous methodologies in a new rulemaking to determine a more
	reasonable salary threshold.
	In conclusion, Mr. Chairman and Committee members, because
	the FLSA was crafted for a different time, it must be
	reevaluated to ensure it still encourages employers to hire,
	grow, and better meet the needs of employees in this twenty-
	first century workplace.
	So I thank you again for allowing me to participate in this
	important discussion, and I also welcome any questions. Thank
	you.
	[The statement of Ms. Walters follows:]
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	Chairman Byrne. Thank you, Ms. Walters. And I thank all of
	you. Those were great statements.
	We're now going to go to the question part of this
	proceeding, and we will start with a question from our
	distinguished Chairwoman, Ms. Foxx.
	Ms. Foxx. Thank you, Mr. Chairman.
	And I want to thank all of our witnesses here today. You've
	made some wonderful comments and shared very useful information
	with us, and I want you to know I appreciate your being here.
	Mr. Brantley, I'd like to know a little bit more about the
	kinds of employees at institutions of higher education who
	would be affected by implementation of the overtime rule.
	Actually, I think I know something about it, having worked in
	an institution of higher--several institutions of higher
	education, but some others may not.
	You mentioned resident directors in your written testimony
	as particularly unsuited to classification as hourly workers.
	Would you elaborate a little bit on that, and how would the
	services they provide to the students be negatively affected?
	Mr. Brantley. Thank you, Chairwoman Foxx. So most of us in
	this room have spent some time on a college campus, and as all
	of us know, the students don't exactly work on an 8 to 5
	schedule. So as we think about the services that are provided
	to these students 24/7/365, no position is more impacted than a
	position like a resident director, who typically has a master's
	degree, may supervise a number of graduate assistants, a number
	of resident assistants, maintenance staff, office staff, et
	cetera. This person typically has an apartment or some other
	residence that's with the students, the idea being that this
	person has that integral connection to the students outside of
	the classroom.
	If we implement the new regulations with a salary threshold
	of $47,476, the majority of our resident directors are paid a
	salary below that. One of the challenges with the current
	regulation is it doesn't include room and board, so all of that
	cannot be included as part of the compensation for our resident
	directors.
	Also, as we encourage these individuals to have to track
	hours, is a casual conversation in the hallway with a student
	working hours? Is having a meal with students in the residence
	hall or in the dining room, is that working hours? The
	complexity is there. Asking these individuals to track their
	hours is all but impossible.
	Ms. Foxx. Thank you very much.
	Ms. Riner, as you've testified, entrepreneurs like yourself
	are being impacted by costly regulatory requirements. Time and
	resources have gone into ensuring compliance with regulatory
	requirements instead of growing businesses and creating jobs.
	Would you reflect on that a little bit more for us and for the
	folks listening?
	Ms. Riner. Yes, Chairwoman Foxx. My own personal journey
	has been very discouraging, quite honestly. I have been trying
	to protect my business from the Department of Labor's
	regulations that they have applied to me. We believe it's
	been--they used the wrong standards in the Fair Labor Standards
	Act. And they actually used the independent contractor test,
	which, actually, they should have used the precedent set forth
	in the Supreme Court, which says that you look at the economic
	reality of the situation and we use our common sense to look at
	the whole work activity.
	So it has been very discouraging for me personally. It has
	hurt our ability to create business opportunities for our
	franchise owners. It's been a big distraction. It's cost us a
	lot of time and money. I'm a small business owner. I have three
	full-time employees in my office, also some part time. And so
	it's been quite a burden to bear to continue to operate our
	business and continue to grow.
	Ms. Foxx. We understand that your attorney has estimated
	the penalties for repeated or willful violations could reach
	$3.6 million for your small business. Is that correct?
	Ms. Riner. Yes, ma'am, that is correct. And it was a
	terrifying number to receive, quite actually. It would put us
	out of business. And so it has been worth fighting for, though,
	not only for my business, but for moms who I represent. I
	represent thousands of families, not only in Arkansas but
	across the country, who love our consignment events. It saves
	families a lot of money. And also, just small business owners.
	Honestly, I hear a lot of stories of small business owners that
	are experiencing this overregulation to the point of being put
	out of business, because a lot of them can't fight back.
	Ms. Foxx. Well, bless you for exercising your civic
	responsibility in doing what you have done. And let's hope we
	can see some changes so that small business people like you
	will not be harassed by bureaucrats with too much time on their
	hands. Thank you very much.
	I yield back.
	Chairman Byrne. Thank you, Chairwoman Foxx. She yields
	back.
	Mr. Takano, you're recognized for five minutes.
	Mr. Takano. Thank you, Mr. Chairman.
	It's curious to me that several witnesses and some of my
	Republican colleagues have said that the Fair Labor Standards
	Act is an outdated law from the 1930s that needs to be updated
	to reflect the modern workforce.
	To me, it's no surprise, Mr. Stettner, that--well, I
	strongly supported the administration's updated overtime rule,
	but I want to make sure the Committee has an understanding of
	why an update to the salary threshold was long overdue.
	What was the original purpose of the maximum hour provision
	in the Fair Labor Standards Act? Can you just review that for
	us?
	Mr. Stettner. First, to create more jobs. When you limit to
	40 hours, rather than having so much overtime, you can create
	more jobs. Second, to allow for the balance between work and
	family. And third, to protect the workers' health.
	Mr. Takano. So basically, when someone has to be paid
	overtime at time and a half or whatever, the employer has a
	choice: Do I pay this person overtime or do I hire another
	person to do that job?
	Mr. Stettner. That's correct.
	Mr. Takano. That was the intent behind the law, was that,
	you know, you legally mandate that they get paid more for
	overtime, and then the employer has to decide whether that
	employee is--you know, it's worth it to that employer to keep
	that employee on the job longer or hire someone else.
	Obviously, it will create more jobs if we have a standard.
	Mr. Stettner. That's correct. And I think it was during the
	Great Depression when there was a need for more employment. So
	let's put this into place. And I think that was the same hoped
	effect of the overtime--the new overtime rule was to, you know,
	inspire more employment.
	Mr. Takano. So, you know, it's fair to say that, you know--
	so it's my understanding that the threshold used to be updated
	quite frequently, once every two to nine years between 1938 and
	1975. But it's only been updated twice since 1975. Do you think
	that Congress envisioned only two updates to that threshold in
	40 years?
	Mr. Stettner. No. The idea was for it to keep pace with
	only those employees to be exempted that are truly bona fide
	executive, administrative, and professional employees. To date,
	having a salary threshold of just $23,000, by any means and
	common sense, does not include individuals that are bona fide
	administratives and executives.
	Mr. Takano. So administrators and executives, we have kind
	of tests to figure out and determine who those folks are, truly
	people who are managers, not people who are called managers who
	are actually doing, you know, work, so that we can tell the
	difference between somebody who's a manager and someone who's a
	line worker.
	What effect, in your opinion, has that long delay had on
	the threshold's ability to accomplish the purpose of the FLSA?
	Mr. Stettner. I think the effect has been that many
	workers, particularly our young workers, aren't even familiar
	with the concept that they have a right to be paid time and a
	half. It's been so eroded that the overtime protections really
	have lost their value in the economy.
	Mr. Takano. You mean to tell me, Mr. Stettner, that there's
	a whole generation of Americans out there, millennials, who
	don't know that they have a right to overtime pay?
	Mr. Stettner. Often they're told in their very first job,
	you're on a salary, you're being paid $28,000 per year, and
	you're not eligible for overtime. So it's just not a reality.
	The salary designation is used to avoid people's right to
	overtime, and it's created a generation of overworked
	Americans.
	Mr. Takano. My God, if I were a millennial or part of this
	whole group of people that wasn't aware of this, because the
	law was not updated and I never felt the benefit of this
	updated threshold, I would begin to think that the economy was
	rigged against me. That the rules not being enforced meant that
	I as a little worker, that the rules somehow not being
	enforced, I mean, now that I'm awakened and know that, hey,
	this law has not--the threshold hasn't been updated, that the
	Obama administration was really trying to unrig this rigged
	economy that's rigged against the wage earner or, actually, in
	this case a salaried worker who, you know, doesn't meet that
	threshold anymore.
	So, to me, enforcing the FLSA and regularly updating the
	law would have meant that many, many people, workers would have
	felt the benefit of being protected by these overtime
	protections.
	The last update to the salary came in 2004. Do you believe,
	Mr. Stettner, that the 2004 update brought the salary threshold
	back to its intended level?
	Mr. Stettner. It was far below what had been in 1979, the
	last time it had been significantly updated. So that the update
	that was promulgated and is now enjoined really is getting
	towards the previous purchasing power of that update. It's by
	no means the maximum. The level has actually been much higher
	in the past. And really importantly, one of the policies that
	we really can do to help those middle income earners who are
	having the hardest struggle.
	Mr. Takano. Well, thank you, Mr. Stettner. My time has run
	out, and I appreciate your responses. Thank you.
	Chairman Byrne. Thank you, Mr. Takano.
	I now recognize myself for five minutes.
	I'm going to give you a test like you had in college. It's
	going to be a one-word response and it's one of two words,
	agree or disagree. Okay. Listen to the statement and tell me if
	you agree or disagree with this.
	Many of us have argued over the years that the rules and
	regulations implementing Federal wage and hour protections are
	outdated and overly complex and, as a result, undermine the
	strength and competitiveness of the American workforce.
	Ms. Riner, agree or disagree?
	Ms. Riner. Agree.
	Chairman Byrne. Mr. Stettner, agree or disagree?
	Mr. Stettner. Disagree.
	Chairman Byrne. Okay. Mr. Brantley, agree or disagree?
	Mr. Brantley. Agree.
	Chairman Byrne. Ms. Walters?
	Ms. Walters. Agree.
	Chairman Byrne. Okay. See, you all did well. You did well
	in college.
	Ms. Riner, I understand legislation was introduced last
	week in the House and Senate to amend the Fair Labor Standards
	Act to clarify that volunteers of certain children's
	consignment events are not employees under the law. Do you
	believe legislation is necessary to provide your business with
	the certainty it needs to operate without the threat of
	litigation going forward?
	Ms. Riner. I do, Chairman. We're very thankful to Senator
	Boozman, Senator Cotton, and Congressman Hill for reintroducing
	the Children's Consignment Event Recognition Act for us. And
	we're very grateful for it.
	We do have a case going on in court right now that we're
	battling, but we feel that for long term, we really do need the
	protection for the industry. It's been growing. This industry
	has been around, actually, for 30 years, and it's serving
	thousands of families. And we feel that in order to protect
	what we do and what families love, that we do need this
	legislation in place.
	Chairman Byrne. When you had your meetings with the people
	with the Wage and Hour Division, did you tell them, this is
	going to put me out of business?
	Ms. Riner. Well, no. Well, I did say that I felt like it
	was unfair.
	Chairman Byrne. What did they say when you said it's
	unfair?
	Ms. Riner. That I needed a lobbying group.
	Chairman Byrne. A lobbying group?
	Ms. Riner. They asked me if I had one, actually.
	Chairman Byrne. So let me get this straight. A Federal
	agency recommended that you get a lobbyist?
	Ms. Riner. Well, they just asked if I had support. And at
	the time, it was myself. And so I realized that if I wanted to
	protect my business and protect the industry, that I really had
	no choice but to fight.
	Chairman Byrne. Ms. Walters, can you talk more about the
	burdens that small businesses face in trying to ensure that
	they have properly classified their workers?
	Ms. Walters. I think I can, Mr. Chairman. How many minutes
	do I have?
	Chairman Byrne. A minute and a half.
	Ms. Walters. Gosh, burdens come from a variety of
	perspectives. First is, as some folks have mentioned here
	today, just getting the initial classification of whether
	someone is an independent contractor versus an employee is
	tantamount and preliminary. We have IRS guidance, Department of
	Labor's Administrative Interpretation. And many States--I hale
	from Maryland. Our Department of Labor, Licensing, and
	Regulation doesn't follow either of those. They use their own
	test.
	Then next, trying to, again, properly classify as exempt or
	nonexempt. We have at least 14 States today, I believe, that
	have their own white-collar or EAP regulations. So you have to
	do that analysis under Federal as well as State analyses. And
	hopefully, if you get that right, then there are myriad, under
	the FLSA, challenges of compliance with regard to travel time,
	idle time, training time. Then we have State laws of sick pay
	and just a whole lot of compliance issues when it comes to
	properly classifying in the first place and paying in the
	second place.
	Chairman Byrne. And most of these small businesses don't
	have a designated single person that just does human resources
	for them. They can't afford to have that. Is that your
	experience?
	Ms. Walters. That's what I find, yes, sir. It's sort of the
	office manager, payroll clerk, HR administrator, and perhaps
	several other hats.
	Chairman Byrne. So that person has to pull away from their
	other duties--first of all, understand this ever-changing law
	that gets more complex by the day, and then figure out, all
	right, how do I apply that in my workplace setting? That's got
	to detract from productivity at that company and their ability
	to grow.
	Ms. Walters. It likely does not enhance it, yes, sir.
	Chairman Byrne. Mr. Brantley, very quickly, the
	Department's overtime rule has a provision that indexes the
	salary threshold for exempt employers, which will likely
	increase the threshold every three years. In your judgment,
	does the Department of Labor have the statutory authority to
	index the threshold, and what practical problems would
	automatic updates cause for colleges and universities?
	Mr. Brantley. Our opinion is that they do not have the
	authority to index and make changes every three years. As we
	think about the changes that are going on in not just the
	economy but for employers overall, we really strongly believe
	that any change to the threshold should be vetted and that we
	should be given the opportunity to provide comment and feedback
	as to what that impact might be for not just colleges and
	universities but employers overall.
	Chairman Byrne. Very quickly, because we're actually out of
	time, but give me just real quick, what would be the effect on
	colleges and universities if we continue to do that?
	Mr. Brantley. The effect on colleges and universities with
	tight budgets and decreasing funding from public institutions,
	et cetera, could mean additional funds that are just not
	available to dedicate to a salary threshold that really is not
	applicable in most circumstances.
	Chairman Byrne. Thank you.
	I now would turn over for five minutes to the distinguished
	lady from North Carolina and my cochair of the HBCU Caucus, Ms.
	Adams.
	Ms. Adams. Thank you, Chairman Byrne and Ranking Member
	Takano.
	And thanks to our witnesses for--thank you for your
	testimony today.
	Women make up half of the country's workforce, yet the
	Census Bureau reported that the gender wage gap between full-
	time year-round working men and women, women make only 80
	percent of the median wage men earn. While working women may
	have had great strides since 1967, when they earned only 58
	percent of what men earned for full-time year-round work,
	there's still a long way to go before true pay equity is
	achieved.
	Mr. Chair, I'd like to enter into the record a letter from
	the nonpartisan National Women's Law Council, which details the
	challenges that women face in the workplace.
	Chairman Byrne. Without objection, so ordered.
	[The information follows:]
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	Ms. Adams. Thank you.
	According to a study by the National Women's Law Center,
	African-American women typically are paid only 63 percent,
	Native American women only 58 percent, and Latinas only 54
	percent of the wages typically paid to white non-Hispanic men
	for full-time year-round work. Researchers cite conscious and
	unconscious stereotypes about working women and the
	overrepresentation of women in low-wage jobs, including minimum
	wage and subminimum wage positions, and underrepresentation in
	high-wage ones. Nearly two-thirds of minimum wage workers and
	tipped workers in the United States are women.
	Congress should introduce and pass the Paycheck Fairness
	Act, a commonsense solution that would help employees to
	uncover and challenge pay discrimination, prohibit retaliation
	against employees who discuss their salaries, improve remedies
	for employees who have been discriminated against, ensure
	employees are provided with effective incentives to comply with
	the law, and to ensure equal pay.
	Ms. Adams. In addition to an increase in minimum wage,
	legislators should prevent prospective employers from asking
	applicants to disclose their prior salary on a job application,
	as it often perpetuates prior discrimination and it compounds
	gender and racial wage gaps.
	Mr. Stettner, as more and more women participate in the
	workforce as either primary breadwinners or supplements to
	their family's income, what are the income impacts of
	systematically low wages for women? And what are some
	initiatives that Congress should support to reduce or eliminate
	pay disparities among women and individuals of color?
	Mr. Stettner. Women and people of color are
	disproportionately impacted by the growth in the low-wage
	service sector and would be more likely--are the predominant
	beneficiaries of an increase in the minimum wage.
	As the Congresswoman mentioned, strengthening the ability
	of women to be able to assert the right to equal pay, having
	the same rights around discrimination that there are in race-
	based cases, and the nondisclosure of salaries--these are all
	steps that can be taken to decrease the gender and racial pay
	gap.
	Ms. Adams. Thank you.
	So do you support protections for workers who choose to
	disclose and discuss their salaries with coworkers? And if so,
	can you explain why?
	Mr. Stettner. In order to defend your right to equal pay,
	you need to know what your colleagues are working. And many
	firms have kept that data away from other employees, and this
	makes it impossible for women workers to assert their rights.
	Ms. Adams. Thank you very much for your responses.
	And, Mr. Chairman, I yield my time back. Thank you.
	Chairman Byrne. Thank you.
	And the chair now recognizes for five minutes Ambassador
	Rooney.
	Mr. Rooney. Thank you, Mr. Chairman.
	Ms. Riner, your heart-moving story of bureaucratic abuse
	reminds me of something President Ford said years ago, where he
	said a government that's big enough to give you everything you
	want is big enough to take away everything you have. And it
	sounds like the Department of Labor has tried assiduously to do
	that to you.
	I'm moved by that, and I wonder if you could just give a
	quick comment on what that out-of-control, abusive bureaucracy
	says about America right now and whether the word
	``opportunity'' still exists for us average Americans trying to
	build up a great country.
	Ms. Riner. Well, you know, I grew up the daughter of an
	infantry Army officer. I love our government, I love our
	country. And so I was very surprised as this process rolled out
	with me. We were very cooperative with the Department of Labor.
	And so I will tell you that it has been very disheartening and
	discouraging, personally, to me and to my family, to my
	franchise owners. A franchising system is really like a family,
	and so, as they have watched me walk through this and try to
	protect our company, it has been very disappointing and
	discouraging.
	And, you know, also, as we have the issue of joint
	employer, that's a whole other battle that we're fighting that
	we're discouraged about. It really creates confusion and,
	again, discouragement, because it creates this confusing
	liability for a franchisor, as we potentially could be
	responsible for all of the employees of our franchisees--in my
	case, even my consignor volunteers.
	So it has been discouraging, but it also, in some ways, has
	been encouraging. As I have fought, so many people have come
	along beside us and encouraged us and supported us. Still no
	one has ever complained against our company. Thousands and
	thousands of families love our business model. Many moms and
	grandmoms and dads love what we do.
	Mr. Rooney. Thank you very much.
	Ms. Walters, we have 20,000 unfilled computer programming
	jobs in the State of Florida right now. This law, the FLSA, was
	passed in 1938 in an era of surplus labor, manufacturing and
	farm economy where people didn't move. And now we have, in
	2016, scarcity of labor, rapidly mobile employment base, and a
	service economy.
	So I'd like you to elaborate just a tad bit on that last
	comment you made about how obsolete and backward-looking the
	FLSA is relative to the conditions that we face now and that
	our young people are going to face in the future.
	Ms. Walters. Well, thank you for the question.
	I think an example that comes to mind is we have a lot of
	employees that, again, enjoy the flexibility that they have
	today to work from home, telecommuters--great example--and how
	do we track the time that they are or are not working. We need
	to track it. They need to be paid. I think we all agree with
	that. If you provide work for us, we need to pay you for that
	time. The question is how do we capture that information.
	In real life, an employer has a large percentage of their
	employee population work from home. Other employees coming into
	work every day is a more traditional model. And research shows
	employee engagement increases productivity. We've talked about
	increased productivity. Face-to-face interaction with our
	employees is very important.
	So the employer asked the telecommuters, ``Would you come
	into the office once a week so we can have a team meeting and
	stay in touch?'' Those employees said they want to be paid for
	the time that they traveled from their home office to the
	regular office. The other employees said, ``Well, that's not
	fair. We don't get paid for that time. Portal-to-Portal Pay
	Act. We get paid only after we arrive at the first office.''
	And so the regulations currently are not clear whether that
	time should be paid or should not be paid.
	So there's a lot of dialogue I think we can have, should
	have, and need to have to figure out how to strike a really,
	really good balance on this.
	Mr. Rooney. Thank you.
	I yield back my time.
	Chairman Byrne. Thank you, Ambassador.
	Ms. Shea-Porter, welcome to the subcommittee. And you are
	recognized for five minutes.
	Ms. Shea-Porter. Thank you very much. It's an honor to be
	back.
	And I thank all the witnesses today.
	Enforcement in industries with high rates of violations is
	an efficient use of the Department's resources and ensures that
	workers who do not have the resources to bring a claim are
	protected.
	Mr. Chair, I'd like to enter into the record a letter from
	the nonpartisan National Employment Law Project.
	Chairman Byrne. Without objection, so ordered.
	Ms. Shea-Porter. Thank you.
	[The information follows:]
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	Ms. Shea-Porter. As this letter explains, during the Obama
	administration, Department of Labor directed its Wage and Hour
	enforcement investigations towards industries with vulnerable
	workers. These industries include hotel and motel work,
	agriculture, janitorial services, garment manufacturing, and
	the restaurant industry.
	And I'd like to stop for a second and say that I worked in
	many, many restaurants through high school and college, and I
	can assure you that we did not receive proper wages in so many
	of those places, and we didn't get our breaks either. So this
	does happen, and that's why we need to be vigilant. I recognize
	that sometimes, you know, there's overstepping, but we do have
	a problem, and there are a large number of people in this
	country who suffer because of this.
	This is especially critical for workers who may be afraid
	to come forward or may not know. The Department of Labor
	successfully rescued over $1.5 billion in back wages for 17
	million workers between 2009 and 2015. In fiscal year 2015
	alone, the Wage and Hour Division investigations resulted in
	more than $246 million in back wages and helped over 240,000
	workers. And we're talking about workers who really must have
	this income to take care of themselves and their families.
	Under the Obama administration, the average back-wage
	recovery per worker increased from $785 in fiscal year 2009 to
	$1,000 per worker in fiscal year 2015. And over 51 percent of
	those rescued wages were returned to 16,902 working families in
	the retail fast-food industry. Yet these recoveries are only a
	fraction of the estimated $3 billion lost annually by workers
	due to wage theft.
	Since the New Deal, the Department of Labor has challenged
	itself to foster, promote, and develop the welfare of the wage
	earners, job seekers, and retirees of United States, improve
	working conditions, advance opportunities for profitable
	employment, and ensure work-related benefits and gains.
	So, Mr. Stettner, my questions are for you. What does
	strategic enforcement by the Department of Labor mean to
	workers?
	Mr. Stettner. Thank you, Ms. Porter.
	What it means is that we're focusing not just on the
	minuscule number of workers that the Department can reach but
	really trying to change those industry practices. In fact,
	there's research that documents it works. If there's one
	investigation against a fast-food restaurant in a ZIP code,
	compliance increases at all the neighboring restaurants.
	So that's the idea, to shift industry practices and make
	sure that all Americans get the pay that they deserve.
	Ms. Shea-Porter. Thank you.
	And do you believe that the Department of Labor's
	enforcement agencies are adequately staffed, given the millions
	of employers in workplaces around the country?
	Mr. Stettner. No. They're woefully understaffed.
	Ms. Shea-Porter. And one last question: Throughout the
	previous administration, we saw the Wage and Hour Division
	focus enforcement on low-wage industries. Can you talk about
	why that practice is important?
	Mr. Stettner. So wage and hour violations are not equally
	distributed. They're really concentrated in some of the
	industries you mentioned: fast food, agricultural, janitorial
	services. Unfortunately, many of the businesses in this sector,
	part of their business model is keeping labor costs so low that
	they routinely break the law. We need to change that practice.
	And, in fact, if there are minuscule price increases that
	happened on your burger, that would be worth it to make sure
	that the working families that work there get a fair pay.
	Ms. Shea-Porter. Thank you.
	I think a lot of people don't realize, because they didn't
	work in an industry like that, that there is a lot of
	difficulty, that they bring workers in and they make the
	effort, they pay the bus fare or whatever it is to get there,
	the gasoline, and then they're told they're not needed or come
	back in three hours. And these are working conditions that a
	lot of us would not accept. So I want to thank you for
	highlighting this.
	And I yield back.
	Chairman Byrne. Thank you.
	The gentlewoman yields back.
	The gentleman from Wisconsin, Mr. Grothman, is recognized
	for five minutes.
	Mr. Grothman. Ms. Walters, I wanted to talk to you a little
	bit more about the overtime rule that caused the workers who
	were previously exempt from overtime to be included in
	overtime.
	I always like to repeat a story. A buddy of mine back home,
	his daughter got a job, probably earning in this--you know,
	under this amount. He told her, always be the first one at work
	in the morning and the last one to go home at night. You know,
	be a hard worker and you're going to move up, and she was a
	hard worker and moved up.
	What impact would this have on your business or the
	businesses that you advise, I guess, if some employee wanted to
	work extra hard and really, you know, go all out?
	Ms. Walters. So if the employee--and I think many, many
	employees want to work extra hard. The question is, what does
	that get you? So if we're talking about more money, that may
	not be the result. Even the Department of Labor, when the final
	regulations came out, the DOL provided examples where an
	employer could prohibit overtime and might not do that--
	Mr. Grothman. As a practical matter, you'd get in trouble
	with your boss for working hard, wouldn't you?
	Ms. Walters. I'm sorry. Say again?
	Mr. Grothman. If you define working hard as putting in
	another half-hour at the end of the day or do something extra,
	you'd get in trouble with your boss because they would have to
	pay you more, right?
	Ms. Walters. Well, if you're nonexempt, then, yes, the
	employer has to pay for that time.
	Mr. Grothman. Right, right, right. Okay. So it would be a
	problem.
	I think in some jobs you can be in a position--usually, I
	think of a salaried job--in which you're supposed to complete
	something by the end of the day, maybe complete a report or
	something. Well, what if at the end of the day you don't feel
	you've done a good job on the report? Aren't you kind of stuck
	in a situation where either you have to turn in a not-very-good
	report or hang around an extra hour if you want and finish
	things?
	What would you do if you were an employee and it's five
	o'clock and you'd like to spiff this up a little bit more or do
	a little bit of work? You know, so you could either turn in the
	report, which you don't think is adequate, at 5:00 or hang
	around at 5:30 and get in trouble with your boss because
	they've got to pay for you for a half-hour of overtime. What
	would you do in that position?
	Ms. Walters. You know, it's interesting. We often find the
	stories, I often hear it's the star employee, it's the star
	performer who says, ``No, no, no, I don't mind, I'll do this
	extra work without pay.'' And you can't. Obviously, we've said
	an employer has to pay for that time.
	So what would I do? I'd have to talk to my boss and say, do
	you want my quality or do you want my time? And then we figure
	it out from there.
	Mr. Grothman. I like the rule was put together by somebody
	who likes to golf all the time. Yeah.
	Okay. Next question. Mr. Brantley, can you give us any
	suggestions--you spoke about the overtime rule--any other
	suggestions you have for changes in the wage-and-hour policy?
	Mr. Brantley. Absolutely. One of the key challenges with
	the policy as currently constructed relates to how we
	characterize part-time employment.
	So let's take the example of an accountant who's a CPA who
	has been working full-time for years who we make an
	accommodation so that person can be at home part-time to spend
	with a newborn or with an elderly parent. If that salary of
	that CPA professional staff member goes below $47,000, all of a
	sudden we are no longer able to consider that person as an
	exempt employee.
	The same could be true for a fundraising development
	professional who is ready to retire, and we'd like to provide a
	stipend so that person could actually provide some services to
	our college or university. If that looks anything like part-
	time, that person could all of a sudden be characterized as
	nonexempt and be required to complete a timesheet for the first
	time in his or her career.
	Mr. Grothman. Okay. It makes things a little bit more
	difficult.
	Ms. Riner, a question for you. We'll get you all. You
	expressed frustration in your testimony, the way the Department
	treated your company. Has the Department worked with you in any
	ways to ensure that small businesses which are franchised can
	succeed?
	Ms. Riner. No, sir. Unfortunately, we've really had an
	adversarial relationship, to the extent that we've had to take
	them to court to protect our business. So we had hoped in the
	beginning that we were working together, we hoped that we were
	educating them as to our model, but, unfortunately, that didn't
	happen. So we're in court, trying to bring resolution and
	protect our industry.
	Mr. Grothman. Okay.
	This is a more sensitive question. Are any of you familiar
	with the EEO-1 form?
	Mr. Brantley, you're familiar with it?
	Mr. Brantley. Yes.
	Mr. Grothman. Yeah. How long have you been familiar with
	the form, or how long have you been familiar with organizations
	that have to fill out that form?
	Mr. Brantley. Well, as a human resource professional my
	entire career, I have a long history of completing that form.
	Mr. Grothman. Okay. To make things turn out right in that
	form, do you or people like you advise people who should be
	hired, who should be promoted?
	Mr. Brantley. Well, most employers that have Federal
	contracts have to have an affirmative action plan. So, in turn,
	as part of that, you have goals and expectations in terms of
	your recruitment efforts.
	Mr. Grothman. Does it ever change who's hired or promoted
	because you want the numbers to work out right on that form?
	Mr. Brantley. Well, obviously, the perspective of any
	employer should be that we're hiring the right person for the
	job. It's just, as it relates to our recruitment efforts, the
	types of things that we're doing to attract a more diverse
	applicant pool.
	Mr. Grothman. Does it affect that--you know, if you have
	two people applying for a job or three people applying for a
	job, you may pick somebody different than you would otherwise?
	Mr. Brantley. The guidance is, if both positions are equal,
	if both individuals are equal, that you would defer to someone
	from a minority status.
	Mr. Grothman. Okay.
	Thank you.
	Chairman Byrne. The gentleman's time has expired.
	The Chair does want to recognize the presence of Mr. Scott,
	the Ranking Member on the full Committee.
	I understand you don't have any questions, but you're
	always welcome here, and we love seeing you.
	Mr. Scott. Well, thank you, Mr. Chairman. I had three other
	meetings at the same time. I apologize for being late. But I
	appreciate your leadership and the Ranking Member. Thank you.
	Chairman Byrne. Thank you, sir. Glad to have you.
	Now we call on Mr. DeSaulnier for five minutes.
	Mr. DeSaulnier. Thank you, Mr. Chairman. I want to thank
	you and the Ranking Member and the witnesses.
	And these are odd hearings for me, when we went through the
	rule last session, because, as somebody who managed and owned
	restaurants for almost 35 years, someone who was once a
	registered Republican but has a difference of opinion, and just
	from my life experience and my work experience--and it may be
	just that northern California is different. Clearly, it's
	different. But, Mr. Stettner, some of my questions are directed
	at just the economic benefits.
	So, when I owned restaurants, I liked to go by the Ford
	rule, that I wanted a product but also an income, that my
	employees could afford the product. Now, recognizing what the
	business owners have said here and in other hearings, there's a
	struggle when your costs go up. I always felt like I could make
	that struggle work and pass it on to my customers, even though
	they were struggling as well.
	But I found that if you paid more--and I always thought it
	was sort of outrageous that I looked at my leases and I wanted
	to make sure they were--the landlord wanted to make sure it was
	indexed for inflation but minimum wage isn't indexed for
	inflation, although that's about to change in California.
	So my question is more directed--it strikes me that, coming
	from northern California, coming from a business ownership,
	having looked at schedules--and I can't remember a time where I
	didn't have to pay an hour if I had split-shifts, I didn't have
	to pay overtime if we went over--it is less than 40 hours in
	California. So I had to manage that, and I had to have my
	managers manage that, and it worked.
	Also, in California, we have a flexible work schedule, that
	if a majority of the employees vote to have a flexible work
	schedule, they can have it. It's fairly easy to access through
	the State workforce development website. And it's an important
	thing.
	As Ms. Walters, as you said, there are a lot of good
	employees, I've had good employees, who have said, ``I'll work
	an extra hour. I don't want to spend an hour and a half in
	traffic. And you need somebody to do this.'' But I would always
	say, ``I'm required to pay you overtime, and I will do that.''
	But it worked. And given that all my competitors, who were
	complying legally, had to do the same thing, it seemed to work
	out.
	So my question, Mr. Stettner, is, in the Bay Area, which is
	part of California that's the fifth-largest economy in the
	world, in 2015 our GDP grew by almost 12 percent. We protect
	consumers, we have very stringent consumer laws, very strict
	worker enforcement laws, stricter than the ones that we are
	debating today, strict environmental laws, but the economy
	works. And we clearly have challenges. Our housing costs are a
	big challenge for us.
	So if you could help me a little bit about why it works in
	some areas and why businesses flourish, but there's this theory
	that in other areas in the country, if you do this, businesses
	will not be able to sustain and have the kind of benefits we
	have in California, in the urban areas.
	Mr. Stettner. So, when workers have more in their pocket,
	they're able to spend more, and it goes directly into the hands
	of businesses. When workers are paid more, they're more likely
	to stay at a firm, more likely to gain a skill and help that
	firm become more productive.
	It's no coincidence that Walmart, which is all over the
	country, including the South, recently increased their wages of
	their associates, explicitly because that's what they needed to
	compete more on quality, as there was much more competition
	from other retaliators offline and online. And, in fact, some
	of the best low-wage retail businesses pay good wages.
	Mr. DeSaulnier. So the transition part, so if you're in
	another part of the country and, say, you want to start to have
	the economy grow faster than one or two percent, and you
	believe this research, how do you help businesses transition to
	that? Or is it just, as in my case, you accepted it and you
	realized that, through your own business experience, that you
	could struggle for a while--a matter of months, in my case--
	but, ultimately, as you said, the research--and my life
	experience bore out the research that you allude to.
	Mr. Stettner. So most of the costs are businesses, like the
	overtime rule. Although that $1.2 billion in pay raises is
	significant, it's less than .1 percent of all wages paid in the
	country. So, right now, in general, corporations have taken the
	most of that growth. The first step to making it work better is
	to have more of it shared. And that's going to help lift all
	boats.
	Mr. DeSaulnier. I'll just conclude, Mr. Chairman, I would
	like to submit a letter from similar business owners from my
	experience and my view, from the Businesses for a Fair Minimum
	Wage for the record, if that's acceptable.
	Chairman Byrne. Without objection, so ordered.
	[The information follows:]
	[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

	Mr. DeSaulnier. And just say it's troubling to me when I
	see--not to vilify CEOs of publicly traded companies, but, for
	instance, publicly traded fast-food restaurants have gone up in
	compensation by almost 1,000 percent since the 1970s, while
	workers wages have raised about 11 percent but their
	productivity has gone up 70 percent. It strikes me that we all
	should really have a reflective period to talk about that and
	balance it.
	And I know both parties share the desire to raise wages and
	the ability to have a quality life for middle-income and lower-
	income people. But it seems like there could be a legitimate
	discussion around these issues since we have different parts of
	the country that have different problems and address them in a
	different way with different results.
	Thank you, Mr. Chairman.
	Chairman Byrne. Thank you.
	The gentleman yields back.
	Well, we've come to the end. I would like to again thank
	our witnesses for taking the time to testify before our
	subcommittee today. I know you took a lot of time to prepare to
	be here and you had to travel to be here, and we want to thank
	you for that time and for the considerable testimony you've
	given us. Very helpful to the subcommittee's work.
	Mr. Takano, do you have any closing remarks?
	Mr. Takano. I do, Mr. Chairman.
	Chairman Byrne. You are recognized.
	Mr. Takano. Thank you. Thank you.
	Well, I'd like to also thank all the witnesses for coming
	to the Committee today to share their views.
	As we all know, there was supposed to be another hearing
	this morning across the Capitol. The Senate HELP Committee was
	scheduled to hold a hearing on Andy Puzder's nomination to be
	Secretary of Labor. In a victory for working families, Mr.
	Puzder has now withdrawn his name from consideration.
	This administration ran a campaign that promised to defend
	working people, but the nomination of Andy Puzder, a fast-food
	CEO with a history of minimum-wage and overtime violations and
	a declared opposition to efforts to raise wages for working
	people, was a betrayal of working people across this country.
	Andy Puzder chose to make a profit by cutting corners and
	breaking the law. Through his words and actions, Mr. Puzder
	repeatedly demonstrated his disdain for working people.
	We heard today about how workers in low-wage industries
	like fast food are repeatedly cheated out of their fair pay.
	These workers deserve a Secretary of Labor who will fight to
	recover their hard-earned pay.
	I urge the President to keep his promise to support working
	families and nominate a Secretary of Labor who is better suited
	to meet the mission of the Department of Labor: to foster,
	promote, and develop the welfare of wage earners, improve their
	working conditions, and advance their opportunities for
	profitable employment.
	But no matter who heads the Department of Labor in the
	Trump administration, the members of our Committee must insist
	that the Department of Labor does its job by holding employers
	accountable for misclassifying their workers and stealing their
	pay.
	The American people are counting on us, and we cannot let
	them down. Mr. Chairman, I hope that we can agree that Federal
	wage-and-hour policies for the twenty-first century should put
	America's families first.
	But before I yield back, I would like to ask unanimous
	consent to submit for the record letters from Jobs With
	Justice, the Economy Policy Institute, and the National
	Partnership for Women and Families, and the American
	Sustainable Business Council. As these letters from business
	representatives--
	Chairman Byrne. Without objection, so ordered.
	Mr. Takano. Thank you.
	[The information follows:]
	[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

	Chairman Byrne. Have you concluded?
	Mr. Takano. Mr. Chairman, I have concluded my statement.
	Chairman Byrne. Thank you, Mr. Takano, and look forward to
	working with you and the other members of the subcommittee.
	We are going to make America great again, but we're not
	going to make America great again if we don't make the lives of
	the hardworking people of America great again.
	The average person in this country wakes up every morning,
	hurriedly gets himself ready to go to work, and they go to work
	and they work hard. A lot of them are doing that while they're
	raising children, which is its own job, a very hard job.
	And as I travel around my district and go to see the places
	where people work--and I'm from lower Alabama; we don't have
	very many big businesses--I talk to the people that work there,
	and I hear what they tell me. And there are so many times when
	the Federal Government is in the way. In some cases, Ms. Riner,
	we're worse than in the way; we're actually harming the ability
	of people to do what they want to do to make their lives
	better.
	I don't think that most of us in the Federal Government
	intend to be in the way. Sometimes the one law we pass up here
	the most is the law of unintended consequences. And sometimes
	we pass these laws to promulgate these regulations thinking
	they're going to have one effect and they have another.
	I know this, that if you go around the workplaces that I've
	been to over the last three years, they don't look like the
	workplaces that I started in as a teenager during the 1970s--
	washing cars and making wooden slats for shutters, sandblasting
	the oil storage tanks. That's the kind of stuff I had to do,
	like most young people had to do. The workplace is so
	different.
	I don't think our laws have kept pace with that change,
	and, worse, I think our laws and the way we're trying to apply
	them are actually getting in the way. So I hope that what we
	can do, with the good help of you who came here today to give
	us this testimony, I hope what we can do is to figure out a way
	where we can work together to make the lives of these
	hardworking Americans great again.
	I believe the vote last fall was an urgent plea from them:
	Please help us. Give us the sort of freedom and flexibility in
	our lives, including our lives where we work every day, so that
	we can do what we want to do and become who we want to become.
	That's the American Dream.
	So I appreciate so much all of you being here and your
	testimony. I appreciate so much all the members of the
	subcommittee who came here today.
	There being no further business, the subcommittee stands
	adjourned.
	[Additional submissions by Mr. Byrne follows:]
	[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

	[Extensive material was submitted by Ms. Riner. The
	submission for the record is in the committee archive for this
	hearing.)
	[Whereupon, at 11:30 a.m., the subcommittee was adjourned.]

	[all]
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