[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
THE IMPACT OF EXECUTIVE ORDER 13658 ON PUBLIC LAND GUIDES AND
OUTFITTERS
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HEARING
BEFORE THE
SUBCOMMITTEE ON
THE INTERIOR
OF THE
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
JUNE 10, 2015
__________
Serial No. 114-34
__________
Printed for the use of the Committee on Oversight and Government Reform
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.fdsys.gov
http://www.house.gov/reform
______
U.S. GOVERNMENT PUBLISHING OFFICE
95-822 PDF WASHINGTON : 2015
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
JASON CHAFFETZ, Utah, Chairman
JOHN L. MICA, Florida ELIJAH E. CUMMINGS, Maryland,
MICHAEL R. TURNER, Ohio Ranking Minority Member
JOHN J. DUNCAN, Jr., Tennessee CAROLYN B. MALONEY, New York
JIM JORDAN, Ohio ELEANOR HOLMES NORTON, District of
TIM WALBERG, Michigan Columbia
JUSTIN AMASH, Michigan WM. LACY CLAY, Missouri
PAUL A. GOSAR, Arizona STEPHEN F. LYNCH, Massachusetts
SCOTT DesJARLAIS, Tennessee JIM COOPER, Tennessee
TREY GOWDY, South Carolina GERALD E. CONNOLLY, Virginia
BLAKE FARENTHOLD, Texas MATT CARTWRIGHT, Pennsylvania
CYNTHIA M. LUMMIS, Wyoming TAMMY DUCKWORTH, Illinois
THOMAS MASSIE, Kentucky ROBIN L. KELLY, Illinois
MARK MEADOWS, North Carolina BRENDA L. LAWRENCE, Michigan
RON DeSANTIS, Florida TED LIEU, California
MICK MULVANEY, South Carolina BONNIE WATSON COLEMAN, New Jersey
KEN BUCK, Colorado STACEY E. PLASKETT, Virgin Islands
MARK WALKER, North Carolina MARK DeSAULNIER, California
ROD BLUM, Iowa BRENDAN F. BOYLE, Pennsylvania
JODY B. HICE, Georgia PETER WELCH, Vermont
STEVE RUSSELL, Oklahoma MICHELLE LUJAN GRISHAM, New Mexico
EARL L. ``BUDDY'' CARTER, Georgia
GLENN GROTHMAN, Wisconsin
WILL HURD, Texas
GARY J. PALMER, Alabama
Sean McLaughlin, Staff Director
David Rapallo, Minority Staff Director
Ryan Hambleton, Senior Professional Staff Member
William McGrath, Staff Director, Subcommittee on the Interior
Melissa Beaumont, Clerk
Subcommittee on the Interior
Cynthia M. Lummis, Wyoming Chairman
Paul A. Gosar, Arizona Brenda L. Lawrence, Michigan,
Blake Farenthold, Texas Ranking Member
Ken Buck, Colorado, Vice Chair Matt Cartwright, Pennsylvania
Steve Russell, Oklahoma Stacey E. Plaskett, Virgin Islands
Gary J. Palmer, Alabama Jim Cooper, Tennessee
C O N T E N T S
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Page
Hearing held on June 10, 2015.................................... 1
WITNESSES
The Hon. Chris Stewart, a Representative in Congress From the
State of Utah
Oral Statement............................................... 3
Written Statement............................................ 6
Mr. Michael Lazzeri, Assistant Administrator for Government
Contracts, U.S. Dept. of Labor
Oral Statement............................................... 8
Written Statement............................................ 11
Mr. Mike Cottingham, Owner, Wilderness Ventures
Oral Statement............................................... 17
Written Statement............................................ 19
Mr. David L. Brown, Executive Director, America Outdoors
Association
Oral Statement............................................... 24
Written Statement............................................ 26
APPENDIX
Executive Order 13658, Establishing a Minimum Wage for
Contractors, submitted by Rep. Lummis.......................... 52
Responses to Questions for the record from Mr. Michael Lazzeri,
DOL, submitted by Rep. Lummis.................................. 62
THE IMPACT OF EXECUTIVE ORDER 13658 ON PUBLIC LAND GUIDES AND
OUTFITTERS
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Wednesday, June 10, 2015
House of Representatives,
Subcommittee on Interior
Committee on Oversight and Government Reform,
Washington, D.C.
The subcommittee met, pursuant to call, at 10:05 a.m., in
Room 2154, Rayburn House Office Building, Hon. Cynthia M.
Lummis [chairman of the subcommittee] presiding.
Present: Representatives Lummis, Buck, Palmer, Lawrence,
and Plaskett.
Also Present: Representative Meadows.
Mrs. Lummis. Good morning. The Subcommittee on the Interior
will come to order.
Without objection, the chair is authorized to declare a
recess at any time.
Today the Subcommittee on the Interior will examine the
impact of Executive Order 13658 on Public Land Guides and
Outfitters. The executive order mandates a $10.10 minimum
hourly wage be paid by employers who contract with the Federal
Government. The order was issued in February 2014, and the
implementing rule was finalized by the Department of Labor in
October 2014.
I want to make it clear that we are not here today to
debate the idea of raising the minimum wage in and of itself.
That will be done by another committee at another time, but
today we're here to discuss the impact on--of how this order
and its implementation will negatively impact seasonal rural
businesses.
The order will leave many locales in danger of losing small
businesses that are providing outdoor and recreational services
to the public. It's particularly damaging to rural economies
that rely on tourism revenue. Wyoming had more than 10 million
visitors who contributed more than $3 billion to the economy in
2014, according to the Wyoming Office of Tourism, from skiing
to river rafting trips to trips on horseback. Many of these
visitors rely on private businesses that operate on Federal
lands.
The Federal Government has promoted tourism as a
replacement for logging and mineral development projects that
have been strangled by regulation, so it's rather ironic that
now the executive branch is working to regulate wilderness
tourism out of business. These businesses provide young
Americans an opportunity to obtain employment while also
providing a valuable service to the visitors of these taxpayer-
owned lands.
The rule unnecessarily burdens seasonal operators and small
businesses using permits to enhance the use of our outdoors.
The Forest Service submitted comments upon the proposed rule,
stating that these seasonal guides and outfitters operating
under permit are not Federal contractors and, as a result,
should be exempt. As a Federal agency very familiar with guides
and outfitters using the land under its jurisdiction, the
Forest Service recognizes the unique nature of these
businesses. It's unfortunate that the Department of Labor chose
to disregard them.
As Americans, we are fortunate to live in a Nation with
diverse and beautiful landscapes. These landscapes provide
families and individuals affordable quality recreation
opportunities. Public land guides and outfitters deliver a
service that allows for an indepth enjoyment of these
activities. This executive order unnecessarily endangers the
economic existence of this industry and diminishes the
enjoyment of our public lands by Americans nationwide.
Representative Chris Stewart of Utah has introduced H.R.
2215, the Outdoor Recreation Enhancement Act. This legislation
seeks to maintain the current level of tourism on public lands.
Today we will hear from Congressman Stewart about his
legislation to address these concerns and protect rural jobs.
We will then hear from representatives of the outfitter and
guide community to discuss how their businesses operate and the
effects this rule will have on them.
We will also hear from a representative of the Department
of Labor, Wage and Hour Division, regarding the implementation
of the President's executive order and the rule to enforce its
provisions across the Federal Government.
What we have here is something that, unfortunately, we see
time and again, especially in the West. The Federal Government
in Washington forcing a one-size-fits-all directive on the
American people. I sincerely hope that the Department of Labor
listens closely to the representatives that we have here and
recognizes that this situation as presently drawn up is not
workable. I sincerely hope that we can take a commonsense
approach to this issue and do the right thing.
With that, I'd like to thank our witnesses in advance for
their testimony. I now recognize Ms. Lawrence, the ranking
member of the Subcommittee on the Interior, for her opening
statement.
Mrs. Lawrence. Thank you, Madam Chair, for holding this
hearing. Today we are focussing on the outfitter and outdoor
guide business that holds permits to conduct business on
Federal land. I understand from the testimony that these
organizations are looking for an exemption to the Federal
minimum wage rule so that workers will be paid less than the
$10.10 required in the President's executive order.
I always support the rights of businesses to earn a profit
in their chosen field. However, I do not support their right to
earn extra profits at the expense of hard-working Americans.
Just as business owners must provide for their families, so
must the people who work for them. We must strike a balance
between competing interests. I hope that today's testimony can
help us to do so with respect to the outdoor industry.
I want to also note that decades of research have shown
that raising the minimum wage raises economic growth, and
raising the minimum wage is one of the most effective economic
tools we have to ensure that the American working class retains
its position as the most affluent in the world, a destination
it's recently lost.
President Obama's Executive Order 13658 established a
minimum wage of $10.10 for businesses that contract with the
Federal Government. The order was based on a well-supported
finding that raising the pay of low-wage workers increases the
quality of their work; more importantly, enables them to
support themselves and their families. It should be noted that
29 States and the District of Columbia as well as 21 cities and
counties have set their minimum wages above the $7.25. It is
also important to note that data has shown that an individual
that makes the current $7.25 minimum wage earns about $15,000 a
year. Now, let's assume that a husband and wife with two
children both make the minimum wage and work full time. That's
a gross income of approximately $30,000. You break that down to
monthly and weekly, having to feed, clothe, provide housing.
I'm from Michigan. There is no public transportation, so cars,
insurance, and gasoline.
We are creating a society that I feel has effectively been
addressed through the President's executive order, and I do
believe firmly that I have the responsibility in this Congress
to ensure that, in America, that those who are working every
day have what they call an opportunity and resources. If they
work every day hard, and they do their jobs, that they can, at
minimum, support their families and not be in poverty.
Thank you so much, and I look forward to the testimony
today. Thank you, Madam Chair.
Mrs. Lummis. I thank the ranking member.
We're pleased that our fellow colleague from the full
committee, Mr. Meadows, has joined us today.
Without objection, Mr. Meadows is welcome to participate
fully in today's hearing.
Welcome.
Thank you. I'll hold the record open for 5 legislative days
for any member who would like to submit a written statement.
We'll now recognize our distinguished witness on our first
panel. I'm pleased to welcome our colleague, the Honorable
Chris Stewart, Congressman from Utah's Second District.
Welcome, Congressman. We thank you for your appearance
today, and we look forward to your testimony. We know you're in
a markup in another committee, so, without further ado, know
that your entire written statement will be made part of the
record. And the floor is yours.
STATEMENT OF THE HON. CHRIS STEWART, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF UTAH
Mr. Stewart. Thank you, Madam Chair. It's interesting to be
on the other side of the table here. It's kind of lonely down
here. Thank you for holding this hearing, Ranking Member Mrs.
Lawrence as well, to give us this opportunity to look at how
the President's executive order on minimum wage is harming
seasonal recreation jobs and public lands and how I believe my
bill, the Outdoor Recreation Enhancement Act, can address the
problem.
This may not be the most exciting issue, I recognize that,
but it's an important one. It impacts real people, and I
appreciate the chance to be part of the discussion here today.
And, again, I apologize in advance for the fact that I have to
leave immediately after my testimony.
Chairwoman, you and I both represent districts that are
almost entirely controlled by the Federal Government. Federal
ownership on our public lands has all kinds of frustrating
outcomes for the residents of Western States, and I'm here to
talk about one of those situations, where decisions made here
in Washington, D.C., are hurting local businesses, local jobs,
and access to public lands.
In February of 2014, President Obama issued an executive
order establishing a new minimum wage for Federal contractors
which raises the minimum wage to $10.10 per hour for businesses
operating under Federal contracts.
First, I should note the minimum wage itself is a misguided
economic policy that hurts the very people that we most want to
help, those at the bottom of the economic scale. Study after
study shows that increasing the minimum wage increases
unemployment among low-skilled workers. It accelerates the move
from labor to capital and makes it harder--not easier but
harder--for young people to get those entry-level jobs that
develop the basic skills that helps workers advance and earn
more.
But, of course, we're not here to talk about that. We want
to talk about the impact the President's actions are having on
a specific industry. Because the executive order applies to
businesses with a Federal contract, that includes guides and
outfitters and other recreational businesses whose only
connection to the Federal Government is a permit to operate on
Federal lands.
That permit is a pretty tenuous link, but it's enough to
bring these businesses under the President's executive order.
The Department of Labor's subsequent interpretation of the
order requires a number of new regulations that will add
additional compliance cost to an industry that operates on very
small margins. This increase will force many outfitting
businesses to either close or to cease operations on public
lands or to operate with fewer workers.
Madam Chairwoman, as you know, my district is huge. It's
almost 40,000 square miles, and it comprises almost entirely of
public land. We have four national parks and millions of acres
of BLM and Forest Service land. Raising the cost of businesses
to operate on these public lands will certainly have an impact
on local jobs and the ability of guides and outfitters to
provide the remarkable experience that attracts millions of
visitors from around the world every year to our public lands.
We have other witnesses here who I'm sure will elaborate on
how some of these new costs will impact their businesses, but
I'd like to briefly read from a letter sent to me by a tour
operator located in my district that addresses his concerns. He
says: ``We very much want to maintain our commitment to the
recreational experience in national parks and on public lands.
However, the cost of compliance and the draconian overtime
restrictions created by this rule have significant impacts on
our business. So this is very serious to us, and we may have to
cease running trips in national parks.''
This business owner is not alone. I'm sure that other
witnesses today will testify of similar concerns. To address
these problems, I again have proposed the Outdoor Recreation
Enhancement Act just to simply clarify and expand an existing
exemption to wage and hour laws for seasonal recreational
establishments under the Fair Labor Standards Act.
The bill will broaden this exemption, which currently
exempts ski resorts to include businesses involving rafting,
horseback riding, hiking, cycling, and other seasonal
recreational business, and I think that's key to point out:
These are seasonal recreational businesses.
It's also important to emphasize that these--these
businesses typically employ high school and college students
who are looking for a position for a summer and want to spend
time outdoors. Congress already recognized how these
circumstances applied to similar industries almost 40 years ago
when it exempted the ski business operating on public lands.
My bill is a simple fix that will allow these businesses to
continue to operate on Federal lands and allow all of us the
opportunity to enjoy extraordinary experiences in our national
parks and other public lands. And for those reasons, I'm
grateful for this opportunity to appear before this
subcommittee.
And, Madam Chairwoman, I yield back my time.
[Prepared statement of Mr. Stewart follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mrs. Lummis. Thank you, Congressman Stewart, for being here
today, and we so appreciate the work you're doing on the
Appropriations Committee. Your bill, I believe, is an important
bill to address the very situation that is the subject of this
hearing.
With that, you are excused, and we will just pause while
the next panel of witnesses joins us. Thank you.
Mr. Stewart. Thank you, Madam Chairwoman.
Mrs. Lawrence. Thank you, Representative.
Mrs. Lummis. Gentlemen, please join us. And before I
recognize you, could you--is it Lazzeri or Lazzeri?
Mr. Lazzeri. It's Lazzeri.
Mrs. Lummis. Lazzeri. Thank you so much.
You ready? Okay. We will now recognize our second panel of
witnesses. I am pleased to welcome Mr. Michael Lazzeri,
Assistant Administrator for Government Contracts at the U.S.
Department of Labor; Mr. Mike Cottingham, owner of Wilderness
Ventures; and Mr. David Brown, executive director of the
America Outdoors Association.
Welcome, gentleman. Pursuant to committee rules, all
witnesses will be sworn in before they testify, so please rise
and raise your right hands.
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?
Thank you. Please be seated. Let the record reflect that
all witnesses answered in the affirmative.
In order to allow time for discussion, please limit your
testimony to 5 minutes. Your entire statement, if it's longer,
will be made part of the record.
I now would like to recognize our panel. Mr. Lazzeri, are
you recognized for 5 minutes. Welcome. Thank you for being
here.
WITNESS STATEMENTS
STATEMENT OF MICHAEL LAZZERI
Mr. Lazzeri. Good morning, Chairman Lummis, Ranking Member
Lawrence, and members of the subcommittee, and I thank you for
the invitation to testify today. I appreciate the opportunity
to discuss the effect of the Executive Order 13658 on
outfitters and guides operating on Federal lands.
On February 12 of 2014, President Obama signed the
executive order requiring certain parties that contract with
the Federal Government to pay covered workers no less than
$10.10 hourly wage. The order obligated the Department to issue
regulations to implement its requirements. The Department,
accordingly, proposed regulations implementing the executive
order on June 17 of 2014 and published final regulations later
that year on October 7.
As Secretary Perez said upon issuance of the final rule: No
one who works full time in America should have to raise their
family in poverty, and if you serve meals to our troops for a
living, then you shouldn't have to go on food stamps to serve a
meal to your family at home.
By raising the minimum wage for workers on Federal
contracts, we're rewarding a hard day's work with fair pay.
This action will also benefit taxpayers. Boosting wages lowers
turnover and increases morale and will lead to higher
productivity.
The Department conducted a robust outreach effort during
the drafting of the rule, including conducting a variety of
listening sessions with private associations and other groups.
The Department has continued to provide additional outreach
since issuance of the final rule, producing a number of fact
sheets, frequently asked questions, webinars, and other
guidance to help contractors understand and implement the
rules' requirements.
The Department has worked with contracting agencies to
develop additional guidance concerning application of the
executive order to particular agency agreements that apply to
particular stakeholders. The order itself applies to four
categories of contracts, including contracts in connection with
Federal lands and related to providing services for the general
public. Provided that such agreements qualify as new contracts,
our final rule defined a new contract as one that results from
a solicitation issued on or after January 1st of this year or
that is awarded outside the solicitation process on or after
January 1st of this year.
So even if a contract satisfies these criteria, the order
only covers individuals working on or in connection with the
contract if those individuals' wages are governed by the Fair
Labor Standards Act, the Service Contract Act, or the Fair
Labor Standards Act. In their comments, the AOA and OARS
companies sought clarification as to whether or not the order
applies to special-use permits, commercial use authorizations,
and outfitter and guide permits issued by the Departments of
Interior and Agriculture.
In its final rule, the Department defined contracts and
contract-like instruments as agreements between two or more
parties, creating obligations that are enforceable or otherwise
recognizable at law, including but not limited to lease
agreements, licenses, or permits.
The permits addressed by AOA and OARS typically authorize
the use of Federal land in exchange for the payment of fees to
the Federal Government, creating obligations that enforceable
or otherwise recognizable at law and, therefore, would
constitute contracts under the purposes of the executive order.
The Department considered the information provided by the
AOA and OARS and determined that even if their contracts with
the Federal Government were outside the scope of the Service
Contract Act, those contracts were covered contracts because
they authorize the use of Federal land and relate to offering
services to the general public.
In addition, wages of the workers on these contracts, even
if not covered by the SCA, are likely covered by the Fair Labor
Standards Act, and because the executive order applies only to
new contracts, wage increases will not affect contractors that
are midway through performance of the contract that was entered
into before January 1 of this year. We have found that
assertions that a contractor will be adversely affected by the
E.O. Often overlook not only the benefits of the E.O. But also
the fact that the E.O. Only applies to new contracts with the
Federal Government, enabling contractors to prepare for any
potential economic impact of the E.O.
I would like to thank you again for inviting me to testify
in the payment of the $10.10 minimum wage to outfitters and
guides working on Federal lands. We invite the AOA and others
to provide us, as well as our counterparts at Agriculture and
Interior, with additional information they believe may assist
those agencies in the development of additional guidance. We
will do our part to provide them with our views. We welcome and
look forward to continuing the dialogue. Thank you.
[Prepared statement of Mr. Lazzeri follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mrs. Lummis. Thank you, Mr. Lazzeri.
I would now like to recognize Mr. Cottingham for 5 minutes.
STATEMENT OF MIKE COTTINGHAM
Mr. Cottingham. Thank you. How do I turn this on? Okay.
Thank you, Madam Chairwoman, and members of the
subcommittee, for the opportunity to offer my support for H.R.
2215 and to explain why the Department of Labor rule, Executive
Order 13658, threatens the viability of my program and numerous
similar travel camp programs and summer camps for youth
operating on public lands.
In 1973, my wife and I quit our teaching jobs in order to
create an alternative educational experience for young people.
The purpose of our program has been to assist young men and
women in becoming responsible adults through team building,
group living, and caring for one another in challenging outdoor
activities.
Since 1973, we have produced--provided life-altering
experiences for over 24,000 young adults, including children of
several Governors, Congressmen and women, and Senators. Our
staff--our self-funded scholarship program enables at least 30
deserving young people, who couldn't afford otherwise, to
participate in these experiences each summer.
Our programs operate in 17 federally designated wilderness
areas in 12 national parks throughout the United States. These
adventures range from 2 to 5 weeks in length and usually
involve our subcontracting activities such as rock climbing and
white water rafting. Executive Order 13658 would require our
monitoring compliance of over 30 subcontractors we work with
operating on Federal lands, which would be extremely difficult,
if not impossible, for us from both a personnel and a financial
perspective.
If they fail to meet the requirements of the Department of
Labor rule and do not pay their staff the higher minimum wage
for Federal contractors, then we would have to make up the
difference. Each summer, we hire between 80 and 100 leaders who
are current college students and graduate students. They work 6
weeks on average while they guide our groups on public lands.
They also participate as clients with our students on a variety
of subcontracted activities, such as climbing Washington's
Mount Rainier or Wyoming's Grand Teton or rafting for 4 days on
Idaho's Salmon River or Utah's Colorado River. As is the case
with hundreds of summer camps and other similar travel camp
programs for youth, we must price our programs competitively.
The implementation of the Department of Labor rule would
not only be impossible to calculate but would be impossible for
anyone in the summer camp industry to afford, as it would
increase our salaries dramatically. Implementation of Executive
Order 13658 would shut down many summer programs for youth
unless they were eligible for an exemption under the Fair Labor
Standards Act as it would be impossible to meet the payroll
requirements of camp counselors who must be on call 24 hours a
day for multiweek employment periods
As a seasonal educational summer program for teens, we also
view ourselves as a training program for young leaders. Nearly
all of our staff members view their time with us as a break
from the rigors of school or as a final opportunity to share
their love for the outdoors with youth before they pursue
life--full-time careers in law, business, medicine, the arts,
et cetera.
Leading a group of young adults for several weeks is a
challenging and very fulfilling opportunity as it provides a
platform for--which stresses responsibility, accountability,
organization, and many other life skills required for success.
I always tell my staff if you can successfully lead one of our
programs, you are well prepared for future and larger
challenges.
I very much appreciate your attention to this issue and to
the corrective action of H.R. 2215, which will be necessary to
save many summer camps and travel camp programs similar to mine
from going out of business. Thank you.
[The statement of Mr. Cottingham follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mrs. Lummis. Thank you, Mr. Cottingham.
And, Mr. Brown, you are recognized for 5 minutes.
STATEMENT OF DAVID L. BROWN
Mr. Brown. Thank you, Madam Chairwoman and Ranking Member
Representative Lawrence. I so much appreciate the opportunity
to offer America Outdoors' support for H.R. 2215, and I'm also
testifying to explain why the Department of Labor rule
implementing Executive Order 13658 threatens viability for many
outfitters and guide companies operating on public lands.
The implementation of this rule may force many of them out
of business. While the minimum wage increase is an issue for
some seasonal businesses which hire a large number of entry-
level employees, a larger issue is compliance with the complex
Department of Labor clause including in this rule, which will
become part of every new permit.
Permit holders are required to comply with the DOL clause
or face potential disqualification and loss of the permit. As
you will see from my testimony, compliance is very difficult
for family-run seasonal businesses who do not have a team of
labor lawyers on their staff.
The Fair Labor Standards Act includes an exemption for
employees hired by seasonal recreational establishments and a
partial exemption for recreational establishments under permit
by Federal land managing agency. Inconsistent interpretation of
the recreational establishment provision under 13(a)(29) leaves
many public land outfitters uncertain as to what overtime
standard they are subject to.
Some courts have ruled that recreational businesses do not
qualify as an establishment under the FLSA if the recreation
venue is more than 6 miles or, in one case, more than 9 miles
from their headquarters. In these situations, some outfitters
would qualify for the exemption, but others providing services
in the same area might not.
Outfitters with traveling camps may not qualify as a
recreational establishment according to another court ruling.
The DOL rule requires permit holders to enforce their contract
clause, as my colleague mentioned, on their subcontractors to
make up the difference between the executive order wage and the
wage paid by the subcontractor.
Some outfitters subcontract with other outfitters for
services. Other subcontractors are not even operating on public
lands. A guest ranch in Wyoming, for example, might be expected
to require a laundry service to comply with the DOL rule and
include the standard contract clause in their contract with the
laundry service.
Enforcing the DOL contract clause on a subcontractor will
be impossible for seasonal recreational businesses. In
analyzing the compliance quandary faced by many outfitters and
guides, a law firm specializing in Fair Labor Standards Act
compliance concluded, although most courts in the Department of
Labor consider the same issues when determining whether a
company is a seasonal recreational establishment, there is very
little consensus regarding how to analyze these questions, much
less the outcome of the review.
If the courts, the Department of Labor, and various law
firms cannot reach consensus on the interpretation of the FLSA
in this area, how can a family-run business be expected to
comply? Unfortunately, the quandary now puts their business at
risk because it is part of permit compliance.
The DOL rule also requires permit holders to enforce the
contract clause under subcontractors, as I mentioned, and that
is one of the other challenges that--with compliance that will
be very difficult. Aside from the uncertainty and difficulty
with compliance, the FSLA correctly interpreted the need for an
exemption for seasonal recreational businesses. That exemption
needs to be fully restored for these businesses to survive in
the long term, and that is why we support H.R. 2215.
Looking beyond the issues related to Executive Order 13658,
the accumulation of regulations and their costs on these small
outfitter and guide businesses are making their ability to
provide services to the public increasingly tenuous. I
respectfully request that you continue oversight and hope that
members of the subcommittee will work together to encourage the
executive branch to streamline and reduce the regulatory
burdens which jeopardize employment in the high-quality
recreational services the public currently enjoys on public
lands. Thank you.
[Prepared statement of Mr. Brown follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mrs. Lummis. Thank you, panel.
The members of the committee will now ask questions, and
the chair will begin. She will recognize herself for 5 minutes.
Mr. Lazzeri, in response to comments on the executive order
implementing rule, Department of Labor said that any increase
in costs to business would be offset by gains in output or
quality of service, perhaps even increasing revenue. What study
or information was used by DOL to reach this conclusion?
Mr. Lazzeri. Thank you for your question, Madam Chairman.
In studying the issue, the Department relied upon a number of
empirical studies that focused on the impacts of productivity
that increasing the minimum wage could have or increased wages.
I'm prepared and very happy to provide a very complete answer
in a question for the record following rather than citing
individual studies, if that's okay.
Mrs. Lummis. We may follow up with you asking for copies of
those empirical studies.
Mrs. Lummis. In response to comments that raising the
minimum wage of the seasonal employees would lead to staff
reductions, Department of Labor said there were alternative
ways for these businesses to operate without reducing staff.
Mr. Lazzeri, what are these alternatives?
Mr. Lazzeri. That's a very good question, and thank you
again. When we looked at the potential economic impacts, again,
we studied increases in productivity that could result from an
increase in the minimum wage and the potential that an increase
in the quality of the services that are provided could in turn
lead to an increase in the number of customers that would bring
additional revenue to a particular employer. In the
Department's final rule, we did consider this information
generally.
Mrs. Lummis. Has DOL performed an analysis of the
outfitting and guide industry to identify better ways they can
operate?
Mr. Lazzeri. Thank you again for the question. I believe
that, you know, the Department, when we considered the
information that was presented to us, and as in any rule of
general applicability, we look at the impacts of a particular
rule pursuant to the Executive Order 12866.
Mrs. Lummis. So the answer is no? The answer is no, right?
Mr. Lazzeri. We're happy to take additional information
to----
Mrs. Lummis. Well, wait a minute. The answer to the
question.
Mr. Lazzeri. The answer to the question specific to that
industry, we did not look at the particular impacts of the rule
on any particular industry.
Mrs. Lummis. Thank you.
Mr. Cottingham, the Department of Labor says this order is
good for everyone because it will result in reduced absenteeism
and turnover, improve employee morale, increase quality of
services. Could you comment on that statement as it applies to
your business?
Mr. Cottingham. Yes, ma'am. First of all, implementation of
this would basically put me out of business. It's--would--our
average salaries are about $2,500 a summer, and it would turn
the industry, at least for teenagers and summer camps for
children, into elitist opportunities only for people with a ton
of money who could possibly afford it, and I see that as a
real, real problem.
Mrs. Lummis. So you don't believe it will make your
business more successful?
Mr. Cottingham. Well, no. It could not make it more
successful. I would not be able to have a clientele except for
maybe 50 or 100 people who could probably afford to pay what I
would have to charge.
Mrs. Lummis. So you would have to reduce staff or just----
Mr. Cottingham. Totally reduce staff or go out of business
in my particular case, yeah.
Mrs. Lummis. Mr. Brown, can you talk about the important
impact the members of your association have on the economies of
local communities?
Mr. Brown. Well, in one recent economic study on the Ocoee
River, the recreation activity on that river created 622 full-
time job equivalents, and $43 million in economic benefits
within a 60-mile radius. That is a rural county, very poor, so
many of the local residents sustain themselves, in part, by the
jobs--seasonal jobs on that river.
Mrs. Lummis. Because they operate seasonally and the
seasonal nature of these businesses makes it a different
business model from the traditional model, should there be a
different minimum wage requirement?
Mr. Brown. Well, I think that the basic Federal minimum
wage requirement is, you know, obviously, the one that should
exist for these businesses. Seasonal--or, you know, the
exemption from the seasonal, there was--in 1939, Fair Labor
Standards Act anticipated an exemption for seasonal
recreational businesses, which was appropriate, I think, and
that's what we're trying to restore. It's an exemption that
exists for organized camps, for ski areas, and for a number of
other nonprofit conference centers and a number of other
similar businesses.
Mrs. Lummis. Thank you. My time is expired.
I now recognize the ranking member for 5 minutes.
Mrs. Lawrence. Thank you, Madam Chair.
And thank you, gentlemen, for your information here today.
My first question goes to Mr. Lazzeri, correct?
Mr. Lazzeri. Lazzeri.
Mrs. Lawrence. Can you explain why the outfitter and guide
business was no longer exempted from the FLSA, Fair Labor
Standard Act, starting in 1977? It is my understanding that the
exemption was removed, and today, the discussion again centers
around making those businesses exempt so that the Federal
minimum wage would no longer apply. Can you tell me the
history, why was it removed?
Mr. Lazzeri. I'm happy to, Ranking Member Lawrence. Thank
you for the question. We've looked at again the legislative
history for the 1977 amendments and their specific mention of
wilderness workers and why they were pulled out of the
exemption, and it was based on just a simple premise that for
work that's performed on Federal land, should be covered by
Federal laws and standards.
Mrs. Lawrence. Can you tell me why the Department of Labor,
why are the outfitter and guide businesses, which hold permits,
are required to be covered by the executive order?
Mr. Lazzeri. I'd be happy to. Thank you. When we looked at
the requirements of the executive order and the categories of
covered contracts in the executive order, there were four.
There were contracts that were covered by the Davis-Bacon Act,
by the Service Contract Act, concession contracts that have
previously not been covered by the Service Contract Act, and
then also a fourth category, which is the category which is
relevant today. And it was agreements that were in connection
with the use of Federal lands for the general public, and when
we looked and in our notice of proposed rulemaking and also
with the comments and considered the information that was
provided to us, it seemed to be fairly clear that the executive
order intended these particular agreements to be exempted--I'm
sorry, these particular agreements to be covered by the
executive order
Mrs. Lawrence. Mr. Cottingham, can you explain to me, you
mentioned your industry and the services you provide, which are
very impressive. Why should the people who work on Federal
lands in the outfitter and guide industry make less money than
other employees by Federal contractors on those very same
lands, why?
Mr. Cottingham. First of all, in my particular situation,
my employees are on duty 24 hours a day.
Mrs. Lawrence. Uh-huh.
Mr. Cottingham. So we are talking about a minimum wage plus
overtime on a 96-hour week if my calculations are correct, and
that type of level of wage is simply not possible in the summer
camp industry. It's just not possible to achieve, and--did I
answer that question to your----
Mrs. Lawrence. Yes. I have a followup question.
Mr. Cottingham. Yes, go ahead.
Mrs. Lawrence. In your timekeeping requirement for your
employees, aren't there guides that when they're on several
days, they have logs of sleep time and interruption, so if a
person is out on one of these, there is actual--they are not on
the clock for the whole 24 hours; aren't there logs for sleep
time and interruptions?
Mr. Cottingham. Yes. It's my understanding, Congresswoman,
that the--you know, you have to obviously get sleep when you
can get sleep, but----
Mrs. Lawrence. But it's not a 24-hour. If someone is out on
a--they are not paid for every single hour that they are----
Mr. Cottingham. No, no, they get paid on a salary basis.
Mrs. Lawrence. Okay. I have another question.
Mr. Brown, you stated something that it was kind of what
I--a point I wanted to make. You said that you--it's a rural
area, and there is poverty, and the jobs that we're talking
about aren't only young college students. They are not only the
people who are entry level. The type of jobs that we're talking
about sometimes sustain, in those rural areas, employment and
income on off-seasons for people in your area; is that correct?
Mr. Brown. I think, if I understand your question, yeah,
they're--these are--a lot of this income is supplemental.
Mrs. Lawrence. Yes, that's my point.
Mr. Brown. Yeah. And it's certainly for the students and
the entry-level employees, it's--you're helping them get
through college or----
Mrs. Lawrence. But it's also supplemental for those who
live in that area.
Mr. Brown. Yeah, exactly.
Mrs. Lawrence. For working adults.
Mr. Brown. And most of those working adults are actually
paid more than the minimum wage, so that's just not an issue
for the more experienced employees in the managerial positions.
Usually, if they've got families, you know, they have enough
experience that they're making more than the minimum wage.
Mrs. Lawrence. But they hold these jobs we're talking
about, correct?
Mr. Brown. Some of the--well, they hold higher levels.
Mrs. Lawrence. They do hold these jobs we're talking about,
working----
Mr. Brown. Working higher level jobs, yes
Mrs. Lawrence. --adults. Thank you.
Mr. Brown. The entry-level jobs are usually held by
students and young people.
Mrs. Lawrence. But they have the same job classification.
Mr. Brown. Different duties.
Mrs. Lawrence. But they are classified as outfitters,
correct?
Mr. Brown. They are classified usually as guides or
managers.
Mrs. Lawrence. Yes. Thank you.
Mr. Brown. Yes.
Mrs. Lummis. I thank the gentlelady.
And the chair now have recognizes Mr. Meadows.
Mr. Meadows. Thank you, Madam Chairman, and thank you for
your leadership on this particular issue.
It is of critical importance to me in that outdoor
outfitters are a vital part of western North Carolina.
Mr. Brown, you mentioned the Ocoee. There's the Ocoee.
There's the Nantahala. There's the Chattooga. There's a number
of different outfitters in my area. Sadly, in those counties,
very close to many of those outfitters, the unemployment rate
is at 15 percent still today, and yet here we have, Mr.
Lazzeri, a rule that threatens to put many of those businesses
out of business, and so the augmenting--you know, it's great to
say that we have a minimum wage at $10.10 an hour, but when you
don't have a job, it doesn't really matter.
So Mr. Lazzeri, I'm going to go to you because I'm troubled
by some of the logic. You opened up with a quote with Mr. Perez
that says no full-time worker should have to work, and yet
we're not really talking about full-time workers here. We're
talking about part time and seasonal, so how would that apply
to your opening quote from Mr. Perez?
Mr. Lazzeri. Well, thank you.
Mr. Meadows. Or wouldn't?
Mr. Lazzeri. Well, thank you, Congressman.
When the Department is considering the executive order and
conducted its economic analysis, as I stated before, we looked
very broadly at the impact of the executive order on all
workers who would be impacted and all employers who would be
impacted. Therefore, we don't look at the specific economic
impact on one individual employer. We do recognize, however, in
the executive order final rule, through our economic analysis,
that any impact for the increase in cost can be offset by the
increase in benefits to----
Mr. Meadows. Now, how is that? You keep saying that. How
many seasonal businesses have you actually owned, Mr. Lazzeri?
I've owned four of them, so you tell me how that's going to
happen because it sounds real good, but I am very troubled by
you suggesting that it can be offset when--have you made
payroll for seasonal businesses on a regular basis?
Mr. Lazzeri. And, again, I appreciate your question,
Congressman. My role today----
Mr. Meadows. Yes or no. Have you owned seasonal businesses?
Mr. Lazzeri. I have not.
Mr. Meadows. Okay. Thank you.
So let me go further. How can you make that kind of
assumption? Hold on. Let me clarify that because that's too
open-ended. Mr. Cottingham is sitting there right beside you.
Mr. Cottingham, when we look at the business that you make,
how much of your income that you get paid by the Federal
Government to do? I mean, do they contract with you and pay you
for these tours and guidance services?
Mr. Cottingham. No, they do not.
Mr. Meadows. So they are not actually contracting with you
and paying you with Federal dollars. What you are in fact doing
is getting a special-use permit to actually come on Federal
lands; is that correct?
Mr. Cottingham. That is correct.
Mr. Meadows. Because we can understand if you were getting
Federal tax dollars and we were paying you for that to set this
new standard.
Mr. Lazzeri, do you not see the difference between the two
of those?
Mr. Lazzeri. Congressman, what I--and I appreciate, again,
the question. What I can say is that the executive order was
very clear.
Mr. Meadows. Do you see a difference? You're answering--
you're giving great answers to questions that I'm not asking.
So do you see a difference between someone who pays for a
service and then, Mr. Cottingham, who is getting a special use
permit, is there a difference? Yes or no.
Mr. Lazzeri. Congressman, I, again, I appreciate the
distinction that you're making. However, we did consider all of
the information that was provided to us when we considered the
final rule in connection with our economic analysis.
Mr. Meadows. So, since you considered it, is there a
difference, yes or no?
Mr. Lazzeri. That would be reflected in our economic
analysis.
Mr. Meadows. So you saw no difference.
Mr. Lazzeri. It was very clear to the Department through
the executive order that----
Mr. Meadows. All right. Then let me go--since you're not
going to answer that question, let me give you a different
question.
How are you implementing this particular rule with regards
to people who have a special-use permit here on the National
Mall?
Mr. Lazzeri. That's a great question, Congressman.
We are continuing to provide additional outreach and
guidance to all contractors, including contractors--including
businesses that are covered in--for special-use permits,
commercial use authorizations.
Mr. Meadows. So you have implemented it with regards to
everybody who demonstrates here on the National Mall, their
contractors, subcontractors, and everybody else have to meet
this new standard.
Mr. Lazzeri. In May of this year, we recently conducted a
webinar for all contractors where we answered questions live
from contractors, regardless of their background and interested
stakeholders, and we'll continue to do so.
Mr. Meadows. That's not the question I asked. I said, are
you enforcing it, yes or no?
Mr. Lazzeri. The Department is enforcing the executive
order on covered contracts.
Mr. Meadows. Here on the National Mall? Because I want you
to submit that to the committee, and actually, I'm here today
because of some of the people that are in my district because
it's personal to me; it's going to put people out of business
in western North Carolina. But I also have oversight over your
particular agency and how it handles it, and so I would ask you
give that to the committee on how you're doing it here on the
National Mall because, under your definition, there is no
difference from Mr. Cottingham and anybody else that gets a
special-use permit here on the National Mall.
Mr. Lazzeri. We'd be happy to provide it.
Mr. Meadows. So are you--are you implementing that?
Mr. Lazzeri. Specifically to the National Mall, I would
have to do additional research and be able to provide you a
response.
Mr. Meadows. All right. Madam Chair, you have been very
generous with your time.
I yield back
Mrs. Lummis. I thank the gentleman.
The chair now recognizes Mr. Palmer for 5 minutes.
Mr. Palmer. Thank you.
Mr. Lazzeri, what is the meaning of verbal agreements
covered by the rule?
Mr. Lazzeri. I'm sorry. Can you repeat the question,
please, Congressman?
Mr. Palmer. Okay. What is the meaning of a verbal agreement
covered by the rule?
Mr. Lazzeri. A verbal agreement, I'd have to--I'd have to
be able to research that and get back to you. I don't know that
we distinguish verbal agreements from any other type of
agreement.
Mr. Palmer. Well, following on Mr. Meadows' questions and
how you have gone from giving permits to companies like Mr.
Cottingham's organization to operate on Federal land, you've
now decided that that verbal agreement or that permit is now a
contract, and so you're going to impose this wage standard.
Mr. Cottingham and Mr. Brown, you can respond to this as
well if you'd like. The Department of Labor has contended that
the outfitters have failed to consider that their sales might
increase due to better service being offered by employees with
higher morale. Are your employees suffering a low morale?
Mr. Cottingham. I don't think any of my employees are
suffering low morale. If you can climb Mount Rainier in the
summer, kayak in Glacier Bay National Park, it is an amazing
opportunity. And they love working with kids. They love sharing
their love for the out of doors.
Mr. Palmer. Mr. Brown.
Mr. Brown. Yes, sir. I think this rule actually has the
reverse effect. It does not increase the income of entry-level
employees because these businesses are actually competing with
other businesses outside public lands and have to set their
prices accordingly, and so what a lot of outfitters are doing
is having to reduce hours to stay on budget, and so the effect
on morale certainly is not what the Department of Labor would
anticipate from that standpoint.
Mr. Palmer. Well, these businesses are different anyway
from traditional businesses in that they are seasonal and
they're subject to a different minimum wage requirement. Would
that be an accurate statement?
Mr. Brown. Yes.
Mr. Palmer. All right. The guides and outfitters typically
operate by paying the Federal Government for a permit to
provide certain services to the consumers on Federal lands. How
would you distinguish--and this is for you, Mr. Brown. How
would you distinguish this permit arrangement from traditional
contracts entered into between other entities?
Mr. Brown. Well, the permit is actually, it says in the
permit that it's not a contract. There are different--I think,
if I'm answering your question, I understand it, there are Park
Service contracts, and then there's certainly contracts that
permit holders will have with other entities. The permit is--
the Forest Service says the permit is not a contract, and BLM
will say the same thing. The only contract specifically in our
industry are Park Service concessions contracts.
Mr. Palmer. Mr. Lazzeri, having heard his response, why is
it the Department of Labor now classifies these as contract-
like instruments?
Mr. Lazzeri. Thank you for the question, Congressman. When
we looked at developing the notice of proposed rulemaking in
the final rule, we referred back to the executive order
definition. And the fourth category of covered contracts is
agreements for the use of Federal land for the general public.
And then, for us, when we looked at the information that was
provided and even during the comment period and the information
that was provided by the American Outdoors Association and OARS
company, another contractor or employer, we--we didn't see that
there was--we at least saw that it was very clear that these
types of agreements were contemplated as being covered by the
executive order explicitly.
Mr. Palmer. But you've never defined it like that before
until now.
Mr. Lazzeri. Well, the executive order in the third and
fourth category of contracts covered a number of contracts that
were previously not covered by the service--or by the Davis-
Bacon Act or arguably by the Service Contract Act.
Mr. Palmer. Okay. I want to go back to a line of questions
that Mr. Meadows was on, and he asked you if you had ever had a
seasonal business. Have you ever worked for a business?
Mr. Lazzeri. Have I worked for a business?
Mr. Palmer. Have you ever owned a business?
Mr. Lazzeri. I have not owned my own business.
Mr. Palmer. Okay. I doubt you'll be able answer this, but
I'll throw it out just in case. Anyone involved in this process
making this determination have--how many of those have ever
owned a business?
Mr. Lazzeri. I do not have that information, Congressman.
Mr. Palmer. My guess is, Mr. Lazzeri, that most of you
never--not only never owned a business, you probably haven't
worked for a business, which I think explains a lot of how we
come up with some of these policies that impact groups like Mr.
Cottingham's and industries like Mr. Brown represents, and it--
it is one of those areas that kind defies common sense. It's
rulemaking outside of an area of expertise that does not do any
good. It doesn't increase morale, and it doesn't--it doesn't
help create an environment where these businesses can make a
living and thrive and offer opportunities for a lot of young
people like Mr. Brown is talking about. It just makes no sense.
Thank you, Madam Chairman.
Mrs. Lummis. I thank the gentleman. We'll now go to a
second round of questions, and the chairman recognizes herself
for 5 minutes.
Mr. Lazzeri, would the rule apply to someone who gets a
permit for filming on public lands?
Mr. Lazzeri. For nonpublic lands?
Mrs. Lummis. Public lands. If someone is filming on public
lands, would the rule apply?
Mr. Lazzeri. I would have to get back to you on that. For
the particular instance, a lot depends on the contract and
particular services that are provided in the agreement
Mrs. Lummis. It's a permit.
Mr. Lazzeri. Again, respectfully, Madam Chairman, I would
have to consider that again. I don't want to provide an answer
for you that's not complete or accurate. I'd rather be able to
consider and provide you a more complete response.
Mrs. Lummis. Yes, I would ask for that. Please submit in
writing whether it applies.
Mrs. Lummis. What other permits would fall under the rule
requirement?
Mr. Lazzeri. So there are special-use permits, commercial-
use authorizations, so permits, for example, in the Forest
Service for use of other lands, so there's those types of
permits; permits issued by the Fish and Wildlife Service.
There's a number of different permits or lease agreements. In
addition, concessions contracts that were previously not
covered under the Service Contract Act are now covered.
Mrs. Lummis. Does it apply to interns at the Wage and Hour
Division?
Mr. Lazzeri. That's an excellent question.
Mrs. Lummis. Would you let me know? Would you answer that
question in writing as well?
Mr. Lazzeri. I will go back, and I will provide you a
response. However, the key to coverage for the executive order
is not just that it's a covered contract under the executive
order, but they would have to be covered under the Fair Labor
Standards Act, so if they are not--if they're an intern that's
not covered by the Fair Labor Standards Act, they'll likely not
be covered.
Mrs. Lummis. Mr. Cottingham, can you walk me through how
this would apply to overnight stays? What kind of recordkeeping
would be required if I were an employee of yours taking young
people out on public lands for an overnight trip?
Mr. Cottingham. It would require another full-time
employee, at least one, in my office--at least one to monitor
all of this. And it would keep--it would also require my
leaders to keep logs in the back country, which is another
hindrance to their primary charge, and that is the wellbeing
and the care of the young adults that they're working with. And
I see that that would be--would be very burdensome.
Mrs. Lummis. Mr. Brown, do you represent other businesses
that do overnight trips?
Mr. Brown. We--mostly outfitters and guides.
Mrs. Lummis. Okay. So----
Mr. Brown. We have guest ranches as well.
Mrs. Lummis. So these people are out on horseback
sometimes?
Mr. Brown. Yes, hunting trips, a variety of outdoor
recreation experiences.
Mrs. Lummis. So are they going to have to take notebooks
with them to keep track of--to log all this, like when they're
asleep, when they're awake?
Mr. Brown. They would. And it's even more complex than that
because they have to keep track of the meals they eat and then
take the value of those meals, add those to the base wage when
overtime is calculated. If they operate under a covered--if
they're employed under a covered contract, activity is under a
covered contract, and activities not under a covered contract,
they have to keep records--precise records of the time spent on
the activities under the covered contract and the activities
that are not on the covered contract.
For example, if you're not working on a permitted activity,
you're working doing something at a guest ranch, you know,
that's not related to the permitted activity, you're not
covered by the rule, but in order to not have to pay, or you
know, to--you have to have very precise records.
Mrs. Lummis. And so the employee has to understand when
they're working on a covered contract versus non?
Mr. Brown. That's correct. If they're keeping the log, and
very often, as you know, when you're working two or three
different types, multitasking at any business, small business,
you're hopping from one task to the next, you might be packing
lunches for a pack trip out in the back country one minute and
the next minute you might be tending to horses that are used
just on a guest ranch.
Mrs. Lummis. I can't imagine the complications associated
with this rule for outfitters and guides.
Mr. Brown. Yes, ma'am.
Mrs. Lummis. Last question. Mr. Lazzeri, sort of on a
different subject. I know the wage and hour division is
currently working on updating the special procedures that
govern the H-2A Visa Program. Sheep and cattle grazers help the
Federal Government manage much of its Federal land. Many of my
constituents utilize the program, the H-2A Visa Program, and,
for example, Mountain Plains Agricultural Service in Casper,
Wyoming works with them. Mountain Plains has repeatedly tried
to meet with your division to discuss their concerns and
provide input but has been denied. I know you're dealing with a
deadline imposed by a court case, but will you commit your
organization to meet with them and other stakeholder groups?
Mr. Lazzeri. I appreciate the question. My role, Madam
Chairwoman, is to represent the wage and hour division
particular to my specific branches in the government contracts
arena. What I can do is I can take back the concerns that you
have and be able to raise them with our leadership. I can
commit to that.
Mrs. Lummis. Thank you. And I would ask you to identify a
specific person that will respond in writing to my request. And
thank you.
Mrs. Lummis. Mrs. Lawrence, you're recognized for 5
minutes.
Mrs. Lawrence. I just want to say I have to go to another
committee meeting, but my goal on my bucket list is whitewater
rafting. So I may see you gentlemen soon.
Mr. Meadows. If the gentlewoman will yield for just a
second, you have a standing invitation to come to western North
Carolina at my expense.
Mrs. Lawrence. Well, I get to determine what level of the
whitewater rafting. That's the only thing.
Gentlemen, today I hear the concerns of the industry. Mr.
Lazzeri, can you please tell me if with the executive order, is
it immediate, is there a phase-in? What would be the impact or
the timeframe on the impact that this executive order will have
on this industry?
Mr. Lazzeri. Well, the executive order, in the final rule,
the Department defined new contracts as covered. The new
contracts entered into after January 1 of this year. So if a
permit holder had an existing permit in December of last year
and they had a 2-year permit, as I believe that the AOA has
specified are commonplace, then they would not be required to
be in compliance with the executive order and pay the $10.10
until 2 years--until the expiration of their contract.
Mrs. Lawrence. I have a question. There's a lot of concern
because the businesses are operating as you are now, but we're
saying things like it's going to have--Mr. Brown, you stated
it's going to result in unemployment and reducing of pay. What
is your data and where do you get that data from? Is it a
concern? Has it been documented? Where does that----
Mr. Brown. Well, it's actually--excuse me. Thank you,
Congresswoman. It's actually what my members who've had this--
the contract clause on their permit have said. Some, as Mr.
Lazzeri said, new permits have the contract clause on them, and
we have some outfitters who've gotten contracts--new clause--
new permits with the contract clause on it. In fact, they were
told that December 1 it was going to be on their permit which
was issued shortly after the first of the year. They were
totally unprepared for it because they'd already sold trips.
And so their response was that they had to adjust their
employment, reduce employment, cut hours. They went from 8-hour
days to 7-hour days, for example, in order to accommodate the
increase of pre-entry level employees primarily.
Mrs. Lawrence. Two things that I heard. I firmly believe
that raising the minimum wage has a positive impact on all of
America, and I'm very strong on that. But I do also understand
that in doing business that you need the opportunity to make
those adjustments, and there is an immediate impact.
Mr. Lazzeri, you have stated that there has been some
training. I would like for the record, what are you doing to
assist these companies in the transition? Some of the things
that were stated by Mr. Cottingham and Mr. Brown in this
industry you're already doing because you already have
individuals who are performing these tasks and you are keeping
because you have a Federal contract now and you do have to
separate the activities. So I don't see that as being an
additional burden. I see that as you doing business.
The last question I have. How long, Mr. Cottingham, have
you been in the business?
Mr. Cottingham. Congresswoman Lawrence, I have been in the
business for--this will be the 43rd year.
Mrs. Lawrence. Wow. So I would consider you a pro. What I
want stated for the record, during that time, the fee that you
charge for individuals participating in your services, they've
been increased over the years. Correct?
Mr. Cottingham. Some years, yes. Not all.
Mrs. Lawrence. But over the, let's say the last 10 years,
you've increased the fees, I'm sure.
Mr. Cottingham. Most certainly, as cost of living has
increased. Yes.
Mrs. Lawrence. Yes. And the point I want to make is the
cost of living has increased and you had to make business
decisions, people who work every day are confronted with that
same issue, and fundamentally that's why I am a very strong
component of increasing the minimum wage. And as businesses
must do what they need to do to meet their bottom line because
we need strong industry, across the country they're making
those decisions to raise the cost of their services.
I drive an automobile. There's never been the same price,
but we also need to be focused on the cost. But I feel that
the--we should support you in preparing you for that so you can
make the right decisions.
Thank you.
Mrs. Lummis. I thank the gentlelady.
And the gentleman from North Carolina is recognized for 5
minutes.
Mr. Meadows. Thank you, Madam chair.
Mr. Lazzeri, since we are talking about outfitters, it
would be appropriate for me to say that I have a burr in my
saddle with regards to this particular rule that you have put
forth. And so in saying that, can you assure the committee that
you are fairly and equally, with the emphasis on equally,
applying this rule to all U.S. citizens who contract in one way
or another under your definition, with the Federal Government,
are all of them having to meet the same standards?
Mr. Lazzeri. Thank you, Congressman. What I can say is that
we are--we do our best, for all the laws we enforce, to ensure
that we enforce them consistently and fairly for all employers,
and on the behalf of all employees regardless of background.
Mr. Meadows. Okay. So you're doing your best. So how do you
do that? Going back to be the National Mall, other than your
Webinar training, how are you putting the same requirements on
those permit holders as you would Mr. Brown's members or Mr.
Cottingham? How are you doing that?
Mr. Lazzeri. Thank you, Congressman. We work very closely
with contracting agencies to make sure that they have the right
training so that way they're inserting the contract clauses
appropriately----
Mr. Meadows. But it's a different standard, Mr. Lazzeri.
And let's have an intellectual discussion here. There's a
difference between enforcement and training. So how are you
enforcing that with regards to that?
Mr. Lazzeri. And I appreciate the question, Congressman. We
treat those equally. We provide an equal amount of outreach and
enforcement, not just for this particular executive order, but
for all the laws we enforce. And we'll continue to do so and
have made the offer to the AOA.
Mr. Meadows. All right. So you mentioned that you listened
to all kinds of stakeholders while you were doing this rule.
The majority of the stakeholders that responded, were they in
favor of this rule?
Mr. Lazzeri. In the comment period, Congressman, to answer
your question, I appreciate it again, we received 6,500
comments, not all unique. We received about 100 unique comments
opposed to the rule.
Mr. Meadows. And so are you suggesting that there was 6,400
unique responses in favor of the rule?
Mr. Lazzeri. No. But I can get you more specific
information as far as the breakout of the numbers.
Mr. Meadows. All right. So you're saying only 100 people
complained in the comment period?
Mr. Lazzeri. During the comment period, we received only
100 comments--or I don't want to say only. We received one--
because every one is valuable----
Mr. Meadows. So how many of those recommendations did you
implement? Well because you keep coming back to talk about the
executive order said this, the executive order said that, and
it sounds like you didn't really pay attention to any of the
stakeholder input as much as you did what the executive order
said.
Mr. Lazzeri. Well, Congressman, we did make changes to the
final rule to exempt new contracts from the coverage of the
rule.
Mr. Meadows. But in this particular case, there's a new
contract--if I'm traveling on a Federal road and paying a toll,
I enter into a new contract each and every time that I do that
because I'm paying a fee to use a Federal asset. So is that a
new contract?
Mr. Lazzeri. Congressman, I would prefer not to respond to
the particular circumstance without giving it more thought. But
my understanding is that would probably not be covered by the
executive order.
Mr. Meadows. All right. So what about if I lease a building
from the Federal Government? Do I have to comply with those
standards when you're the lessor?
Mr. Lazzeri. There are a number of requirements,
Congressman, not just under the executive order but the Service
Contract Act that would govern contracts governed by lease
agreements as well.
Mr. Meadows. So I would have to meet the new executive
order if I'm a lessee?
Mr. Lazzeri. Well, Congressman, you would likely have to
comply with not just the executive order but also the Fair
Labor Standards Act.
Mr. Meadows. But that's a different number. And so--when we
really look at that. So let me go on a little bit further.
Is there, in your opinion, any way that we can give a
waiver to seasonal businesses and that you re-address this and
work this without us doing a legislative fix? Are you willing
to look at that?
Mr. Lazzeri. Thank you, Congressman. We're happy to take
additional information. However, we did consider these types of
agreements in conjunction with the scope of the executive
order, and we determined that these agreements were clearly
ones that were meant to be covered by the very terms of the
executive order.
Mr. Meadows. So, again, it was more what the executive
order said than what the stakeholders said.
Mr. Lazzeri. We considered both.
Mr. Meadows. All right. So how many--how many times did you
go out and visit seasonal businesses before you made your rule?
You personally. How many times did you go? Since you're one of
the ones that are in charge, how many times did you travel to
see the impact?
Mr. Lazzeri. I can't comment on that. I actually don't
have----
Mr. Meadows. So did you go or not?
Mr. Lazzeri. I can't tell you for sure----
Mr. Meadows. So you don't know whether you went to a
seasonal business or not?
Mr. Lazzeri. I can look back and I can respond, but I can
respond in questions for the record if you prefer.
Mr. Meadows. So it wasn't that long ago. So did you travel
to go and visit personally or not? Come on, Mr. Lazzeri.
Mr. Lazzeri. I do not want to provide you with an answer
that's inaccurate, Congressman. But I do appreciate the
question, and I understand the importance of this issue to you.
And I do want to provide you with a more complete response.
Mr. Meadows. So you may have.
Mr. Lazzeri. I can't say for sure.
Mr. Meadows. Madam Chairwoman, I find it just amazing. I
hope that his wife or--if you're married----
Mr. Lazzeri. I am.
Mr. Meadows. --that you can remember your anniversary
better than you can potential trips.
Mrs. Lummis. The chair now recognizes the gentleman from
Colorado for 5 minutes.
Mr. Buck. And I would be glad to yield to the gentleman
from North Carolina. I'm enjoying this. So I don't have any
questions. So if you'd like to continue.
Mr. Meadows. I have one other question, Mr. Lazzeri. If you
say you're willing to take additional input but yet it's not
going to affect the outcome, why take the additional input?
Mr. Lazzeri. Well, I can talk about the testimony provided
by the American Outdoors Association as an example. Providing
additional compliance assistance can resolve some of the issues
that have been raised that we believe may not be exactly
accurate. For example, for meals and breaks, under the Fair
Labor Standards Act the AOA has referred to that as a burden.
But that burden, as it's described, is currently required by
the Fair Labor Standards Act, but only if you take a credit as
an employer against the minimum wage.
So you're already reducing the hourly pay for that hour
where a meal break is being provided. That is why these
employers are provided--or asked to keep logs. And for the
Department, we would be happy to provide additional compliance
assistance, because we think that there are ways, just based on
the testimony, that we can help clarify some of the
misperceptions that we believe the industry has about the rule.
Mr. Meadows. All right. Madam Chairman, I want to close
with one other request. Mr. Lazzeri, since you can't seem to
recall whether you've been there or not, are you willing to
accompany me to some of the seasonal businesses in western
North Carolina so that you can see firsthand what you're
talking about and the rules that you are and how they
potentially impact people that are dealing with double digit
unemployment in western North Carolina? Are you willing to go
with me? I'll be glad to pay.
Mr. Lazzeri. I appreciate that, Congressman. I would have
to consult with the Department as far as what I can do.
However, I'm more than happy to consult with also additional
employers. In addition, members for the AOA, we're happy to
respond to any questions that they have specifically to help
them to be able to comply with the law.
Mr. Meadows. All right. I thank you, Madam Chairman, for
your leadership on this issue. I yield back to the gentleman
from Colorado. I appreciate you graciousness.
Mr. Buck. Thank you.
Mr. Cottingham, anything that you want to mention today
that hasn't come up? Anything that you think is important to
put on the record?
Mr. Cottingham. Well, I've been in business for 43 years,
and I don't know how many employees I've had over all those
years. A lot. I've never met a mountain guide on Mount Rainier,
Grand Teton, Mount Shasta, I've never met a river rafting guide
on any of the rivers I've run who had low morale engaging in
those kinds of activities.
When I led for the first 9 years--I didn't just start a
company and hire a bunch of people. I actually led. I led for 9
straight years with my wife. And those were the finest, most
rewarding summers I ever had in my life. And when I hire a
young person today, as a leader, I am so thrilled that they
have an opportunity to have the experience that I had.
So I would just like to add that because I think it--you--
the Department of Labor misses the whole point about the need
for this exemption, because these jobs are for people who are
not--in my particular case, I can tell you that they aren't
people who are trying to put bread on the table and feed their
families. They are people who are doing this because they just
love the opportunity to share their enthusiasm. It's a pretty
amazing group of people.
Mr. Buck. Thank you. Mr. Brown, same question.
Mr. Brown. Well, I think one of the concerns we have is the
subcontractor requirement that--to require the Department of
Labor contract clause to be put on any subcontract that a
permittee has. We're still unclear on who qualifies as a
subcontractor. We asked the Department of Labor to clarify
that, and they referred us to the Service Contract Act. Well,
there aren't many permittees who have the opportunity or
inclination to read the Service Contract Act. So that would be
one of the real concerns we have about implementation of the
rule.
Mr. Buck. Okay. Thank you.
I yield back.
Mrs. Lummis. I thank the gentleman from Colorado.
And we have been joined by Ms. Plaskett from the Virgin
Islands. You are recognized for 5 minutes.
Ms. Plaskett. Yes. Thank you so much for your time. I don't
have that many questions. I know there's been quite a bit of
discussion going back and forth on this, and that Ranking
Member Lawrence did ask some questions previously.
I just had just a couple that I wanted to speak on. Mr.
Brown, I know that this was asked to Mr. Cottingham, but, Mr.
Brown, your testimony about the guides in the back country for
several days have to keep logs of sleep time and any
interruptions. The value of meals they eat have to be
calculated and added to hourly computation for overtime wages.
Is that correct that keeping these records are not specified in
the executive order?
Mr. Brown. No. Well, there's a requirement, Congresswoman,
to maintain records for examination. And so I would presume
that those records are required, although they're not referred
to in the rule.
Ms. Plaskett. But it would be something that you would
expect to be kept?
Mr. Brown. Yes.
Ms. Plaskett. And how would that change the amount of wages
that individuals are receiving if you were to calculate that as
well?
Mr. Brown. Well, potentially if you certainly took the
credit for sleep time, it would reduce the amount of pay.
Ms. Plaskett. Right. Because you're sleeping probably
almost as much as you're working. Right?
Mr. Brown. No. Probably not. Probably working more than
sleeping.
Ms. Plaskett. Okay. Well, that's how I work, but I don't
know how other people--but it would significantly make the
amount of pay that individuals are receiving per hour of a
significant change?
Mr. Brown. It would change the gross pay, yes.
Ms. Plaskett. And when we talk about the gross pay, Mr.
Cottingham, in earlier testimony there was discussion about
average salaries for the summer, $300 to $500 a summer. How
many months is that?
Mr. Cottingham. Excuse me. I don't quite understand $300 to
$500. What are you referring to? Our average salary is
approximately $2,500 for a 6- to 7-week employment period.
Ms. Plaskett. Okay. Okay. The employment period is how
long?
Mr. Cottingham. Six to seven weeks.
Ms. Plaskett. Okay. So for 6 or 7 weeks they're making how
much in gross pay?
Mr. Cottingham. Twenty-five hundred dollars, plus they are
getting the bonuses of being able to climb major peaks, raft
rivers and----
Ms. Plaskett. So the $300 to $500 amount, what is that? Per
week, then? Is that what this is?
Mr. Cottingham. I didn't say anything about $300 to $500.
Ms. Plaskett. Okay.
Mr. Cottingham. Yeah. No.
Ms. Plaskett. All right. Thank you for that clarification.
Mr. Brown, you can you describe any other specific burdens
that the executive order will generate for businesses?
Mr. Brown. Well, the one issue that I described a little
earlier was the requirement, for example, if you have an
employee that works under a covered part--part-time under
covered contracts and then part-time under activities that are
not covered under the Department of Labor rule, then assuming
that they are not paid the same scale for those other
activities outside the covered contract, precise records have
to be maintained so that you are able to show the Department of
Labor how many hours are worked under the activities covered by
the contract.
Ms. Plaskett. But that would just be good business practice
anyway. Would it not?
Mr. Brown. It would not be required without this Department
of Labor rule.
Ms. Plaskett. Okay. And, Mr. Lazzeri--is that the correct--
--
Mr. Lazzeri. Yes. It is.
Ms. Plaskett. Okay. I'm very particular about the
pronunciation of my name. So I try to get people's correct.
How do you respond to business concerns about the increased
labor cost affecting profitability? And then how has the
Department responded to that if there are those business
concerns?
Mr. Lazzeri. Thank you for the question. We--as described
in the executive order, we did a careful economic analysis, and
it was our determination based on that analysis that any
additional costs that would be borne by employers could be
offset by additional productivity increases, reduced turnover,
less absenteeism, lower supervisory costs, for example, and the
Department continues to provide additional outreach and
guidance and are willing to do so for the AOA and its members,
to Mr. Cottingham, and to others who have additional questions
about how to comply with the law and how to comply in an easier
manner, so to speak.
Ms. Plaskett. Okay. Thank you. Thank you very much for the
time.
Mrs. Lummis. I thank the gentlelady.
The chair now recognizes Mr. Palmer for 5 minutes.
Mr. Palmer. I want to go back to that previous question.
Thank you, Madam Chairman.
You were saying that it would increase productivity and
efficiency, but earlier in the rule it says increased costs can
be offset in contract negotiations entered into by the
businesses and its suppliers and consumers. This would imply
that those people who did your little analysis might have
anticipated that there'd be a cost increase.
And you said this would--it also said this would either
mean the payments it makes to the Forest Service and other land
managements agencies or to customers who are Americans, usually
a taxpayer, on land. Will the Department of Labor ensure that
other Federal land management entities such as the Forest
Service, for instance, will charge guides and outfitters less
for public land permits to make up for the increased labor
costs caused by the executive order? Any plans for that?
Mr. Lazzeri. We've been working with other Federal partners
like the United States Forest Service to be able to answer
questions from the regulated community and from their specific
stakeholders. We recognize in the rule that, you know, it is a
rule of general applicability and that we do not have all of
the experience that some of the contracting agencies like
Bureau of Land Management, for example, would have with
individual stakeholders, and we're happy to work with them to
be able to help them answer additional questions.
As far as influence over the cost of the permit, I would
have to defer to the contracting agency.
Mr. Palmer. Before you started--before you put forth this
rule, did you sit down with anyone from the Forest Service,
Bureau of Land Management, any of these other agencies that
deal directly with these businesses to discuss with them how
this might impact these businesses?
Mr. Lazzeri. Following the issuance of the executive order
and the development of the notice of proposed rulemaking and
the final rule and throughout our rulemaking, we do consult
with additional--with other contracting agencies and receive
comments through interagency comments that we receive, and we
respond to those accordingly.
Mr. Palmer. So are you saying that you did sit down with
the Forest Service and discuss how this would impact these
businesses?
Mr. Lazzeri. Congressman, we did receive their input.
Mr. Palmer. And would you be willing to share that with the
committee?
Mr. Lazzeri. I would have to discuss that with the
Department and--however, if you request any additional
information, we will respond accordingly.
Mr. Palmer. Madam Chairman, I would like to request that
any documented discussions that they had with the Forest
Service be provided to the committee.
Mr. Palmer. Mr. Brown, about a year ago on behalf of the
American Outdoor Association you wrote a letter to Director
Ziegler, I think it was in July of last year, and asking what
is the meaning of verbal agreements covered by the rule. Did
you get a response?
Mr. Brown. No. I did not. There were references in the
final rule, which was 300 pages, but I would not be able to
tell you the answer. Not sure there is one.
Mr. Palmer. Mr. Lazzeri, and, Madam Chairman, I would like
for Director Ziegler to provide a response to Mr. Brown's
letter to Mr. Brown and to the committee, if I may ask for
that.
Mrs. Lummis. Without objection, so ordered.
Mr. Palmer. Thank you.
Mr. Palmer. The Forest Service doesn't view permits as
contracts or contract-like instruments. Can you give me some
explanation as to why the Department of Labor has decided to
equate permits to contracts?
Mr. Lazzeri. I appreciate the question, Congressman. When
we considered the executive order and we looked at the
definitions--the four categories of covered contracts, they
were explicitly mentioned in the executive order.
And when we considered the information provided by
stakeholders, including the American Outdoors Association and
others, Forest Service and others, it was clear to us when we
looked at the executive order definition that the executive
order very explicitly intended to cover just these particular
types of agreements.
Mr. Palmer. All right.
Mr. Lazzeri. Under the fourth category of covered contract.
Mr. Palmer. Madam Chairman, I yield the balance of my time.
Thank you.
Mrs. Lummis. I thank the gentleman, and I thank all members
of the committee and the panel, thank the staff.
Particularly want to thank our witnesses today. We
appreciate your being here. Appreciate your testimony. Mr.
Lazzeri, you've been asked for--to follow up in writing on
several matters today at the hearing, and we will look forward
to your responses and the Department's responses to our
requests. Thank you all for being here.
If there's no further business, without objection, the
subcommittee stands adjourned.
[Whereupon, at 11:33 a.m., the subcommittee was adjourned.]
APPENDIX
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