[Senate Report 105-11]
[From the U.S. Government Publishing Office]
Calendar No. 32
105th Congress Report
SENATE
1st Session 105-11
_______________________________________________________________________
FAMILY FRIENDLY WORKPLACE ACT
_______
April 2, 1997.--Ordered to be printed
Filed under the authority of the order of the Senate on March 27, 1997
_______________________________________________________________________
Mr. Jeffords, from the Committee on Labor and Human Resources,
submitted the following
R E P O R T
together with
ADDITIONAL AND MINORITY VIEWS
[To accompany S. 4]
The Committee on Labor and Human Resources, to which was
referred the bill (S. 4) to amend the Fair Labor Standards Act
of 1938 to provide to private sector employees the same
opportunities for time-and-a-half compensatory time off,
biweekly work programs, and flexible credit hour programs as
Federal employees currently enjoy to help balance the demands
and needs of work and family, to clarify the provisions
relating to exemptions of certain professionals from the
minimum wage and overtime requirements of the Fair Labor
Standards Act of 1938, and for other purposes, having
considered the same, reports favorably thereon with amendments
and recommends that the bill (as amended) do pass.
CONTENTS
Page
I. Introduction and purpose.........................................2
II. Background and need for legislation..............................1
III. Legislative history and committee action.........................3
IV. Explanation of bill and committee views.........................14
V. Cost estimate...................................................26
VI. Regulatory impact statement.....................................28
VII. Application of law to legislative branch........................29
VIII.Section-by-section analysis.....................................29
IX. Additional views................................................34
X. Minority views..................................................36
XI. Changes in existing law.........................................57
I. Introduction and Purpose
The purpose of S. 4, the Family Friendly Workplace Act, is
to ensure that the evolving needs of America's work force are
reflected in our Nation's laws. Today, there are more working,
single parents and dual income families in America than ever
before. S. 4 updates the Fair Labor Standards Act of 1938 in
order to assist working people to balance the growing demands
of the workplace with the needs of families. S. 4 provides men
and women working in the private sector the opportunity to
voluntarily choose compensatory time off in lieu of overtime
pay, as well as to voluntarily participate in biweekly and
flexible credit hour programs.
The U.S. Congress has endorsed the benefits of flexible
scheduling on numerous occasions. Unfortunately, public sector
employees have thus far been thus far the only beneficiaries of
this enlightenment. S. 4 is intended to change this by making
flexible scheduling options available to 80 million employees
working in America's private sector. This legislation will give
hard working men and women the ability to design their work
schedules around their family situations. Employers will
benefit from more productive and satisfied employees.
In recent polls, Americans have overwhelmingly supported
amending the Fair Labor Standards Act to allow for more
flexible scheduling options. The American people are not alone
in their belief that it is time for a change. President Clinton
acknowledged the importance of workplace flexibility, at least
for Federal employees, in a July 11, 1994 Presidential
Memorandum. The President decreed that ``Broad use of flexible
work arrangements to enable Federal employees to better balance
their work and family responsibilities can increase employee
effectiveness and job satisfaction, while decreasing turnover
rates and absenteeism.'' In his 1997 State of the Union
Address, the President also recognized that it is time for
broader change in the private sector when he proclaimed: ``We
should pass flex-time, so workers can choose to be paid
overtime in income, or trade it in for time off to be with
their families.'' S. 4 is the impetus to that much needed
change. This legislation will enable Americans to participate
in flexible work schedules so that they can better cope with
the challenges of the 21st century.
II. Background and Need for Legislation
a. background
The Fair Labor Standards Act (FLSA) \1\ was enacted in
1938. It established standards for minimum wage, overtime,
record keeping, child labor and other workplace issues. As
originally passed, the FLSA did not extend to public sector
employers. The FLSA was amended in 1966 to extend coverage to
certain State and local employers and again in 1974 so as to
cover all state and local government activities.
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\1\ 29 U.S.C. Sec. Sec. 201-209.
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The FLSA requires that when a nonexempt employee works more
than 40 hours in a seven day period, that employee must be
compensated at a rate of one and one half times the employee's
regular rate of pay.\2\ Certain exceptions to the 40 hour
workweek are permitted under sections 7 and 13 of the FLSA,\3\
for a variety of specific types and places of employment whose
circumstances have led Congress, over the years, to enact
specific provisions regarding maximum hours of work for those
types of employment. In addition, the ``overtime pay''
requirement does not apply to employees who are exempt as
``executive, administrative, or professional'' employees.\4\
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\2\ 29 U.S.C. Sec. 207.
\3\ 29 U.S.C. Sec. Sec. 207, 213.
\4\ U.S.C. Sec. 213. In order to be exempted from the overtime
provisions of the FLSA, an executive, professional or administrative
employee must meet the duties test and be paid a salary on a salary
basis. 29 C.F.R. Sec. 541.118 Under the salary basis test, an employee
is considered to be paid on a salary basis if he or she regularly
receives each pay period a predetermined amount constituting all or
part of his compensation.
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Under the overtime pay requirement in the FLSA, overtime
pay for employees in the private sector must be in the form of
cash wages paid to the employee in the employee's next
paycheck. This is contrary to the overtime pay provisions
applying to State and local government employees.\5\ Section
7(o) \6\ provides that State and local governments may provide
paid compensatory time off in lieu of overtime compensation, so
long as the employee or his or her collective bargaining
representative has agreed to this arrangement and the
compensatory time is given at a rate of not less than one and
one half hours for each hour of employment for which overtime
is required.
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\5\ The FLSA applies to any ``public agency'' which is a State,
political subdivision of a State, or an interstate governmental agency.
29 U.S.C. Sec. 207(o)(1).
\6\ 29 U.S.C. Sec. 207(o).
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The difference in the FLSA's treatment of private sector
and state and local government employers in the FLSA is
explained by the fact that provisions applying the FLSA to the
public sector were amended in 1985 and therefore included a
recognition that the workplace and the work force had changed
greatly since the 1930's when the FLSA was first enacted. In
1985, Congress recognized that changes in the work force and
the workplace had led many employees in State and local
governments to make compensatory time available and for their
employees to choose compensatory time. As this committee
explained in including compensatory time for State and local
government employees in the 1985 amendments:
The committee also is cognizant that many State and
local government employers and their employees
voluntarily have worked out arrangements providing for
compensatory time off in lieu of pay for hours worked
beyond the normally scheduled workweek. These
arrangements--frequently the result of collective
bargaining--reflect mutually satisfactory solutions
that are both fiscally and socially responsible. To the
extent practicable, we wish to accommodate such
arrangements.\7\
\7\ Report on S. 1570, Senate Committee of Labor and Human
Resources, 99th Congress, First Sess. S. Rep. No. 99-159, p. 8.
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Prior to 1974, employees of the Federal government were
covered solely by the Title V of the United States of Code.\8\
When Congress amended the FLSA in 1974, it also made the FLSA
applicable to most employees of the Federal government.\9\
However, Congress simultaneously authorized the Civil Service
Commission to administer provisions of the FLSA for employees
of the Federal Government.\10\ Pursuant to that authority, the
Civil Service Commission, which later became the Office of
Personnel Management (OPM), promulgated regulations for Federal
employees.\11\
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\8\ Under Title V, Federal employees are entitled to overtime
compensation. 5 U.S.C. Sec. 5542. In addition, Title V authorized the
head of a Federal agency, at the request of an employee, to offer
compensatory time off instead of overtime pay. 5 U.S.C. Sec. 5543.
\9\ P.L. 93-259; see 29 U.S.C. Sec. 203(e)(2)(A).
\10\ P.L. 93-259; see 29 U.S.C. Sec. 204(f). Note, however, that
the Civil Service Commission was not authorized to administer the FLSA
to individuals employed by Library of Congress, the U.S. Postal
Service, the Postal Rate Commission and the Tennessee Valley Authority.
\11\ C.F.R. Parts 550, 551. Although employees of the Federal
Government are entitled to be compensated at a rate of one-and-one half
times their regular rate of pay for overtime hours, if the employee
selects compensatory time instead of overtime, that employee is given
compensatory time at a rate of one hour for each hour of overtime
worked unless that employee is a member of a union that has reached a
different arrangement through a collective bargaining agreement. See 5
C.F.R. Sec. 550.114; Sec. 551.531.
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In 1978, Congress passed the Federal Employees' Flexible
and Compressed Schedules Act.''\12\ The measure allowed Federal
executive branch employees, along with employees of certain
other agencies, to experiment with alternative work schedules
that would meet their personal needs. During the following 3-
year period, the alternative works schedules program was
monitored by OPM. Congress reauthorized the program in
1982.\13\ The program was so successful that in 1985, the
Federal Employees' Flexible and Compressed Schedules Act was
made permanent.\14\
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\12\ P.L. 95-390.
\13\ P.O. 97-221.
\14\ P.L. 99-196.
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As a result of the Federal Employees' Flexible and
Compressed Schedules Act, Federal agencies may offer compressed
work schedules and flexible work schedules to better
accommodate their employees' needs.\15\ Under a compressed work
schedule, full-time employees may fulfill an 80 hour bi-weekly
work requirement in less than 10 days by increasing the number
of hours in a workday.\16\ For example, this allows Federal
employees to work on a ``9/80 schedule'' wherein they work 9
hours each day for 8 days, 8 hours for one day and get the
tenth day off. As part of a flexible work schedule program,
Federal employees may work ``credit hours'' in excess of their
basic work requirement which they may use to shorten a future
workweek or workday.\17\
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\15\ U.S.C. Sec. 6120 et. seq.
\16\ U.S.C. Sec. 6121(5) and Sec. 6127.
\17\ U.S.C. Sec. 6121(4) and Sec. 6126.
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B. Need for Legislation
Since the enactment of the Fair Labor Standards Act in
1938, there have been considerable changes in our nation's
economy, labor market conditions and labor-management
relations. One of the greatest transformations has been in the
composition of the United States' labor force. More women are
working then ever before. According to the Bureau of Labor
Statistics, women now account for 46 percent of the labor
force. Between 1948 and 1995, women's labor participation rates
almost doubled from 33 percent to 59 percent.
The increase of women in the work force has had a
significant impact on the day-to-day activities of the American
family. The ``stay-at-home'' mom is now the exception rather
than the rule. Indeed in 1995, only 5.2 percent of all American
families mirrored the traditional ``Ozzie and Harriet'' family
structure of a wage-earning father, nonworking mother and two
children.\18\ According to the Bureau of Labor Statistics, 62
percent of two parent families with children have both parents
working outside the home.
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\18\ Bureau of the Census, ``Money Income in the United States:
1995,'' September 1996.
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The markup of the American work force has changed
dramatically yet few provisions of the FLSA have been updated
to reflect those changes. The needs of today's work force are
different than the needs of the work force of the 1930's.
Although employees are demanding more flexible work schedules
and compensation packages, the FLSA and its underlying
regulations preclude employers from complying with employee
demands.
Because the FLSA prevents employers from accommodating
employee requests for greater flexibility in scheduling,
employees are being forced to make difficult choices between
work and family, often at the expense of the latter. For
example, a working mother may wish to modify her regular
schedule by working extra hours over a 2-week period in order
to take a day of to chaperone her son's field trip to the local
zoo. Because the FLSA will not allow that mother to ``flex''
her schedule beyond a 40 hour work week, unless the mother is
able to work four 10 hour days during the week of the field
trip, she can not serve as a chaperone without using leave or
losing pay. Senator Kay Bailey Hutchison discussed the grave
need for change in the FLSA in a hearing before the committee:
The time has come to give nonexempt employees the
same flexibility that salaried, or ``exempt'' employees
presently enjoy and that federal employees have enjoyed
since 1978. By untying the hands of employers and
employees who may wish to agree to mutually beneficial
scheduling arrangements, but who are prohibited from
doing so under existing law, the Family Friendly
Workplace Act will ensure that the Federal Government
will no longer stand in the way of achieving an optimal
work environment for each particular workplace and each
particular worker.\19\
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\19\ Hearing on S. 4, the Family Friendly Workplace Act before the
Senate Committee on Labor and Human Resources, Subcommittee on
Employment and Training, 105th Cong., 1st Sess, February 4, 1997 (to be
published).
This demand for a change in the existing law was exhibited
in a recent poll conducted by Penn + Schoen for the Employment
Policy Foundation. The poll indicates that 88 percent of all
workers want more flexibility through scheduling flexibility
and/or the choice of compensatorytime.\20\ Another national
poll revealed that 65 percent of Americans favor changes in labor law
that would allow for more flexible work schedules.\21\ It is not
surprising that the private sector is demanding a change. In a 1985
survey of Federal employees participating with flexible work schedules,
72 percent said that they had more flexibility to spend time with their
families, and 74 percent said that having a flexible schedule had
improved their morale.
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\20\ Flexible Scheduling and Compensatory Time Poll,'' conducted by
Penn + Schoen Associates, Inc. for the Employment Policy Foundation,
October 27, 1995.
\21\ Princeton Survey Research Associates, ``Worker Representation
and Participation Survey, Top-Line Results,'' October, 1994.
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Over the past several years, the committee has heard
compelling testimony of individuals who are impacted by the
FLSA and who believe that the time has come for Congress to
change the law to better accommodate today's work force. Ms.
Phyllis Diosey, a senior air quality specialist at Malcolm
Pirnie in Westchester, NY, summed up the reason that hourly
workers are demanding a change:
Flexibility on the part of employers and employees is
critical in today's workplace. Any policy or regulation
that hinders this flexibility puts working parents, and
I really think especially working mothers, at risk
because their role as traditional caretakers will make
them less attractive and appear less productive as
employees.
I hope that the changes that are made will truly
reflect work styles and lifestyles as they exist today
and as we enter the 21st century.\22\
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\22\ Fair Labor Standards Act Oversight Hearing, Before the Senate
Committee on Labor and Human Resources, 104th Cong., 2nd Sess. S. Doc.
No. 104-39, p. 11.
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1. Compensatory time
The committee is confident that giving hourly employees the
ability to choose compensatory time instead of overtime pay for
hours worked beyond 40 in a week will be extremely beneficial.
Many employees who are covered by the overtime protections of
the FLSA expressed their support for changing the law so as to
allow employees to choose compensatory time in lieu of overtime
pay. Ms. Christine Korzendorfer, an hourly employee at TRW who
must balance the substantial overtime hours required by her job
with caring for her two children, explained to the Labor and
Human Resources Subcommittee on Employment and Training why
having the ability to choose between compensatory time and
overtime wages would be helpful:
[Overtime] pay is important to me. However, the time
with my family is more important. If I had a choice
there are times when I would prefer to take comp time
in lieu of overtime. What makes this idea appealing is
that I would be able to choose which option best suits
my situation.
Just recently, my son was ill and I had to stay at
home with him. I took a day of vacation which I would
have preferred to use for vacation. I did not want to
take unpaid leave * * * If I had had the choice, I
would have used comp time in lieu of overtime for that
day off from work. Besides, I would have only had to
use about five and one-half hours of comp time to cover
that 8 hour day.\23\
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\23\ Hearing on S. 4, the Family Friendly Workplace Act before the
Senate Committee on Labor and Human Resources, Subcommittee on
Employment and Training, 105th Cong., 1st Sess, February 4, 1997 (to be
published).
Ms. Sandie Moneypenny, a process technician at the Timken
Co.'s Asheboro, NC bearing plant and an hourly nonexempt
employee, explained why having the option of selecting
compensatory time would help her to meet the demands of
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parenthood:
Today, I can only use comp time in the week it
occurs, but as most of you know, life doesn't seem to
always work that way. If I could ``bank'' my overtime,
I wouldn't have to worry about missing work if my child
gets sick on a Monday or Tuesday. I also would only be
postponing valuable time off with my family when I have
a busy workweek, because I could always take time off
at a later date. We also have several people in our
plant that are trying to further their education. They
would work overtime during breaks in their school
schedule, and use their ``banked'' overtime during the
course of the school year, or during exam week.\24\
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\24\ Hearing on S. 4, the Family Friendly Workplace Act before the
Senate Committee on Labor and Human Resources, Subcommittee on
Employment and Training, 105th Cong., 1st Sess, February 13, 1997 (to
be published).
There is ample support for concluding that today's work
force would like the option of selecting compensatory time off
rather than cash wages, for the overtime hours that they work.
In its 1995 survey, Penn + Schoen Associates, Inc. found that
75 percent of those surveyed favored a proposal to give workers
the opportunity to choose time off in lieu of overtime wages.
In fact, 57 percent of those responding speculated that they
would choose paid time off more frequently than overtime
wages.\25\
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\25\ ``Flexible Scheduling and Compensatory Time Poll,'' conducted
by Penn + Schoen Associates, Inc. for the Employment Policy Foundation,
October 27, 1995.
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Unfortunately, while the FLSA was intended to protect
employees, many are finding it too restrictive. Nonexempt
employees simply wish for the FLSA to be amended so that
theymay enjoy the flexibility legally available to their exempt co-
workers and government workers. During the 104th Congress, the
committee heard testimony from Ms. Arlyce Robinson, an administrative
support coordinator for Computer Services Corp., who explained that she
spent 20 years of her career in the public sector and that she misses
the flexibility associated with compensatory time. Ms. Robinson
observed that:
While the laws was intended to protect us--and maybe
58 years ago it did--and in some cases, is still
protecting many, many people, but in today's world it
has had the effect of hurting many of the people that
it was originally designed to help * * * Again, when we
talk about the act, we do not want it replaced; we just
want it made a little more flexible.\26\
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\26\ Fair Labor Standards Act Oversight Hearing before the Senate
Committee on Labor and Human Resources, 104th Cong., 2nd Sess. S. Doc.
No. 104-397, p.39.
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2. Bi-weekly schedules
The witnesses also confirmed that it is extremely difficult
for employers to institute flexible schedules for hourly
employees without violating the FLSA. This is not the case in
the public sector, where many workers have the ability to
choose to work a ``9/80'' schedule which involves 80 hours over
a 9 day period, such as working 45 hours the first week
followed by 35 hours the next week, with a scheduled day off
every other week. It is impracticable for hourly employees in
the private sector to take advantage of bi-weekly scheduling
options. Sallie Larsen, vice president, Human Resources and
Communications, TRW Systems Integration Group, testified about
TRW employees' frustration with the rigidity of the current
law:
In our business unit, we have a compelling business
need to better understand our employee work patterns
for bidding new work. In meeting the needs of these
employees, we saw an opportunity to add even more
flexibility for all of our salaried employees and
managers in scheduling work across a longer period of
time * * * The professional work schedule helps our
salaried employees with two week flexing, partial day
time off, and additional time off. However, we are
unable to extend this schedule to our hourly employees
because of the restrictions of the Fair Labor Standards
Act. These employees are amazed to learn that it is a
60-year old law that is substantially unchanged since
it was passed that stands in their way of becoming a
full member of the team. Their most common complaint:
``Why am I treated as a second class citizen?'' Our
answer: it is the law, not the company's unwillingness
to offer the Professional Work Schedule to them.\27\
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\27\ Hearing on S. 4, The Family Friendly Workplace Act before the
Senate Committee on Labor and Human Resources, Subcommittee on
Employment and Training, 105th Cong., 1st Sess, February 4, 1997 (to be
published).
Employers and employees ought to be free to ``flex'' the
40-hour workweek when it is advantageous to both parties. Under
the current law, however, private sector employers may offer
the flextime option of bi-weekly scheduling only to exempt,
salaried employees. This creates unnecessary tension between
exempt and nonexempt employees. By confining employee's
flexibility to the 40-hour workweek, the FLSA is making it more
difficult for hourly employees to meet family, community, and
personal needs.
3. Flexible credit hours
It is not uncommon in the case of foreseeable future
events, such as having a baby, assisting an elderly parent or
studying for an exam, for an employee to exhaust his or her
paid leave. Although employees may wish to work additional
hours in order to ``bank'' that time for a future event, the
FLSA strictly prohibits any type of flexible credit hour
program. Jim Willms, executive vice president of Unicover
Corp., of Cheyenne, WY, testified before the Labor and Human
Resources Subcommittee on Employment and Training about an ill-
fated flexible credit hour program that was initiated and
designed by Unicover employees:
In 1980 our elected Employee Council representing all
departments of the Company asked that we adopt an
optional compensatory time policy. They wanted a policy
that would permit an employee at his or her sole option
to build up extra hours one-for-one instead of overtime
pay which could be used at a later time for additional
days off. Our employees told us this would be
advantageous to them and to the Company. They said they
were really more interested in having more time off to
spend with family and enjoying leisure than they were
being paid at overtime rates for working more than 40
hours in a week. * * * At the end of 1981, we were
advised by the U.S. Department of Labor that our new
policy, which had been implemented at the request of,
and which had the input of all of our employees, did
not comply with the overtime provisions of the Fair
Labor Standards Act. We rescinded the policy and paid
out all the compensatory time on the books at overtime
rates. We faced genuine outrage on the part of our
employees that something which they asked for and
received from the Company was rescinded because of a 40
year-old Federal law.\28\
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\28\ Hearing on S. 4, The Family Friendly Workplace Act before the
Senate Committee on Labor and Human Resources, Subcommittee on
Employment and Training, 105th Cong., 1st Sess, February 13, 1997 (to
be published).
Allowing employees to ``bank'' hours would also provide the
millions of Americans who do not work overtime hours with more
flexibility because it would give them the ability to work
additional hours so that they could use the flexible credit
hours as paid time off when necessary. Under the FLSA, however,
if an hourly employee sought to work additional hours, that
employee would be unable to ``bank'' those hours. Rather, the
employer would have to compensate the employee at an overtime
rate for the additional hours. If an employer has no real need
for overtime, it is less likely that employers will be willing
to pay employees an overtime premium. In essence, there is a
disincentive under the FLSA for employers to provide employees
with the flexibility that they demand.
4. Salary basis test
There is also a need to clarify the FLSA's salary basis
test. Under the salary basis test, an employee is considered to
be paid on a salary basis and thus exempt from the FLSA, if
that employee regularly receives each pay period a
predetermined amount constituting all or part of his or her
compensation. This account cannot be subject to reduction for
absences of less than a day. However, a number of court cases
have interpreted this language to mean that the theoretical
possibility of a salary being docked for an absence of less
than a day is enough to destroy an employee's exemption, even
if there has never been a deduction. William J. Kilberg
testified on behalf of the Fair Labor Standards Act Reform
Coalition and explained the confusion in this area:
Most courts, in fact, have applied the ``subject to''
principle as an ironclad rule, which unequivocally
mandates a loss of exemption if anyone can concoct a
theoretical circumstance under which existing employer
policies could allow improper deductions. Beginning
with the Ninth Circuit's 1990 decision in Abshire v.
County of Kern,\29\ and mushrooming in a series of
subsequent cases such as Martin v. Malcolm Pirnie,
Inc.,\30\ courts have demonstrated a willingness to
ignore all other facts in the case to deny exemptions
on nothing more than this draconian ``subject to''
theory.
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\29\ 908 F.2d 483 (9th Cir. 1990), cert. denied, 111 S. Ct. 785
(1991).
\30\ 949 F.2d. 611 (2d Cir. 1991), cert. denied, 113 S. Ct. 298
(1992).
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The consequences of this misinterpretation are
enormous. In Pirnie, for example, only a very small
handful of partial day deductions had occurred, which
the court itself labeled ``de minimis.'' Many of these
deductions were entirely understandable; one employee,
for example, had voluntarily directed that she did not
want to be paid for the portions of workdays she spent
working on her doctoral thesis * * * In Pirnie,
however, the court held that the employer's policy of
allowing such deductions caused an entire class of
highly paid engineering professionals to lose their
FLSA exemption.\31\
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\31\ Hearing on S. 4, The Family Friendly Workplace Act before the
Senate Committee on Labor and Human Resources, Subcommittee on
Employment and Training, 105th Cong., 1st Sess, February 4, 1997 (to be
published).
The salary basis problem is particularly acute in the
public sector. Because of the confusing application of the
salary basis test, highly paid executive, administrative and
professional employees are bringing actions against their State
and local government employers at an alarming rate. The
Honorable Paul Jadin, Mayor of Green Bay, Wisconsin, testified
on behalf of the U.S. Conference of Mayors and the Public
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Sector FLSA Coalition about this problem:
While these [highly paid executive administrative and
professional State and local government employees]
employees were intended to be exempt from the overtime
pay requirements, recent court interpretations of how
the salary basis applies to the public sector have led
to enormous liability. High level management employees
earning between $40,000 and $100,000 annually have been
successful in winning back pay for the overtime hours
that they have worked. * * * Because the Labor
Department has failed to address many of the problems
that prevent our employees from qualifying for this
exemption, public employers continue to be exposed to
enormous liability. This only underscores the need for
passing legislation like the amendment included in S. 4
to correct a problem that Congress never intended to be
imposed on state and local governments.\32\
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\32\ Hearing on S. 4, The Family Friendly Workplace Act before the
Senate Committee on Labor and Human Resources, Subcommittee on
Employment and Training, 105th Cong., 1st Sess, February 13, 1997 (to
be published).
In addition, when Congress enacted the Family Medical Leave
Act, it recognized that an employee should be able to take
unpaid leave for FMLA purposes without the reduction of pay
affecting the exempt status of the employee.\33\
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\33\ 29 U.S.C. Sec. 2612(c).
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5. Time for a change
While the FLSA was enacted to protect workers, many of
today's work force view certain of the FLSA's provisions as
harmful rather than helpful. Given the overwhelming success of
public sector programs, it is important that Congress now
extend the same freedom and flexibility to private workers.
Flexible work schedules would give employees more control over
their lives by giving them a better tool to balance their
family and work obligations. Employersand hourly employees must
be given the ability to reach accord on flexible schedules beyond the
standard 40 hour workweek and to bank compensatory time in lieu of cash
overtime where such an arrangement is mutually beneficial. Salary basis
reform for non-exempt employees would also increase flexibility
options. The FLSA should be amended to assist workers in balancing the
needs of an evolving work environment and quality family time.
III. Legislative History and Committee Action
On January 21, 1997, Senator Ashcroft along with Senators
Hutchison, Lott, Nickles, Craig, Collins, DeWine, Allard,
Brownback, Chafee, Coats, Domenici, Enzi, Faircloth, Gramm,
Grams, Grassley, Hagel, Hatch, Helms, Hutchinson, Kyl,
Murkowski, Roberts, Sessions, Thurmond, Warner, Coverdell, and
Jeffords, introduced S. 4, the Family Friendly Workplace Act.
S. 4 is also sponsored by Senators Mack, Smith of New
Hampshire, McCain, Cochran, Burns, McConnell and Thomas.
On February 4, 1997, the Labor Human Resources Subcommittee
on Employment and Training held a hearing (S. Hrg. 105-__) on
the Family Friendly Workplace Act. The following individuals
provided testimony:
The Honorable Kay Bailey Hutchison, U.S. Senator
Sandra Boyd of the Labor Policy Association, Inc.,
Washington, DC
Michael Losey of the Society for Human Resource
Management, Alexandria, VA
Sallie Larsen of TRW Systems Integration Group,
Fairfax, VA
Christine Korzendorfer of TRW Systems Integration
Group, Fairfax, VA
Mark Wilson of Heritage Foundation, Washington, DC
William Kilberg of the Fair Labor Standards Act
Reform Coalition, Washington, DC
Karen Nussbaum, Director of AFL-CIO Working Women's
Department, Washington, DC
Edith Rasell, The Economic Policy Institute,
Washington, DC
Additional statements and letters regarding S. 4 were also
received and placed in the record.
On February 13, 1997, the Labor and Human Resources
Subcommittee on Employment and Training held a hearing (S. H.G.
105-__) on the Family Friendly Workplace Act. The following
individuals provided testimony:
The Honorable John Ashcroft, U.S. Senator
The Honorable Paul F. Jadin, Mayor, Green Bay, WI
Marilyn Richter, Assistant Corporation Counsel, City
of New York, NY
Jim Wilms of Unicover Corporation, Cheyenne, WY
Donna Lenhoff, General Counsel, Women's Legal Defense
Fund, Washington, DC
Sandy Moneypenny of the Timken Co., Randleman, NC
Kathleen Fairall of the Timken Co., Randleman, NC
Diana Thompson, Pullyup, Washington, DC
William Stone of Louisville Plate Glass Co.,
Louisville, KY
Susan Eckerly of the National Federation of
Independent Business, Washington, DC
David Silberman of Bredhoff & Kaiser, Washington, DC
Additional statements and letters regarding S. 4 were also
received and placed in the record.
On March 13, 1997, the Senate Committee on Labor and Human
Resources met in executive session to consider S. 4. A quorum
being present, the committee voted on the following amendments:
Senator DeWine offered an amendment to improve provisions
relating to compensatory time, biweekly work programs, flexible
credit hour programs and exemptions. The amendment was
accepted.
YEAS NAYS
Jeffords Kennedy
Coats Dodd
Gregg Harkin
Frist Mikulski
DeWine Bingaman
Enzi Wellstone
Hutchinson Murray
Collins Reed
Warner
McConnell
Senator Wellstone offered an amendment that would permit
the use of compensatory time for family and medical leave and
that would further permit employees to use compensatory time
for any reason so long as the employee provided two weeks
notice and the leave would not cause ``substantial and grievous
injury'' to the employers operations. The amendment was
defeated.
YEAS NAYS
Kennedy Jeffords
Dodd Coats
Harkin Gregg
Mikulski Frist
Bingaman DeWine
Wellstone Enzi
Murray Hutchinson
Reed Collins
Warner
McConnell
On March 18, 1997, the Senate Committee on Labor and Human
Resources met in executive session to consider S. 4. A quorum
being present, the committee voted on the following amendments:
Senator Murray offered an amendment mandating that an
employer provide 24 hours per year of unpaid leave for parental
involvement in school activities. The amendment was defeated.
YEAS NAYS
Kennedy Jeffords
Dodd Coats
Harkin Gregg
Mikulski Frist
Bingaman DeWine
Wellstone Enzi
Murray Hutchinson
Reed Collins
Warner
McConnell
Senator Dodd offered an amendment to expand the Family
Medical Leave Act to cover employers with 25 or more employees.
The amendment was defeated.
YEAS NAYS
Kennedy Jeffords
Dodd Coats
Harkin Gregg
Mikulski Frist
Bingaman DeWine
Wellstone Enzi
Murray Hutchinson
Reed Collins
Warner
McConnell
Senator Wellstone offered an amendment to exclude part-
time, seasonal, and temporary employees and to exempt employers
in the garment business. The amendment was defeated.
YEAS NAYS
Kennedy Jeffords
Dodd Coats
Harkin Gregg
Mikulski Frist
Bingaman DeWine
Wellstone Enzi
Murray Hutchinson
Reed Collins
Warner
McConnell
Senator Wellstone offered an amendment to delay the
effective date of the act until such time as the Department of
Labor had resolved 90 percent of the wage and hour complaints.
The amendment was defeated.
YEAS NAYS
Kennedy Jeffords
Dodd Coats
Harkin Gregg
Mikulski Frist
Bingaman DeWine
Wellstone Enzi
Murray Hutchinson
Reed Collins
Warner
McConnell
Senator Wellstone offered an amendment to require employers
to treat compensatory time off as hours worked for the purpose
of calculating overtime and employee benefits. The amendment
was defeated.
YEAS NAYS
Kennedy Jeffords
Dodd Coats
Harkin Gregg
Mikulski Frist
Bingaman DeWine
Wellstone Enzi
Murray Hutchinson
Reed Collins
Warner
McConnell
Senator Kennedy offered an amendment to prohibit
discrimination against employees who are eligible for
compensatory time off and to expand the remedies available for
violation of the compensatory time off requirements. The
amendment was defeated.
YEAS NAYS
Kennedy Jeffords
Dodd Coats
Harkin Gregg
Mikulski Frist
Bingaman DeWine
Wellstone Enzi
Murray Hutchinson
Reed Collins
Warner
McConnell
The committee then voted to report S. 4 favorably.
YEAS NAYS
Jeffords Kennedy
Coats Dodd
Gregg Harkin
Frist Mikulski
DeWine Bingaman
Enzi Wellstone
Hutchinson Murray
Collins Reed
Warner
McConnell
IV. Explanation of Bill and Committee Views
S. 4, The Family Friendly Workplace Act, provides private
sector employers and employees with the same optional workplace
flexibility benefits that public sector employees have enjoyed
since 1978. They include earning compensatory time in lieu of
traditional monetary overtime pay; and participating in
biweekly work schedules and flexible credit hour programs.
These options will allow employees to balance the heavy demands
of the workplace with their growing obligations to family and
education. Participation in these programs are entirely
voluntary. This legislation does not mandate that employers
offer these programs and employees are under no obligation to
participate in them.
a. compensatory time as an alternative to traditional overtime
compensation.
1. The compensatory time option is 100 percent voluntary
The cornerstone of the Family Friendly Workplace Act is
that the various workplace flexibility options are completely
voluntary. While the legislation gives employers the ability to
provide compensatory time,\34\ the actual decision to choose
compensatory time off in lieu of monetary compensation is up to
the employee. The decision may not be a condition of
employment.
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\34\ S. 4 Sec. 3(a)(1)-(r)(3).
[N]o employee may be required under this subsection
to receive compensatory time off in lieu of monetary
overtime compensation. The acceptance of compensatory
time off in lieu of monetary overtime compensation may
not be a condition of employment.\35\
---------------------------------------------------------------------------
\35\ S. 4 Sec. 3(a)(1)-(r)(1).
Opponents of the legislation incorrectly claim that the
bill allows employers to avoid providing overtime pay by
forcing employees to accept compensatory time off instead.
These claims are spurious. The bill takes careful and marked
steps to ensure that it is the employee's decision to elect
compensatory time off instead of overtime pay. Coercion,
intimidation, and threats are expressly prohibited. No employer
can force an employee to accept or deny compensatory time nor
can an employer force an employee to use accrued compensatory
time. Any attempt to do so is punishable by pecuniary measures
including liquidated damages to the affected employee.\36\
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\36\ For a complete explanation of penalties please see ``Remedies
and Sanctions.''
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2. The legislation facilitates a workable compensatory time policy
while protecting employees' rights to remuneration for their
overtime services
The nature of an employee's agreement to accept
compensatory time in lieu of traditional monetary overtime
compensation is dictated by whether the employee is represented
by a union or not. Employees who are represented by a union
will agree or disagree to a compensatory time option through
the collective bargaining process.
If nonunion employees choose to accept compensatory
overtime in lieu of traditional overtime compensation, they
must make that election before they actually perform the
overtime work. The agreement may not be considered a condition
of employment and must be ``entered into knowingly and
voluntarily.'' \37\ The decision to elect compensatory time is
generally made each workweek. This underscores the idea that
any overtime compensation in the form of compensatory time is
not a condition of employment, but rather a renewable benefit
whose election rests solely with the employee. Furthermore, a
nonunion employee's agreement must be written ``or otherwise
verifiable'' and kept pursuant to the record keeping terms of
the FLSA.\38\
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\37\ S. 4 Sec. (a)(1)-(r)(3)(A)(ii).
\38\ Every employer subject to any provision of this chapter * * *
shall make, keep, and preserve such records of the persons employed by
him and of the wages, hours, and other conditions and practices of
employment maintained by him, and shall preserve such records for such
periods of time, and shall make such reports therefrom to the
Administrator as he shall prescribe by regulation or order as necessary
or appropriate for the enforcement of the provisions of this chapter or
the regulations or the orders thereunder.'' 29 U.S.C. Sec. 211(c).
---------------------------------------------------------------------------
Contrary to the claim's of the bill's detractors, the
``otherwise verifiable'' language will not allow employers to
coerce, intimidate, or threaten an employee based on any lack
of recorded consent. The term ``otherwise verifiable'' simply
allows employees to provide consent in forms other than
writing, for example, video recording, tape recording or
electronic mail transmissions. This is consistent with FLSA
regulations which state that there is no prescribed form of
record.\39\
---------------------------------------------------------------------------
\39\ 20 C.F.R. Sec. 516.1.
---------------------------------------------------------------------------
The legislation permits an employee to accrue up to 240
hours of compensatory time during a calendar year or other 12-
month period established by the employer. Employees may not
carry over accrued compensatory time from one year to the next.
Therefore, the legislation mandates that employees are paid
monetary compensation at the end of the calendar year or 12-
month period, which helps guarantee that employees receive
compensation for their overtime work in a timely manner. To
ensure that the employee is adequately compensated, the
employer must pay the employee no less than the employee's
overtime rate at the time the compensatory overtime was earned
or the employee's final pay rate, whichever is greater.\40\ In
addition, the employer must provide the employee with 30 days
written notice of its intention to issue monetary compensation
for all accrued compensatory time off in excess of 80
hours.\41\
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\40\ An employee's final rate of pay is not necessarily the rate of
pay at the time of termination or resignation. It may also be an
employee's current rate of pay subsequent to a raise.
\41\ An employer may want to make an early remittance of accrued
compensatory time because the end of the calendar year or 12 month
period is approaching and the employer wants to avoid a large payout to
several employees who have accrued hundreds of hours.
---------------------------------------------------------------------------
While opponents of the legislation fear that employers will
control when an employee will be able to use accrued
compensatory time off, their concern is unfounded. The bill
clearly states that an employee must be allowed to use his or
her accrued compensatory time off within a ``reasonable
period'' of time provided that the time off will not ``unduly
disrupt'' the workplace. This portion of the bill mirrors what
is already firmly established, strongly recognized, and upheld
in the FLSA and relevant regulations as they pertain to the
public sector. The law states:
An employee of a public agency which is a State,
political subdivision of a State, or an inter-state
governmental agency who has accrued compensatory time
off * * * and who has requested the use of such
compensatory time, shall be permitted * * * to use such
time within a reasonable period after making the
request if the use of the compensatory time does not
unduly disrupt the operations of the public agency.\42\
---------------------------------------------------------------------------
\42\ 29 U.S.C. Sec. 207(o)(5)(A)-(B).
The current regulations resolve any remaining issues of
ambiguity surrounding an employee's ability to take accrued
compensatory time. First, they delineate factors to determine
what is a reasonable period of time within which an employer
must honor an employee's request to use compensatory time. The
factors will vary based on the employer's ``customary work
practices'' \43\ and include but are not limited to: ``the
normal schedule of work, anticipated peak workloads based on
past experience, emergency requirements for staff and services,
and the availability of qualified substitute staff.'' \44\ In
addition, in the union setting, the issue of reasonableness
would be resolved in the collective bargaining process.
---------------------------------------------------------------------------
\43\ 29 C.F.R. Sec. 553.25 (c)(1).
\44\ Ibid.
---------------------------------------------------------------------------
Second, the regulations define ``unduly disrupt'' by
stating:
Mere inconvenience to the employer is an insufficient
basis for the denial of a request * * * For an agency
to turn down a request from an employee for
compensatory time off requires that it should
reasonably and in good faith anticipate that the [time
off] would impose an unreasonable burden on the
agency's ability to provide acceptable quality and
quantity for the public during the time requested
without the use of the employee's services.\45\
---------------------------------------------------------------------------
\45\ 29 C.F.R. Sec. 553.25(d).
In interpreting the ``unduly disrupt'' standard, the courts
have repeatedly held that it is a narrow test and that a mere
inconvenience to the employer is not enough for an employer to
deny an employee the use of compensatory time. For example, one
court held that, ``[Compensatory time] essentially is the
property of the employee'' \46\ and the ``unduly disrupt''
standard was not enough to allow an employer to dictate how an
employee used his property. Indeed, another court even found
that an employer's practice of forcing employees to use their
accrued compensatory time to reduce the employer's compensatory
time balances was illegal.\47\
---------------------------------------------------------------------------
\46\ Heaton v. Missouri Department of Corrections, 43 F.3d 1176,
1180 (8th Cir. 1994).
\47\ Moreau v. Harris County, No. 94-1427 (D. S. Texas Nov. 25,
1996).
---------------------------------------------------------------------------
Additionally, this portion of the bill is strikingly
similar to the provisions of the Family Medical Leave Act and
the relevant regulations. That law provides that an employee
requiring medical leave based on planned medical treatment,
``shall make a reasonable effort to schedule the treatment so
as not to disrupt unduly the operations of the employer.'' \48\
The regulations contain veritably the same language.\49\
---------------------------------------------------------------------------
\48\ 29 U.S.C. Sec. 2612(e)(2)(A).
\49\ 29 C.F.R. Sec. 825.302(e).
---------------------------------------------------------------------------
Reinforcing the employees' ability to control how they are
compensated for overtime, the legislation gives nonunion
employees the ability to withdraw from a compensatory time
program at any time by submitting a written notice to their
employer. An employer has 30 days from its receipt of such a
request to remit the monetary compensation. The employer's
remittance will not be less than the greater of the employee's
overtime rate at the time the compensatory time was earned or
the employee's final pay rate.\50\ An employee's termination or
resignation has the same effect as a withdrawal. If an employer
wishes to discontinue offering the compensatory time option, it
may do so upon giving 30 days written notice to all
participating employees.
---------------------------------------------------------------------------
\50\ See note 40.
---------------------------------------------------------------------------
The bill treats unused or owned compensatory time as unpaid
monetary compensation. Specifically, it provides that, ``the
terms `monetary overtime compensation' and `compensatory time
off' shall have the meaning given the terms `overtime
compensation' and `compensatory time', respectively, by
subsection (o)(7).'' \51\ This provision has the effect of
guaranteeing that unused compensatory time will be given the
same priority that unpaid wages would be given in a bankruptcy
proceeding. Thus, unused or owed compensatory time will be
categorized as a third priority asset for the purposes of
bankruptcy proceedings.
---------------------------------------------------------------------------
\51\ S. 4 Sec. (a)(1)-(r)(10).
---------------------------------------------------------------------------
Overtime hours compensated with compensatory time off are
no different than overtime hours compensated with traditional
monetary overtime pay. Overtime hours compensated with
compensatory time off are still hours ``for which the employee
is paid or entitled to pay for the performance of duties for
the employer.'' They are therefore ``hours of service''
according to the Employee Retirement Income Security Act.\52\
Accordingly, the bill's detractors, who insist that payment in
compensatory time rather than money will reduce the number of
hours and employee works and consequently the employee's
pension benefits, are mistaken. It is the intention of the
committee that any hours an employee works overtime, whether
they are compensated by monetary overtime pay or compensatory
time off, are to be credited for the purpose of accrual,
participation, and vesting benefits.
---------------------------------------------------------------------------
\52\ 29 C.F.R. Sec. 2530.200b-2.
---------------------------------------------------------------------------
Obviously, an employee who takes advantage of the
compensatory time option as opposed to collecting monetary
compensation for overtime will realize a reduction in monetary
income. A reduction in monetary income will naturally reduce an
employee's credits for benefits. This is no different, however,
than any other decision an employee makes to lessen the number
of actual hours worked; for example, refusing to work offered
optional overtime hours or taking leave without pay. There is
no detriment to the employee who knowingly and voluntarily
makes such a decision. There is, however, an inherent advantage
in accruing additional paid time off because it enables an
employee to do other things with that time.
Opponents' concerns that compensation in the form of
compensatory time will affect an employee's opportunity for
unemployment benefits is unfounded. Compensation as
compensatory time is no different than compensation as monetary
overtime pay. They are even awarded on the same scale. This
committee intends to treat compensatory time paid to an
employee for overtime hours worked as wages. It does not matter
whether an employee accrues the compensatory time, uses the
compensatory time, or cashes out the compensatory time.\53\
---------------------------------------------------------------------------
\53\ In some states, payment of accrued compensatory time to a
terminated employee will become ``disqualifying income.'' This,
however, only will defer the payment of unemployment benefits. It will
not affect the amount to which the employee is entitled.
---------------------------------------------------------------------------
3. Severe penalties have been included
Between the prohibitions and penalties already provided for
in the FLSA and S. 4's additional measures, employees will be
protected from potential employer misconduct.
The FLSA currently makes it unlawful to violate the
existing provisions of section 7.\54\ Because the legislation
will become a part of section 7, it will enjoy the same
protection. The FLSA also makes it is unlawful to ``discharge
or in any other manner discriminate against an employee because
such employee has filed any complaint or instituted or caused
to be instituted any proceeding under or related to ``the
employee's rights.'' \55\ The FLSA authorizes an employee to
file suit in either Federal or State court for a violation of
section 7. In addition, an employee may file a complaint with
the Department of Labor. The Department of Labor, in turn, may
sue the employer for damages or injunctive relief on behalf of
the complaining employee.\56\ The Secretary of Labor also may
seek civil penalties up to $1,000 for willful and repeated
violations of section 7.\57\ In an action for wrongfully denied
overtime compensation, an employee may be entitled to damages
equal to the amount of unpaid compensation and another equal
amount as liquidated damages.\58\ (Liquidated damages may be
reduced if an employer has acted in good faith.\59\) Finally,
where an employee brings suit, he or she may be entitled to
recover his costs and attorney's fees.\60\
---------------------------------------------------------------------------
\54\ 29 U.S.C. Sec. 215(a)(2).
\55\ 29 U.S.C. Sec. 215(a)(3).
\56\ 29 U.S.C. Sec. 217.
\57\ 29 U.S.C. Sec. 216(e).
\58\ 29 U.S.C. Sec. 216(b).
\59\ 29 U.S.C. Sec. 260.
\60\ 29 U.S.C. Sec. 216(b).
---------------------------------------------------------------------------
The legislation adds a provision making it unlawful to
``directly or indirectly intimidate, threaten, or coerce, or
attempt to intimidate, threaten, or coerce any employee'' to
request or not request compensatory time off in lieu of
monetary overtime pay or to use accrued compensatory time
off.\61\ The terms ``intimidate, threaten, or coerce'' are
defined as including a ``promise to confer or conferring any
benefit (such as an appointment, promotion, or compensation) or
effecting or threatening to effect any reprisal (such as
deprivation of appointment, promotion, or compensation).\62\
Thus, for example, an employer may not force an employee to
accept compensatory time off rather than monetary overtime pay
by promising to promote the employee nor may an employer punish
failure to accept compensatory time by failing to promote that
employee.
---------------------------------------------------------------------------
\61\ S.4 Sec. 3(a)(1)-(r)(6)(A).
\62\ Ibid.
---------------------------------------------------------------------------
The legislation also adds additional remedies to section 16
of the FLSA. It provides for penalties for violations of its
anti-coercion language. An employer who violates S. 4's anti-
coercion provision shall be liable to the affected employee for
an amount equal to the total of the employee's rate of
compensation multiplied by ``number of hours of compensatory
time off involved in the violation that was initially used by
the employee; less the number of such hours accrued by the
employee.'' \63\ Furthermore, the affected employee will be
entitled to liquidated damages equivalent to the employee's
rate of compensation multiplied by ``the number of hours of
compensatory time off involved in the violation that was
initially accrued by the employee.'' \64\ In addition, other
remedies are also available including criminal penalties and
any additional civil penalties.\65\
---------------------------------------------------------------------------
\63\ S. 4 Sec. 3(a)(2).
\64\ Ibid.
\65\ Ibid.
---------------------------------------------------------------------------
b. flexibility for today's work force
The reality of today's work force is that only 20 percent
of hourly workers reportedly work more than 40 hours in a
typical week.\66\ Of those workers, nearly 3 out of 4 are men,
primarily married men.\67\ Due to the social changes that have
occurred over the past five decades, more women are entering
the work force. While these individuals would like greater
flexibility in their work schedules, compensatory time will be
of little assistance because many workers do not work overtime.
Given the demands of today, all workers need more flexibility,
not just those who work overtime. It is for this reason that
the committee included the biweekly work schedule and flexible
credit hour programs in the Family Friendly Workplace Act.
---------------------------------------------------------------------------
\66\ Anita U. Hattiangadi, Patterns of Overtime Work: The Case for
Greater Workplace Flexibility, Employment Policy Foundation, 1997, at
7.
\67\ Ibid., Employment Policy Foundation tabulations, Current
Population Survey data, 1996.
---------------------------------------------------------------------------
1. Biweekly work schedules
Biweekly work schedule programs will allow employers and
employees to decide, either through collective bargaining or
agreement at the outset of each biweekly work period, how an
employee will schedule an 80 hour work period. Employers and
employees are free to agree to any arrangement so long as the
total number of hours worked over the 2-week period does not
exceed 80. All hours which an employer requires an employee to
work that are in excess of the biweekly schedule, are
considered overtime and the employee must be compensated
accordingly, either by monetary overtime pay or compensatory
time off.
Just as the election of compensatory time is voluntary so,
too, is the election of biweekly work schedules. Employers do
not have to offer biweekly schedules and employees are under no
obligation to participate in them. In addition, an employee's
participation in a biweekly work schedule may not be a
condition of employment.
Under S. 4's biweekly work schedule provisions, employees
enjoy the preexisting safeguards of the FLSA. Employees will
also benefit from S. 4's own provisions prohibiting an employer
from ``directly or indirectly intimidat[ing], threaten[ing], or
coerc[ing]'' an employee to participate a biweekly schedule
program. Naturally, the FLSA's preexisting remedies and
sanctions as well as S. 4's remedies and sanctions apply to any
violation involving a biweekly work schedule program.
Federal employees have enjoyed the benefit of biweekly work
schedules since 1978. Because of the success of biweekly
scheduling programs in the public sector, the committee
believes that this opportunity should be available to private
sector employees as well. Amending the FLSA so as to allow for
biweekly work schedules will provide greater scheduling
flexibility to more employers and employees.
For union employees, the particulars of a biweekly work
schedule, such as hours to be worked and methods of withdrawal,
will be set forth in a collective bargaining agreement. In the
non-union setting, the agreement between an employee and
employer, wherein the employee elects to participate in the
program, will be individualized. The employee must enter into
an agreement for a biweekly schedule prior to the biweekly
period and the agreement must set forth the actual schedule of
hours that the employee shall work during that period. As with
the compensatory time agreement, the employee must enter into
the biweekly schedule agreement knowingly and voluntarily, and
the agreement must be evidenced by a written affirmation or
otherwise verifiable \68\ assertion on the part of the
participating employee. Under no circumstances is it to be a
condition of employment. All such agreements must be preserved
according to the requirements of the FLSA's recording keeping
provision.\69\
---------------------------------------------------------------------------
\68\ The term ``otherwise verifiable'' simply allows employees to
provide consent in forms other than writing, for example, video
recording, tape recording, electronic mail transmissions, or verbal
consent that falls within an accepted exception to the hearsay rule.
The regulations pertaining to the FLSA state that there is no
prescribed form of record. 29 C.F.R. Sec. 516.1.
\69\ 29 U.S.C. Sec. 211(c).
---------------------------------------------------------------------------
Because biweekly work schedule programs are voluntary,
nonunion employees may withdraw their agreement to participate
by providing written notice to the employer. Similarly, an
employer may discontinue a biweekly work schedule program upon
thirty days notice to all participating employees.
An example of a biweekly work schedule is:
(1) During week one, an employee works 5 days from
8:30 a.m. to 6 p.m. with a half hour for lunch each
day. The total amount of hours worked during week one
therefore equals 45. No overtime is paid for time
worked beyond 40 hours during week one. (2) During week
two, an employee works Monday from 8:30 a.m. to 5 p.m.
and Tuesday through Thursday from 8:30 a.m. to 6 p.m.
Each day during week two allows a half hour for lunch.
The employee is able to take Friday of week two off.
The total number of hoursworked during week two equals
35. The total number of hours worked during the two week period equals
80.
Any hours that an employer requests the employee to work beyond
the predeteremined 80 scheduled hours are considered overtime
and the employee must be compensated for this overtime
accordingly. In the example above, working until 6 p.m. on the
second Monday would result in an hour of overtime even if the
hour were eliminated from the Tuesday through Thursday
schedule.
The biweekly schedule provides the employer with 80 hours
of an employee's labor or expertise over a 2-week period. While
this is presumably the same number of hours the employee would
have worked, the flexibility and the additional day off gives
employees the ability to tailor their schedules to meet their
needs and is likely to engender a more contented, healthier,
more balanced, and more productive employee; an asset to any
employer. The biweekly schedule provides employees with the
flexibility they desire and allows them to spend more time with
family, pursuing leisure activities, or continuing education.
2. Flexible credit hour program
Like biweekly schedules, flexible credit hours provide
flexibility to employees who may not traditionally work a great
deal of overtime. A flexible credit hour program will give more
employees a greater ability to balance work with family. The
bill's language that provides for and governs this option is
quite similar to the compensatory time provision.
A flexible credit hour program would allow an employee to
request to work up to 50 hours over his or her regularly
scheduled hours. Flexible credit hours are awarded on a one to
one ratio: one credit hour for one hour over an employee's
regular schedule. Each hour is a ``flexible credit hour'' which
is then ``banked'' for future use. The employee may use those
banked hours at any future date to reduce a workday or a
workweek. When used, flexible credit hours represent time off
from work at the employee's regular rate of pay.
As with compensatory time and biweekly programs, an
employer has the initial decision of whether to offer the
flexible credit hour program. Participation in a flexible
credit hour program is, of course, voluntary. An interested
employee must elect to participate. The legislation provides
that:
[A]t the election of the employee, the employer and
the employee jointly designate hours for the employee
to work that are in excess of the basic work
requirement of the employee so that the employee can
accrue flexible credit hours to reduce the hours worked
in a week or day subsequent to the day on which the
flexible credit hours are worked.\70\
---------------------------------------------------------------------------
\70\ S. 4 Sec. Sec. 3(b)(1)-13A(c)(1).
The legislation defines election as ``at the initiative of, and
at the request of the employee'' \71\ thereby reinforcing the
voluntary nature of the bill. An employee's choice to
participate pursuant to this legislation's pervasive policy of
employee choice, is made under the same guidelines established
for agreements to participate in compensatory time and biweekly
work schedule programs. Union employees perform according to
their collective bargaining agreements and nonunion employees
must submit a written or ``otherwise verifiable'' \72\
statement acknowledging his participation in the program. The
anti-coercion, remedy, and sanction provisions applicable to
compensatory time off options and biweekly work schedule
programs apply to the flexible credit programs as well.
---------------------------------------------------------------------------
\71\ S. 4 Sec. Sec. 3(b)(1)-13A(e)(4).
\72\ The term ``otherwise verifiable'' simply allows employees to
provide consent in forms other than writing, for example, video
recording, tape recording, electronic mail transmissions, or verbal
consent that falls within an accepted exception to the hearsay rule.
---------------------------------------------------------------------------
Compensation for unused accrued credit hours is handled in
much the same way that compensation for unused compensatory
time is handled. If, after a calendar year or other 12 month
period established by an employer, an employee participating in
a flexible credit hour program has not used all his or her
credit hours, the employer is required to cash out the
employee's remaining credit hours at the employee's normal
rate. The employer has until January 31 of the following year
or 31 days following the end of the employer's 12 month period
to provide this compensation.
An employee must be allowed to use accrued credit hours
within a reasonable period of time following the request so
long as doing so will not unduly disrupt the workplace. The
discussion above of the proper construction of the standard of
``unduly disrupt'' in the context of unused compensatory time
applies equally to the use of flexible credit hours.
A nonunion employee may withdraw at any time by submitting
a written notice to his or her employer and requesting monetary
compensation for the balance of unused accrued credit hours.
Such compensation is paid at a rate equal to the employee's
normal rate and an employer has 30 days from receiving the
request to remit the monies due. An employer may discontinue a
flexible credit hour program by providing 30 days written
notice to participating employees that it intends to
discontinue the program.
C. Correcting Confusion Over the ``Salary Basis'' Test
The final portion of this legislation helps clarify an
ambiguity that has arisen under the ``salary basis'' test.
Recent judicial interpretations of the ``subject to'' language
contained in the FLSA regulations have clouded the salary basis
test and caused unnecessary litigation and windfall awards for
highly paid employees. This portion of the legislation is
merely intended to clarify who is and who is not an exempt
employee and avoid any further inequitable payments of overtime
back-pay.
For more than five decades, the ``subject to'' language
generated little or no controversy. In recent years, however,
courts began to reinterpret the salary basis standard. Seizing
upon the ``subject to'' language, large groups of employees
have won multimillion dollar judgments. These awards have been
awarded in spite of the fact that many of the plaintiff-
employees have never actually experienced a pay deduction of
any kind and have never expected to receive overtime pay in
addition to their ``executive, administrative, or
professional'' salaries.
The committee wishes to clarify that an employee will not
lose their exempt status because his or her employer has a
policy on the books that provides for a reduction in pay for
absences of less than a full day or less than a full pay
period. However, the legislation would not affect the outcome
as to a particular employee if that employee experienced an
actual reduction in the compensation. Therefore, an employee
whose salary was reduced could still lose his or her exempt
status.
In a recent case, Auer v. Robbins,\73\ the U.S. Supreme
Court attempted to clarify the ``subject to'' language.
However, the Court's decision did not go far enough so as to
eliminate the notion that employees could lose their exemption
status based solely on the fact that their employer had a
personnel policy on the books. Therefore, it is up to Congress
to define the test once and for all. S. 4 clarifies that being
``subject to'' a reduction in pay for an employee's absence
from work for less than a full day or less than a full pay
period (depending on how the employee's pay structure is
organized) does not destroy an employee's exempt status.
---------------------------------------------------------------------------
\73\ No. 95-897; 65 U.S.L.W. 4136 (1997).
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The committee has included this clarification, in part, to
stop the deluge of cases that are being brought against state
and local governments. The committee recognizes that the
Department of Labor attempted to solve this problem through
regulations, as it applies to State and local employees in
1992.\74\ This legislation in no way preempts those
regulations. Therefore, a reduction in pay of an employee of a
public agency for absences of less than a day pursuant to
principles of public accountability shall not be considered in
making a determination as to employment status. Further, it is
the committee's intention that a reduction in pay of an
employee of a public agency for absences due to a budget
required furlough shall not considered in making a
determination as to employment status, except in the workweek
in which the furlough occurs.
---------------------------------------------------------------------------
\74\ 29 C.F.R. Sec. 541.5d.
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As an additional clarifying point, S. 4 provides that
additions to an exempt employee's salary, such as overtime
premiums or an end-of-the-year bonus will not destroy an
exemption. Last, S. 4 provides that the salary basis
clarification be retroactively applied to all such actions in
which final judgment has not been made as of the effective
date.
In addition to clarifying the law and avoiding inequitable
judgements, this committee intends to foster a more family
friendly workplace. If an employer is to be encouraged to
foster a family friendly workplace it can not be hindered by
the concern that granting bonuses or providing needed unpaid
time off to salaried employees may become a crushing liability.
Summary
There are more single parents and dual income families in
our work force than ever before and their numbers are growing.
In today's society employees are faced with the difficult task
of balancing their obligations at work with their obligations
to family, school, and other needs. For many years, Federal,
State, and local governments have enjoyed the benefit of
statutory options creating a flexible work schedule and
allowing their employees an opportunity for more leisure time,
time with family, or time to continue an education. S. 4, The
Family Friendly Workplace Act, will amend the Fair Labor
Standards Act to finally provide employers and employees in the
private sector with the same benefits public sector employees
have enjoyed.
S. 4 provides three options: 1) compensatory time off in
lieu of monetary overtime pay, 2) biweekly work schedules, and
3) flexible credit hours. Participation is voluntary; employers
do not have to offer these programs and employees do not have
to participate in them. Under no circumstances will
participation ever be a condition of employment.
Compensatory time
Compensation as compensatory time off is paid out at the
same rate as an employee's normal rate of overtime pay, one and
a half hours of compensatory time off for every hour of
overtime worked. Compensatory time off is treated as any other
wage for the purposes of bankruptcy, pension, and unemployment
benefits.
Employers and employees must agree to provide and receive
respectively, compensatory time in lieu of monetary overtime
pay. Union employees do so through the collective bargaining
process. Nonunion employees must do so by agreement prior to
the performance of overtime work. The employee must enter this
agreement ``knowingly and voluntarily.'' Furthermore, a
nonunion employee's decision to participate in a
compensatorytime off program must be in writing or be ``otherwise
verifiable'' and kept by the employer according to the Fair Labor
Standards Act's record keeping provision.
An employer may withdraw from his decision to provide a
compensatory time off program by providing 30 days written
notice to the participating employees. Similarly, nonunion
employees may withdraw by providing written notice to his or
her employer. The terms of the union employee's withdrawal will
be reflected in the collective bargaining agreement. Upon an
employer's discontinuance of a compensatory time off policy or
an employee's withdrawal, resignation, or termination, an
employee is entitled to the cash equivalent of any unused
compensatory hours. The employer's remittance must not be less
than the greater of the employee's overtime rate or the
employee's final rate of pay.
An employee may accrue up to 240 hours of compensatory time
during a 12 month period. If, after the 12 month period, an
employee has not used his accrued time, the employer has 31
days to remit the cash equivalent of those hours. If an
employee has accrued over 80 hours at any time, an employer may
remit the cash equivalent of those excess hours.
An employee must be allowed to use any accrued compensatory
time within a ``reasonable period'' of time of a request to do
so provided that it does not ``unduly disrupt'' the workplace.
Under a compensatory time off program, an employee enjoys the
preexisting protections of the Fair Labor Standards Act,
including prohibitions against violations of section 7 and
FLSA's discrimination provision, as well as S. 4's anti-
coercion provision. No employee may be coerced, intimidated or
threatened to accept or deny participation in any of the bill's
flexible workplace options. Violation of any of these
provisions submits an employer to pecuniary liability including
liquidated damages and any other viable remedy at law or
equity.
Biweekly work schedules
Biweekly work schedule programs are simply another
alternative to providing a more flexible workplace. Biweekly
work schedules enable employees to craft schedules that
coordinate their work obligations with their personal
obligations.
If an employer chooses to offer a biweekly scheduling
option and an employee elects to participate, prior to each 2-
week work period the employer and employee will arrange a
schedule for the 2-week period. Regardless of how the hours are
divided, the employee will not be required to work past 80
hours during the 2-week period. Employees will be entitled to
overtime for all hours worked which are outside the
predetermined biweekly schedule.
The parameters of the program are practically
interchangeable with those facilitating compensatory time off
programs. A participating employee enjoys the same protections
and may utilize the identical remedies. A biweekly work program
provides employers and employees flexibility to address other
demands.
Flexible credit hours
Flexible credit hour programs are a third scheduling
alternative. An employee may choose to work additional hours
(more than 40 hours) in a week in order to ``bank'' those hours
and use them to shorten a work week at a later date. An
employee may accrue up to 50 credit hours annually. As with the
other options, the employee's participation is completely
voluntary.
The program's particulars also trace those of the
compensatory time off option and the biweekly work schedule
program. Employees remain entitled to the same protections and
remedies, agreement, accrual, withdrawal, and notice
requirements. The program is similar to both the compensatory
time off and the biweekly works schedules because the policy
behind it is the same: namely to give workers more flexibility
by providing alternatives to the traditional 40 hour work week
and existing overtime procedures.
Salary basis employees
Finally, S. 4 clarifies the ``subject to'' language in the
regulations delineating the salary basis test. S. 4 clarifies
that the fact that a particular employee is subject to a
deduction in pay for absence of less than a full work day or
less than a full pay period may not be considered in
determining whether that employee enjoys exempt status. Only
actual reductions in pay may be considered. The legislation
also clarifies that employers may give bonuses and overtime
payments to salaried employees without destroying their
exemption from the FLSA.
V. Cost Estimate
U.S. Congress
Congressional Budget Office,
Washington, DC, April 2, 1997.
Hon. James M. Jeffords,
Chairman, Committee on Labor and Human Resources,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has prepared the
enclosed cost estimate for S. 4, the Family Friendly Workplace Act. If
you wish further details on this estimate, we will be pleased to
provide them. The CBO staff contacts are Christina Hawley Sadoti and
Mary Maginniss for federal costs, John Patterson for state and local
impacts, and Kathyrn Rarick for private sector impacts.
Sincerely,
James L. Blum
(For June E. O'Neill, Director.)
S. 4--Family Friendly Workplace Act
Summary: CBO estimates that enactment of S. 4 would result in a
small savings to the federal government. S. 4 would not affect direct
spending or receipts; therefore, pay-as-you-go procedures would not
apply. The bill would impose no new intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act of 1955 (UMRA),
and could result in savings for state, local, and tribal governments.
S. 4 would amend the Fair Labor Standards Act (FLSA) to allow
employers to establish more flexible compensation systems, so long as
such arrangements are in accordance with a collective bargaining
agreement or both the employer and the employee agree. The bill would
allow employers to provide compensatory time off in lieu of monetary
overtime compensation for private employees, pay overtime to employees
who work more than 80 hours in a two-week period (rather than 40 hours
in a single week), and provide flexible credit-hour programs whereby
hourly credits beyond the basic schedule can be exchanged for time off
at a subsequent date. Under current law, private-sector employers may
not offer these types of arrangements. Employees of the federal
government (excluding most employees of the legislative branch)
currently may receive time-and-a-half compensatory time in lieu of
time-and-a-half overtime pay, and may have flexible work schedules
under conditions similar to those specified in S. 4.
Finally, S. 4 would change the salary test used to determine if an
employee is exempt from the FLSA's overtime requirements. Under current
law, an employee is defined as an hourly worker and entitled to
overtime pay if it is theoretically possible that the employee's pay
could reduced for an absence of less than a day or a week. The bill
would change the salary test from a theoretical loss of pay to an
actual loss of pay, and would allow employers to provide overtime pay
and other compensation without making an employee an hourly worker who
would be automatically entitled to overtime pay.
Estimated cost to the Federal Government: Enacting S. 4
would save about $1 million annually, assuming that
appropriations are reduced accordingly.
Basis of estimate: Enactment of S. 4 would probably have a
minor impact on the legislative branch of the federal
government. Within the legislative branch, employees who are
not exempt from the FLSA may receive compensatory time in lieu
of overtime pay under limited conditions governed, for the most
part, by regulations that implement the Congressional
Accountability Act. If S. 4 were enacted, it is likely that
these regulations would be rewritten to reflect more closely
the options available to the private sector, thus giving the
legislative branch greater flexibility in compensating
employees for overtime hours worked. As a consequence, some
legislative branch employees would opt for and employers would
provide compensatory time instead of overtime pay. CBO
estimates that the resulting savings would amount to about $1
million annually, beginning in fiscal year 1998.
Accordingly, S. 4 would require the Secretary of Labor to
revise the materials that explain the Fair Labor Standards Act
to employees to reflect the changes made by the Family Friendly
Workplace Act. These requirements are provided for in current
law, and therefore would pose no additional costs to the
Department of Labor.
The budgetary impact of this legislation falls within
budget subfunction 801 (Legislative Branch).
Pay-as-you-go considerations: None.
Estimated impact on State, local, and tribal governments:
S. 4 would impose no new intergovernmental mandates as defined
in the Unfunded Mandates Reform Act of 1995 (UMRA) and could
result in savings for state, local, and tribal governments.
The wage provisions of the FLSA apply to tribal governments
on a case-by-case basis. Under current law, in the cases where
the FLSA applies (for example, when employees of tribal
governments are not members of the tribe), tribal governments
cannot provide compensatory time in lieu of overtime pay, deny
overtime pay to employees who work more than 40 hours in a week
but less than 80 hours in a two-week period, or give hourly
credits for work carried out beyond the basic work
requirements, which can then be exchanged for additional time
off at a later date. The bill could reduce the employment costs
of tribal governments by allowing such procedures when the
affected employees agree to them. (Because state and local
governments would be excluded from these amendments to the
FLSA, the amendments would have no impact on them.) At the same
time, the bill would increase the cost of another FLSA mandate
that requires tribal governments to post a notice explaining
the FLSA to their employees. CBO estimates that any additional
posting costs would be insignificant.
In addition, S. 4 would change the salary test used to
determine whether an employee is exempt from the FLSA's
overtime pay requirements. This change could reduce future
compensation costs of state, local, and tribal governments and
eliminate a number of pending liability claims for a variety of
pay practices.
Estimated impact on the private sector: The bill contains
no new private-sector mandates as defined in UMRA. By relaxing
existing mandates related to the payment of overtime, the bill
would reduce employment costs for some employers. At the same
time, the bill would increase slightly the cost of an existing
mandate on employers that requires them to post a notice
explaining the Fair Labor Standards Act to their employees. CBO
estimates that any added cost to employers would be well under
the $100 million annual threshold specified in UMRA and that
the bill would most likely result in net savings for employers.
Previous CBO estimate: On March 6, 1997, the Congressional
Budget Office prepared an estimate for H.R. 1, the Working
Families Flexibility Act of 1997. H.R. 1 also would allow
private employers to offer compensatory time off in lieu of
overtime pay, but it would not allow employers to offer bi-
weekly work programs or flexible credit hours. The estimated
effects of H.R. 1 and S. 4 on the federal budget are identical.
Estimate prepared by: Federal Cost--Christina Hawley Sadoti
and Mary Maginniss; impact on State, local, and tribal
governments--John Patterson; impact on the private sector--
Kathryn Rarick.
Estimate approved by: Robert A. Sunshine, Deputy Assistant
Director for Budget Analysis.
VI. Regulatory Impact Statement
The committee has determined that the bill would result in
some additional paperwork, time and costs to the Department of
Labor, which would be entrusted with implementation and
enforcement of the Act. It is difficult to estimate the volume
of additional paperwork necessitated by the Act, but the
committee does not believe it will be significant.
VII. Application of Law to Legislative Branch
Section 102(b)(3) of Public Law 104-1, the Congressional
Accountability Act (CAA), requires a description of the
application of this bill to the legislative branch. S. 4 amends
the Fair Labor Standards Act of 1938 to provide compensatory
time, biweekly schedules and flexible credit hours for all
employees. S. 4 also amends the Fair Labor Standards Act to
clarify that a salaried employee, who has not incurred an
actual reduction in pay, shall not lose his or her exempt
status due to the fact that the employee is subject to
deductions in pay for absences of employment of less than a day
or less than a full-pay period. Section 203(a) of the CAA
applies the rights and protections of subsections (a)(1) and
(d) of section 6, section 7, and section 12(c) of the Fair
Labor Standards Act \75\ to covered employees and employing
offices of the legislative branch. Section 225(f)(1) of the CAA
applies to the exemptions of these laws and section 13 of the
Fair Labor Standards Act is such an exemption. S. 4 amends
section 13 of the Fair Labor Standards Act by adding a new
subsection (m). Therefore, the changes made by S. 4 to section
7 and section 13 of the Fair Labor Standards Act \76\ apply to
the legislative branch.
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\75\ 29 U.S.C. Sec. Sec. 206(a)(1) and (d); 207; 212(c).
\76\ 29 U.S.C. Sec. 207.
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VIII. Section-by-Section Analysis
Sec. 1. Short Title.--The bill may be referred to as the
``Family Friendly Workplace Act.''
Sec. 2. Purposes--The legislation will amend the Fair Labor
Standards Act to provide employees in the private sector the
benefits and advantages of compensatory time, biweekly work
schedules, and flexible credit hours that Federal government
employees have enjoyed since 1978. Private sector employees
will be able to choose, based on their personal situations and
requirements, whether to accept compensatory time in place of
overtime pay and whether to participate in biweekly work
programs and flexible credit hour programs.
Sec. 3(a)(1). Workplace Flexibility Options.--The
legislation amends Section 7 of the Fair Labor Standards Act of
1938. The amendment provides an opportunity for employees who
work overtime hours to choose compensatory time rather than the
traditional time and a half monetary compensation. The
compensatory time option does not delete traditional overtime
pay, it simply offers an alternative. Furthermore, the
legislation allows an employee who no longer wants compensatory
time, to exchange the balance of any accrued time for
traditional monetary compensation. Specifically, the
legislation adds the following provisions to the end of the
Fair Labor Standard Act, Section 7:
(r)(1). Voluntary Participation.--The employee's decision
to accept compensatory time is entirely voluntary and may not
be a condition of employment. Unless a collective bargaining
agreement says otherwise, no employee is required to accept
compensatory time in lieu of traditional overtime pay. An
employer may not intimidate, threaten, or coerce an employee to
accept or deny the compensatory time option or to use
compensatory time or accrued time off.
When a nonunion employee enters into an agreement or
understanding with an employer, the agreement must allow the
employee to choose either monetary overtime pay or the accrual
of compensatory time in lieu of overtime pay for each workweek
overtime is offered.
(r)(2). General Rule.--An employee may elect to receive
compensatory time in lieu of monetary overtime compensation. An
employee must accrue at least 1.5 hours of compensatory time
for every hour of overtime pay to which he or she would
otherwise be entitled. Public agencies are expressly excluded
from the provisions regarding compensatory time.
(r)(3). Conditions.--Where an employee is represented by a
union that has been recognized under Sec. 9(a) of the NLRA,
compensatory time may be provided pursuant to a collective
bargaining agreement. Where an employee is not represented by a
union that has been recognized under Sec. 9(a) of the NLRA,
compensatory time may be provided pursuant to an agreement or
understanding that an employee has entered into, knowingly and
voluntarily, prior to the performance of work but such an
agreement may not be a condition of employment. In order to
receive compensatory time an employee must provide written or
otherwise verifiable consent which the employer must maintain
in accordance with section 11(c).
(r)(4). Hour Limit.--An employee may accrue up to 240 hours
of compensatory time during a calendar year or other 12 month
period designated and communicated by the employer. An employee
may not carry over compensatory hours from one 12 month period
to the next. If an employee has unused compensatory time by the
last day of the 12th month, his or her employer must provide
monetary compensation for unused hours by the last day of the
13th month. Any time an employee has accrued more than 80 hours
of compensatory time, the employer may provide the employee
with 30 days written notice of its intention to issue monetary
compensation for all accrued compensatory time in excess of 80
hours.
(r)(5). Discontinuance of Policy or Withdrawal.--An
employer may discontinue a compensatory time policy by
providing those employees who are accruing compensatory time in
lieu of overtime with 30 days written notice. An employee may
provide an employer with written notice at any time that he or
she is withdrawing the agreement or understanding to receive
compensatory time in lieu of overtime pay. An employee may
provide an employer with written notice at any time that his or
her unused compensatory time be returned as monetary
compensation. An employer must remit the monetary compensation
within 30 days from the date it receives the written request.
Sec. 3(a)(2). Remedies and Sanctions.--The legislation
amends Section 16 of the Fair Labor Standards Act of 1938 to
include pecuniary remedies for violations of the prohibition
against intimidation, threats, and coercion. Specifically the
legislation adds the following to Section 16:
(f)(1) An employer who violates the prohibition is liable
for the employee's rate of compensation multiplied by the
number of hours of compensatory time involved minus
anycompensatory hours used by the employee. Furthermore, the employer
is liable for liquidated damages equaling the employee's rate of
compensation times the number of compensatory hours initially accrued.
(f)(2). These penalties are not substitutes for any other
viable remedies including civil and criminal remedies.
Sec. 3(a)(3). Calculations and Special Rules.--The
legislation amends the Fair Labor Standards Act of 1938 by
continuing Section 7(r), introduced above. This portion of
section 7(r) outlines how and according to what rate an
employee is compensated for relinquishing accrued compensatory
time. Specifically the legislation offers the following:
(r)(5). Termination of Employment.--Upon termination, an
employee who has accrued compensatory time according to a
prescribed rate.
(r)(6). Rate of Compensation for Compensatory Time Off.--
When an employee relinquishes accrued compensatory time in
exchange for traditional pay, the rate will not be less than
the greater of the employee's normal overtime rate when the
compensatory time was earned or the employee's final pay rate.
(r)(7). Use of Time.--An employee who chooses to use earned
compensatory time must be allowed to do so within a reasonable
period of time after making a request provided that such use
does not unduly disrupt the workplace.
(r)(8). Definitions.--Monetary Overtime Compensation and
Compensatory Time Off have the same meanings given to Overtime
Compensation and Compensatory Time respectively outlined in
subsection (o)(7).
Sec. 3(a)(4). Notice to Employees.--The Secretary of Labor
will provide revised materials no later than 30 days following
the enactment of this act explaining the revisions and
notifying employees of the amendments to the Fair Labor
Standards Act of 1938.
Sec. 3(b)(1). Biweekly Work Programs And Flexible Credit
Hour Programs.--The legislation amends the Fair Labor Standards
Act of 1938 by creating two optional programs for private
sector employers and employees. First, biweekly work programs
will allow employees to select how many hours they want to work
in a given week during a 2 week 80 hour work period. Second,
flexible credit hour programs will allow employers and
employees to agree what hours and how many hours an employee
will work overtime. The overtime hours are ``flexible credit
hours'' that the employee can accrue and use whenever necessary
to shorten a typical workday or work week. Specifically, the
legislation inserts the following language before Section 13 of
the Fair Labor Standards Act of 1938:
Sec. 13A. Biweekly Work Programs And Flexible Credit Hour Programs
13A(a)(1). Voluntary Participation.--Neither biweekly
programs nor flexible credit hour programs may be conditions of
employment. Both are entirely voluntary.
13A(a)(2). Collective Bargaining Agreement.--An employee
may only be required to participate in a biweekly work schedule
program, a flexible credit hour program, or both in accordance
with the terms of the collective bargaining agreement.
13A(b)(1). Biweekly Work Programs.--An employer may
establish biweekly work schedules. Under a biweekly work
schedule an employee may work up to 80 hours in any combination
over a two week period.
13A(b)(2). Conditions.--An employer may only establish a
biweekly work program if the program comports with relevant
collective bargaining agreements or, in the case on non-union
workers, with any relevant agreements or understandings.
Employees who wish to participate in a biweekly program must
provide written or otherwise verifiable consent of their
participation which the employer must retain in accordance with
section 11(c).
13A(b)(3). Compensation for Hours in Schedule.--
Participating employees must be compensated at a rate that is
no less than their regular rate of compensation.
13A(b)(4). Computation of Overtime.--If an employer
requests that an employee work hours in excess of the biweekly
schedule or in excess 80 hours in the 2 week period, then the
excess hours shall be considered overtime hours.
13A(b)(5). Overtime Compensation Provision.--Any employee
working overtime hours during a biweekly work schedule shall
receive compensation at 1.5 times their normal rate of
compensation or compensatory time.
13A(b)(6). Discontinuance of Program.--An employer may
discontinue a biweekly work program by providing its
participating employees with 30 days written notice. A nonunion
employee participating in a biweekly work program may withdraw
his/her agreement or understanding to participate in the
program at the end of any 2-week period by providing written
notice to the employer.
13A(c)(1). Flexible Credit Hour Programs.--An employer may
establish flexible credit hour programs. Once an employee
elects to participate, the employer and employee agree on the
hours to be worked in excess of the normal schedule,
designating those additional hours as flexible credit hours.
13A(c)(2). Conditions.--An employer may establish a
flexible credit hour program only if the program comports with
any relevant collective bargaining agreements or, in the case
of non-union workers, with any relevant agreements or
understandings. Employees who wish to participate in a flexible
credit hour program must provide written or otherwise
verifiable consent of their participation which the employer
must retain in accordance with section 11(c). Non-union
agreements or understandings must state that the employer and
employee will jointly designate, for any applicable workweek,
the flexible credit hours.
13A(c)(3). Hour Limit.--An employee may accrue up to 50
hours of flexible credit hours during a calendar year. If an
employee has not used his or her accrued hours by December 31,
his or her employer has until January 31 to provide monetary
compensation for the unused hours.
13A(c)(4). Compensation for Flexible Credit Hours.--An
employee shall be compensated for flexible credit hours at a
rate no less than his or her normal compensation.
13A(c)(5). Computation of Overtime.--If an employer
requests that an employee, who has elected to participate in
the flexible credit hour program, work hours, which are in
excess of 40 hours in a given week and which have not been
previously designated as flexible credit hours, those hours
shall be considered overtime hours.
13A(c)(6). Overtime Compensation Provision.--For each
overtime hour earned under a flexible credit hour program, an
employee will be compensated either 1.5 times his or her normal
rate or receive compensatory time.
13A(c)(7). Use of Time.--An employee who chooses to use
flexible credit hours must be allowed to do so within a
reasonable period of time after making a request provided that
such use does not unduly disrupt the workplace.
13A(c)(8). Discontinuance of Program or Withdrawal.--An
employer may discontinue an established flexible credit hour
program by providing its participating employees with 30 days
written notice. An employee may provide an employer with
written notice at any time that he or she is withdrawing the
agreement or understanding to participate in a flexible credit
hour program. An employee may provide an employer with written
notice at any time that his/her unused flexible credit hours be
returned as monetary compensation. An employer must remit the
monetary compensation within 30 days of receiving the
employee's request.
13A(d)(1). Prohibition of Coercion.--An employer may not
intimidate, threaten, or coerce an employee to: participate in
either a biweekly work schedule program or a flexible credit
hour program, to work flexible credit hours, or to use accrued
flexible credit hours. Furthermore, the term ``intimidate,
threaten, or coerce'' includes a promise to confer a benefit
and the threat to effect a reprisal.
13A(e). Definitions.--This section defines key terms used
in the bill: Basic Work Requirement, Collective Bargaining,
Collective Bargaining Agreement, Election, Employee, Employer,
Flexible Credit Hours, Overtime Hours, and Regular Rate.
Sec. 3(b)(2). Prohibitions.--Section 15(a)(3) of the Fair
Labor Standards Act of 1938 is amended to include only minor
changes.
Sec. 3(c)(1). Limitations On Salary Practices Relating To
Exempt Employees.--The legislation amends the Fair Labor
Standards Act to include factors used to determine whether an
employee has an exempt status. Specifically, the following is
added to section 13:
(m)(1). In General.--The fact that a particular employee is
subject to a deduction in pay for absence of less than a full
work day or less than a full pay period may not be considered
in determining whether that employee enjoys exempt status, only
actual reductions in pay may be considered. In addition, the
fact that an employer compensates an exempt employee with
overtime pay or other additional compensation shall not be
considered in the determination of that employee's status.
(m)(2). Effective Date.--The effective date of this
amendment will be on the date of enactment and will apply to
any relevant civil action in which final judgment has not been
rendered prior to such date.
IX. ADDITIONAL VIEWS
I am proud to be an original cosponsor of S. 4, the Family-
Friendly Workplace Act, which amends the Fair Labor Standards
Act of 1938. I am a strong supporter of both employee and
employer rights--always have been. Providing employees with
flexible work schedules and increasing choices and options for
their time at work--and quality time with their families--makes
good common sense.
The Fair Labor Standards Act of 1938 has been beneficial.
Our society, however, has braved a storm of changes since this
act was passed 59 years ago. Our Nation's work environment has
changed since 1938 through the introduction of personal
computers, high speed modems, cellular phones, pagers and fax
machines. American suburbanization has created audio and video
conferencing, satellite offices, and most importantly,
``telecommuting.'' There has also been an influx of women into
our Nation's workforce since 1938. According to the Bureau of
Labor Statistics, 76 percent of mothers with school-age
children now work. Moreover, 63 percent of mother and father
households now see both parents working outside of the home--
one works to pay the bills, while the other works to pay the
taxes. Despite such demographic and technological advancements,
American employers and employees remain tethered to a 59-year-
old Act that forbids them from crossing that ``bridge to the
21st century.'' This is why the Fair Labor Standards Act of
1938 yearns for a modern-day fix.
Some people are now working two jobs to make ends meet--the
second at less pay than the first since labor costs are being
held down by avoiding overtime. These jobs are generally
inflexible and provide the employee with little or no family-
time. In addition, a large portion of these jobs are ``temp''
positions--which, once again, drive down the cost of paying
overtime wages. The Family-Friendly Workplace Act provides the
time off employees desire, while keeping the option of overtime
wages open. It is often the case, however, that people can bank
time easier than money. Once they get the money--they spend it.
The average worker never sees the money anyway. I can tell you
from experience that this generation isn't interested in
overtime--they want the time off. The Family-Friendly Workplace
Act goes the extra mile by giving them the ability to choose
either one.
Federal employees have enjoyed flexible work schedules
since 1978--19 years! I have never ``bought into'' the notion
that federal employees should somehow be blessed with greater
flexibility in the workplace than private sector employees. I
am fully confident that the provisions in S. 4 will not only
grant our nation's workforce with choices and options that are
family-friendly, but safeguard both employers and employees
from the possibility of abuse. We must take action now to help
employees balance the demands of work and family lives. I
believe that S. 4, the Family Friendly Workplace Act, is an
important first step in helping our Nation's working parents do
just that.
Michael B. Enzi.
X. MINORITY VIEWS
introduction
The majority report goes to great lengths to make the case
that employees want more control over their work schedules. In
the second sentence, the majority correctly points out:
``Today, there are more working, single parents and dual
families in America than ever before.'' The report goes on to
note that women now account for 46% of the labor force, and
that in 62% of the two parent families with children, both
parents are working outside the home. These workers need more
opportunity to take time off from their work to be with their
children.
We agree wholeheartedly with that description of the needs
of today's workforce. In fact, this portion of the report makes
a compelling case for expansion of the Family and Medical Leave
Act (FMLA). However, when Senator Dodd and Senator Murray
offered amendments to expand the number of employees covered by
the FMLA and to increase the leave opportunities provided for
by the Act, the majority unanimously voted against them. These
amendments would have provided workers with a genuine choice to
take time off when they needed it the most.
The very employee witnesses whom the majority cites in its
report--Christine Korzendorfer and Sandie Moneypenny--
emphasized the importance of employee choice in their
testimony. Ms. Korzendorfer told the Employment and Training
Subcommittee: ``What makes this idea appealing is that I would
be able to choose which option best suits my situation.'' But
those who brought Ms. Korzendorfer to testify failed to advise
her that, under S. 4, it is her employer alone who will
determine what scheduling flexibility is available in her
workplace.
Similarly, Ms. Moneypenny testified that ``if I could
`bank' my overtime, I wouldn't have to worry about missing work
if my child gets sick on a Monday or Tuesday.'' The problem is
that S. 4 will not assure her that opportunity. Her employer
will have no obligation to let her use the accrued comp time on
the days when her child becomes ill.
It is for these reasons that the minority opposes S. 4--it
offers only the appearance of employee choice, not the reality.
A close reading of the bill reveals the flaws at its heart.
Although the minority offered amendments that highlighted these
deficiencies, the majority refused to adopt a single one. Smoke
and mirrors may be acceptable to the proponents of this bill,
but not to the minority on this Committee. We unanimously
oppose this legislation, applaud the President's promise to
veto it, and urge our colleagues in the Senate to reject it
outright.
No real employee choice
There is significant interest in the idea of legislation
that would allow an employee to make a truly voluntary choice
to be compensated for overtime work in time off rather than in
pay. The essence of a genuine comp time bill is the creation of
new options for employees, not employers. This is not such a
bill. S. 4 contains four major provisions, each of which is
designed not to help employees, but to allow employers to
reduce the amount of money they must pay their workers.
While the legislation purports to let employees make the
choice between overtime pay and comp time, it does not contain
the protections that are necessary to insure that employees are
free to choose and are free from reprisal.
Under S. 4, it is the employer, not the employee, who
decides what forms of comp time and flex time will be available
at the workplace. There is no freedom of choice for the worker.
There is nothing in this bill that prevents an employer
from discriminating against a worker who refuses to take comp
time instead of overtime pay. Under S. 4, an employer could
lawfully deny all overtime work to those employees who want to
be paid and give overtime exclusively to workers who will
accept comp time in lieu of pay. This is not freedom of choice
for the worker.
An employee may want a particular day off so that she can
accompany her child to a special school event or to an
appointment with the pediatrician. However, nothing in this
legislation requires the employer to give the employee the day
she requests. This bill gives the employer virtually
unreviewable discretion to determine when a worker can use her
accrued comp time. Here, too, there is no freedom of choice for
the worker.
The failure of the Majority's bill to provide freedom of
choice for the worker on these crucial issues cannot be excused
an unintentional. Senator Kennedy offered an amendment which
would have expressly made it unlawful for an employer to
discriminate in awarding overtime based upon an employee's
willingness to accept compensatory time instead of overtime
pay. It was defeated 8 to 10 on a party line vote. Senator
Wellstone offered an amendment affording employees the right to
determine when they would take the time off which they had
earned. It would have required an employer to permit employees
to use accrued compensatory time for any of the reasons set
forth in the FMLA, and for any other reason if the time off was
requested more than two weeks in advance and the absence would
not cause substantial and grievous injury to the employer's
business. This, too, was rejected 8 to10 on a party line vote.
On these critical points, S. 4 does not empower workers to decide, it
empowers their bosses.
S. 4 contains much more than a badly flawed comp time
provision. It contains a section entitled ``Biweekly Work
Program'' which abolishes the 40 hour workweek. The bill
substitutes a provision that would allow an employer to work
employees up to 80 hours in a single week without paying a cent
of overtime as long as the employer gave them the next week
off. Similarly, the employer could schedule employees for 60
hours one week and 20 the next--all paid at the employee's
regular hourly rate. This provision gives workers nothing extra
for overtime hours. Moreover, irregular and shifting schedules
are the antithesis of a family-friendly proposal. Obviously the
majority has not considered the difficulties of arranging child
care for such an erratic schedule.
The bill also contains a provision entitled ``Flexible
Credit Hours.'' Under this provision, an employee who works
hours that are ``in excess of the basic work requirement''
would no longer be entitled to overtime. Instead, the employee
would get an equivalent amount of hours off at a later
unspecified time. Under existing law, the employee would be
paid time and a half for such excess hours. Under comp time,
the employee would at least receive one and one half hours of
time off for every excess hour worked. However, ``flexible
credit hours'' purports to offer the employee a new
alternative--work the extra hours but receive only one hour off
for each such hour worked. It is difficult to believe that any
employee would choose to participate in such a plan unless he
or she was given no alternative.
The last feature of this bill applies to salaried
employees. Under current law, they do not receive overtime when
they work extra hours and their pay cannot be cut for an
absence of less than a full day. S. 4 proposes to change that
rule. Salaried employees would still receive no overtime, but
they could be subject to deductions in their pay if they were
absent. The fact that such an employee could have pay deducted
if he missed five hours of work in one week could no longer be
used to prove that he was an hourly employee entitled to
overtime if he worked 5 hours extra another week. This is
patently unfair, and in no way enhances workers' freedom of
choice.
A careful analysis of S. 4 demonstrates that its title
ought to be ``The Pay Reduction Act of 1997.'' The inevitable
result of its enactment would be to require employees to work
longer hours for less pay. As the acting Secretary of Labor has
stated, S. 4 would ``obliterate the principle of time-and-a-
half for overtime'' and would ``destroy the 40 hour workweek.''
Under this bill, employers would no longer be required to
pay time and a half to hourly employees who work overtime. In
fact, employers would no longer be required to pay anything for
overtime work. Instead, employers could simply give an hourly
employee who works overtime an IOU, promising the employee
additional time off at some indeterminate time in the future.
Employers would even be allowed to allocate time off at the
straight time rate: an hour off for each overtime hour worked.
This is not family friendly--it is a pay cut, pure and simple.
Those who earn overtime include the most vulnerable workers
The majority claims that none of these potential abuses
will occur because employees must consent to any of the
flexible arrangements provided in S. 4. This assertion ignores
the reality that, in many workplace, employees lack of any
bargaining power. They can be discharged at will by their
employers and easily replaced. Employees in such workplaces--
and there are millions of them across the country--cannot say
``no'' when they are asked to accept comp time in place of
overtime pay. Indeed, the very workers who currently rely most
heavily on overtime pay are the employees most vulnerable to
coercion and retaliation by their employer.
Thus, to understand the real world impact of this bill, we
must look at the workers who are currently depending on
overtime pay to make ends meet. Overwhelmingly, they are
working for low wages. Department of Labor statistics reveal
that one-fourth of workers earning overtime earn under $12,000
per year. 44 percent of workers who depend on overtime earn
$16,000 per year or less, and 61 percent earn $20,000 per year
or less. More than 80 percent of overtime recipients have
annual earnings of less than $28,000 per year. And, according
to the Bureau of Labor Statistics, nearly 8 million of them are
already holding more than one job just to make ends meet.
400,000 Americans, more than half of them women, are working
two jobs in the food service industry. Nearly 200,000 men and
women with multiple jobs work in cleaning and maintaining
buildings. These are classic low-wage jobs, where workers need
every dollar of pay they can earn. Furthermore, overtime pay
makes up a significant percentage of many hourly workers' take-
home pay. When they work overtime, manufacturing workers find
that an average of nearly 15 percent of their take-home pay is
attributable to the extra hours.
The workers who will be affected by this bill are hard-
working, productive members of American families. They are also
among the least-educated workers in the country. 43 percent of
workers earning overtime have only a high school diploma.An
additional 14 percent have not graduated from high school. These are
people who need every dollar they can earn just to survive in today's
economy. They are men and women who are supporting families. If this
bill becomes law, many of them will lose overtime pay that they depend
on to pay the rent, buy food, and provide clothing for their children.
If this bill passes, employers will give all the overtime work to
employees who agree to take comp time instead of overtime pay. There
will be no overtime work for those who insist on being paid. Under S.
4, such discrimination in awarding overtime is perfectly legal.
Millions of those who rely on overtime earn only the
minimum wage. By and large, these are not teenagers working
jobs after school for pocket money. About 60 percent of minimum
wage workers are married. They earn an average of 51 percent of
their families' earnings. One-third of minimum wage earners are
the sole breadwinners in their families. 60 percent are women.
2.3 million children rely on parents who earn the minimum
wage--parents who hope their children don't get sick because
they can't afford a doctor.
The vulnerable nature of workers who earn overtime is not a
theoretical or patronizing concept. Employers violate current
overtime provisions at an alarming rate. The Department of
Labor conducted over 42,000 investigations under the Fair Labor
Standards Act in 1996. One-third of those investigations,
13,687, disclosed overtime violations. The Department ordered
over $100 million in back pay for 170,000 workers who were
victims of these overtime violations. These figures do not even
take into account a backlog of 16,000 unexamined complaints
pending at the Department at the end of 1996.
In testimony before the Employment and Training
Subcommittee on February 13, 1997, the President of the United
States Chamber of Commerce characterized these 170,000
victimized employees as a ``microdot'' on the economy. In
contrast, most of us, Republicans and Democrats alike, were
shocked at the magnitude of these numbers, and the suffering
they represent.
The comp time provisions of S. 4 will apply to industries
where these noncompliance problems have become endemic, but S.
4 authorizes no additional funds for wage and hour enforcement.
Garment workers, seasonal employees and temporary workers are
all covered by this bill. Yet Department of Labor enforcement
efforts find that more than half of the garment shops in the
United States unlawfully pay less than the minimum wage, fail
to pay overtime, or use child labor. If S. 4 becomes law,
employers in these industries will use its provisions to coerce
workers into accepting compensatory time instead of overtime
wages.
Abuse of the overtime provisions is not restricted to fly-
by-night garment shops and undocumented workers. The Employment
Policy Foundation, an employer-supported research group,
estimates that workers would receive an additional $19 billion
each year if all employers complied with the law. The resources
of the Department of Labor are already inadequate to police all
the violations. Those resources certainly are not equal to the
task of ensuring compliance with a far more complex set of comp
time provisions.
Current law permits many flexible work schedules
According to the majority, the FLSA itself ``prevents
employers from accommodating employee requests for greater
flexibility in scheduling.'' In fact, however, it is American
employers, and not the law, which prevents flexible scheduling.
If employers want to provide family-friendly work
schedules, they can do so today. The key is the 40-hour
workweek. While employees normally work five eight-hour days a
week, many more flexible arrangements are possible. A February
11, 1997 letter from the Department of Labor to Senator Kennedy
provides compelling evidence of the many flexible arrangements
available under current law. For example, the FLSA permits
employers to schedule workers for four ten hours days a week
with the fifth day off, and pay them the regular hourly rate
for each hour. Under these circumstances, according to the
Department of Labor, ``no overtime premium pay would be due for
that week.'' Similarly, employers can arrange a work schedule
of four nine-hour days plus a four-hour day on the fifth day.
Once again, states the Department of Labor, ``the FLSA would
not require payment of any overtime premium pay for that
workweek.'' In addition, under current law, some employees
could choose to vary their hours enough to have a three day
weekend every week or every other week.
Employers also can offer genuine ``flex time.'' This allows
employers to schedule an 8-hour day around ``core'' hours of
10:00 A.M. to 3:00 P.M., and let employees decide whether they
want to work 7:00 A.M. to 3:00 P.M. or 10:00 A.M. to 6:00 P.M.
This too, costs employers not a penny more.
But the record is clear. Only a tiny fraction of employers
use these or the many other flexible arrangements available
under current law. A 1991 study conducted by the Bureau of
Labor Statistics found that only 10% of hourly employees are
permittedto use flexible schedules. Current law offers a host
of family-friendly, flexible schedules--yet few employers provide them.
It is not the FLSA that prevents employers from offering employee
flexibility. The problem workers confront lies not in the inflexibility
of the law, but rather in the inflexibility of too many employers.
The false analogy to the public sector
To buttress their claim that S. 4 would simply enhance
employee free choice, the majority relies on a supposed analogy
to the public sector, where comp time has been permitted for
more than a decade. The majority asserts that comp time has
worked well for public employees, and then assumes that the
same would be true in the private sector.
There is no evidence before this Committee as to how comp
time is working in the public sector. A recent report by
Professor Lonnie Golden for the Economic Policy Institute finds
that, in fact, ``many [public] employees carry a large number
of banked comp time hours'' and ``have difficulty obtaining
their employers' permission to use their comp time hours when
they need them.'' As a result, Professor Golden concludes,
public employees are `` `loaning' hours to their employers
interest free.'' \1\
---------------------------------------------------------------------------
\1\ Golden, Family Friend or Foe? Working Time, Flexibility and the
Fair Labor Standards Act at 2 (1997).
---------------------------------------------------------------------------
But even if the majority's premise were sound, it would not
follow that extending comp time and flexible credit hours to
the private sector makes sense. For as then-Governor John
Ashcroft explained in 1985, when the Senate was considering
whether to permit comp time in the public sector, ``State and
local governments are qualitatively different in structure and
in function from private business.'' \2\ He continued, ``A key
distinction is that state governments do not compete with each
other or the private sector. State and local government workers
also are set off from their private-sector colleagues by the
protection they enjoy through the government process itself. *
* * An inherent distinction exists between state and local
governments and private business with regard to the vital
public functions state and local governments serve and the
legal constraints under which they operate.'' Senate Labor
Subcommittee Hearings at 57, 64.
---------------------------------------------------------------------------
\2\ Hearings Before the Subcommittee on Labor of the Senate
Committee on Labor and Human Resources on the Fair Labor Standards
Amendments of 1985, 99th Cong. 1st Sess. 51 (1985).
---------------------------------------------------------------------------
Most public sector employees have some form of civil
service protection, and can only be discharged or demoted for
cause established at an adversarial hearing. The job security
they enjoy is far greater than an employee in the private
sector, who can be terminated at will by his or her employer.
In addition, some 60% of public sector employees are protected
by the dispute resolution procedures of collective bargaining
agreements, while only about 14% of private sector workers
enjoy such benefits.
Thus, even if it were true that comp time is working
successfully in the public sector--and that is far from clear--
it would not follow that the same would be true in the public
sector.
The real motivation
Further, the FLSA was amended in 1985 to allow public
sector comp time principally to allow state and local
governments to avoid the costs of overtime pay. Historically,
state and local governments had not been subject to the
overtime provisions of the Fair Labor Standards Act. When that
was reversed by a Supreme Court decision, those governments
were faced with substantial new costs. They immediately sought
relief from Congress so that they could avoid the costs of
overtime pay. For example, the National League of Cities
claimed at the time that, without relief, ``the cost of
complying with the overtime provisions of the FLSA * * * will
be in excess of $1 billion for local governments.'' \3\ The
National Association of Counties reported that ``It will cost
States and localities in the billions of dollars to maintain
current service levels under this ruling. * * * We need
flexibility to use compensatory time and volunteers as
alternatives to meeting the public's demand for increased
services when we are faced with budget shortfalls.'' Id. at 204
(emphasis added). That estimate--and similar dire warnings from
the States and counties--led to the enactment of comp time
legislation in order, as Senator Hatch put it, ``to prevent the
taxpayers in every single city in America from suffering
reduced services and higher taxes.'' \4\ These candid remarks
belie the pious claims now being heard that comp time is being
extended to the private sector to benefit employees' families,
rather than employers' balance sheets.
---------------------------------------------------------------------------
\3\ Hearing Before the Subcommittee on Labor Standards of the House
Committee on Education and Labor on the Fair Labor Standards Act, 99th
Cong. 1st Sess. at 83 (testimony of then-Mayor Voinovich) (1985).
\4\ ____ Cong. Rec. 28988 (Oct. 24, 1985).
---------------------------------------------------------------------------
The real impetus for S. 4 was inadvertently betrayed by a
representative of the National Federation of Independent
Businesses in testimony at the Employment andTraining
Subcommittee hearing on February 13, 1997: ``Real small businesses * *
* our members cannot afford to pay their employees overtime. This is
something that they can offer in exchange that gives them a benefit.''
Once more, the intended beneficiary is the employer, not the employee.
section-by-section analysis
The majority argues that our opposition to the comp time
provisions of S. 4 is unreasonable. They argue that most
employers get along well with their employees, and that
employers will work in a spirit of cooperation to implement a
positive and non-discriminatory comp time program, even if this
bill provides no explicit protections for employees rights. We
agree that many employers get along well with their employees.
Further, we assume that many employers desire flexible
scheduling options in order to help their employees meet family
obligations without putting careers at risk.
However, Congress must not make major changes in the
nations' labor laws without considering their impact on all
workers. Our first duty is to protect the sizable minority of
employees whose rights are threatened with violation. A careful
analysis of S. 4 shows that it is unacceptable because it fails
to include a full range of critically important protections.
comp time
No guarantee that comp time will be voluntary
Supporters of S. 4 claim that the bill provides a truly
voluntary system of compensatory time: a system in which comp
time can only be provided when an employee agrees to accept
time off instead of overtime pay. But the bill in fact provides
very few safeguards to ensure that comp time programs will be
truly voluntary, no language protecting employees against
discrimination on the basis of their decision to earn overtime
pay instead of comp time, and inadequate provisions giving
employees a right to use their comp time when they actually
need it.
The bill states that, for workers not represented by a
union pursuant to section 9(a) of the National Labor Relations
Act,\5\ comp time can only be offered pursuant to ``an
agreement or understanding arrived at between the employer and
employee,'' if this agreement or understanding was entered into
``knowingly and voluntarily'' by the employee. The bill further
states that the employee must affirm in a ``written or
otherwise verifiable statement'' that he or she has chosen to
receive comp time in lieu of overtime pay.
---------------------------------------------------------------------------
\5\ As drafted, S. 4 permits employers to offer comp time programs
even when doing so conflicts with existing collective bargaining
agreements. See section entitled ``No exemption for airline, railroad
or construction unions.''
---------------------------------------------------------------------------
However, the bill does not require that a comp time
agreement must be provided to employees in writing, and it does
not require that an employee's voluntary request to earn comp
time must also be in writing. The absence of a requirement for
written documentation opens a real possibility for abuse.
First, if comp time agreements are not written down, employees
will not be able to enforce them. The agreements will become
``moving targets'' that can be reinterpreted at the employer's
convenience, and applied inconsistently to different employees
who have substantially the same duties. Second, if an
employee's voluntary request for comp time does not have to be
documented in writing, then an employer can claim that an
employee has requested comp time, even if the employee prefers
overtime pay.
This bill is unacceptable because it cannot provide even
minimal assurances that employees will enter into comp time
agreements only with a complete understanding of their terms
and an honest willingness to do so. At a minimum, written
documentation of comp time requests and agreements must be
required. Better still, the Department of Labor should be given
the authority to issue regulations specifying the content of
written comp time agreements. In the absence of either
protective mechanism, the majority's construct is totally
inadequate.
No exemption for airline, railroad or construction union contracts
As drafted, S. 4 does not apply to workforces represented
by ``a labor organization recognized as provided in section
9(a) of the National Labor Relations Act.'' This exclusion
applies to many unionized workplaces, but fails to acknowledge
the existence of collective bargaining relationships in many
others. For example, employees in the railroad and airline
industries are heavily organized--but they are covered by the
Railway Labor Act, 45 U.S.C. sections 151 (railroad employees)
and 182 (airline employees), and therefore are expressly
excluded from coverage under the National Labor Relations Act.
See 29 U.S.C. section 152(3) (excluding ``any individual
employed by an employer subject to the Railway Labor Act'' from
definition of ``employee'' covered under National Labor
Relations Act).
Similary, workers in the construction industry have a long
tradition of unionization. However, building trades unions do
not typically seek or obtain recognition under section 9(a) of
the National Labor Relations Act. Instead, such unions
negotiate contracts with employers under section 8(f) of the
NLRA, 29 U.S.C. section 158(f) (entitled ``Agreement covering
employees in the building andconstruction industry'').
By its terms, this bill would permit an employer
unilaterally to impose a comp time program on workers in the
airline, railroad and construction industries--even if those
workers were represented by a union that had negotiated a
collective bargaining agreement on their behalf. An employer
could bypass the union, create and implement a comp time system
for employees whose collective bargaining agreement expressly
prohibited such a system, and nothing in S. 4 would make this
unlawful. The hundreds of thousands of workers represented by
unions in these sectors should not be subjected to inconsistent
and inequitable treatment, yet that is precisely what S. 4
would permit.
No bar on discriminatory practices
The bill does not include a bar on such discriminatory
practices as assigning overtime work only to employees who
choose comp time off instead of time-and-a-half pay. Absent a
strong statutory deterrent against discrimination, many
employers will distribute overtime hours only to workers who
agree to take comp time instead of insisting on overtime pay.
Even assuming, arguendo, that those employees who choose comp
time do so voluntarily, many other employees who desire
overtime pay will never get the opportunity to earn it. They
will lose the overtime that they are currently earning and
relying upon to support their families. For them, the freedom
of choice allegedly offered by S. 4 will be in fact a cruel
joke.
No exemption for vulnerable workforces
The bill does not exempt classes of employees, occupations,
or industries that have the highest incidences of, and are most
susceptible to, overtime violations. Nor does it allow the
Government to exempt specific employers from the bill who are
guilty of violating the law. This is a major flaw.
In certain industries, such as the garment industry, abuse
is entrenched. The Labor Department has found that over half of
the garment shops in the U.S. fail to pay overtime, use child
labor, or pay less than the minimum wage. In just six months in
1996, the Labor Department assessed more than $1.5 million in
back wages for labor law violations by garment firms. More than
$345,000 in civil damages were also assessed during this
period. No one would reasonably suggest that the garment
industry is ready for the flexibilities provided by this bill.
Why isn't this industry exempted?
The National Federation of Independent Businesses testified
before the Employment and Training Subcommittee that America's
small businesses ``can't afford to pay overtime,'' but that S.
4 ``is something they can offer in exchange that gives
[employees] a benefit.'' The inference could not be clearer:
small business owners will pressure their employees to accept
comp time instead of overtime pay. This is not an employee
benefit, but rather a way for employers to cut costs.
The bill does not even exclude the most notorious
employers--those with records of serious and repeated FLSA
violations--from offering comp time. For those employers, S. 4
will constitute an open invitation to enage in new forms of
employee abuse. This is shameful public policy.
No right to use comp time when employees need it
S. 4 provides that an employee who requests the use of comp
time off shall be permitted to use the comp time ``within a
reasonable period,'' if it ``does not unduly disrupt the
operations of the employer.'' Nowhere in the bill are the terms
``reasonable period'' and ``unduly disrupt'' defined. In
practice, an employee could give his employer two weeks notice
of his intent to take comp time off to see his daughter's
school play, and have his request denied on grounds of
insufficient notice. Similarly, if an employee plans to take
her child to a dentist appointment during a school vacation,
her employer could claim that her use of comp time would
``unduly disrupt'' business operations, without even explaining
why.
Compensatory time is a form of earned, accrued
compensation. Employees should be able to use it on demand with
a reasonable period of notification, unless its use would cause
substantial and grievous injury to the employer's operations.
Clearly, an employee should be able to use comp time for any of
the same reasons that qualify for leave under the Family and
Medical Leave Act.
This bill establishes a comp time program for hourly wage
workers, who typically have little bargaining power vis-a-vis
their employers. The bill fails to acknowledge this critical
fact, and fails to vest employees with an express right to use
comp time that they have earned at the time of their choice.
The bill does not even provide that employee requests made with
reasonable notice shall be granted by employers. In practice,
S. 4 will result in time off being scheduled at the employer's
convenience, not the employee's.
The majority clearly errs in stating that ``this portion of
the bill is strikingly similar to the provisions of the FMLA
and the relevant regulations.'' The FMLA recognizes two types
of medical leave--unforeseen, serious illnesses for which the
employee need make no effort to accommodate the employer, and
foreseeablemedical treatment. In the latter situation, the
employee must make a ``reasonable effort'' to schedule treatment at a
time that doesn't ``unduly disrupt'' the employer's operations. If the
employee's reasonable efforts fail, he or she can still take the leave
despite the resulting inconvenience to the employer. The employer is
expressly prohibited from taking any punitive action against the
employee based upon the leave.
Under the FMLA, the ultimate decision on the timing of the
leave rests with the employee. In marked contrast, under S. 4,
the decision rests with the employer. Management determines
what is ``reasonable'' and when time off would be ``unduly
disruptive.'' The employee has little recourse. To claim that
S. 4 is ``strikingly similar'' to the FMLA is grossly
inaccurate.
No penalties for denying comp time
Under S. 4, if an employee gives reasonable notice that he
or she intends to use comp time, and if the comp time would not
disrupt the employer's operations, the employer is supposed to
allow the comp time to be used. Unfortunately, the bill
provides no penalties to ensure that an employer will honor
reasonable requests for comp time. An employer can deny comp
time for any reason, and there is nothing that the employee can
do about it--even though the comp time belongs exclusively to
the employee.
This is irrational, and it is inconsistent with the
enforcement provisions of laws such as the Family and Medical
Leave Act. If an employer denies an employee's reasonable
request to take FMLA leave, the employee can recover damages,
including money expended on child care and compensatory
damages. The FMLA improves employee morale and productivity
only because it is both credible and enforceable. This bill, by
contrast, is misleading and non-enforceable.
Too many hours of comp time can be accrued
Given the danger of employer insolvency, a ceiling of 240
hours is far too high. That is six full weeks of work. For an
employee earning $10 an hour, 240 hours means $2,400. That
would constitute some fifteen percent of the employee's annual
earnings. Even the Republicans in the House of Representatives
recognized that 240 hours was unacceptably high, when they
amended H.R. 1 to provide a cap of 160 hours of bankable comp
time. The administration has proposed a limit of 80 hours for
accrued comp time. Given the wholly inadequate safeguards in S.
4, the level of financial risk to employees must be minimized
to the greatest extent possible.
No protection of accrued comp time during business failure or job loss
Accumulated compensatory time is an earned benefit,
accepted instead of overtime pay. It belongs exclusively to the
employee. But S. 4 does not contain sufficient protections to
ensure that workers whose employers go bankrupt will have some
claim on their unpaid comp time.
In 994, 845,300 American businesses filed for bankruptcy,
according to the Administrative Office of the U.S. Courts. In
each of the three preceding years, the number of bankruptcies
was even higher: 918,700 in 1993; 972,500 in 1992; and 880,400
in 1991. Some industries are unusually susceptible to business
failure. In 1994, the rate of business failure in the garment
industry was 146 per 10,000 firms: twice the national average.
In construction, the rate of business failure was 91 per 10,000
firms.
Since S. 4 allows employees to ``bank'' up to 240 hours of
comp time, some workers could lose up to six weeks of pay when
their companies go out of business. That's $1,440 for a worker
earning $6 per hour: money for rent, food, and school clothing
for the children. If a financial institution goes out of
business, its customers' accounts are protected by Federal
Depositors' Insurance. People who deposit their overtime
earnings into a ``comp time bank'' deserve the same level of
protection when their companies go out of business. It is
unacceptable not to treat employees' accumulated compensatory
time as unpaid wages during a bankruptcy.
biweekly work programs and flexible credit hours
Under S. 4, it is up to the employer to decide whether to
offer comp time to employees. Many will opt not to do so, given
that the bill also authorizes employers, in lieu of paying for
overtime, to offer ``biweekly work programs'' and ``flexible
credit hour programs.''
Like the comp time sections, the provisions authorizing
biweekly work programs and flexible credit hours would free
employers from any obligation to pay employees who work
overtime. Like comp time, these programs would permit employers
to substitute IOUs instead, promising time off the following
week (in the case of a biweekly work program) or at some future
point in time (in the case of flexible credit hour programs).
But unlike comp time, employees who work overtime as part of a
biweekly work program or a flexible credit hour program would
earn only one hour of future time off for each overtime hour
worked. In other words, these sections would effectively repeal
the guarantee of premium pay--time and one-half--for overtime
work. A clearer provision for cutting worker pay is difficult
to imagine.
The threat that these provisions pose to the 40 hour
workweek--and to stablework hours--is self-evident. The
biweekly work program would permit an employer to work an employee 50,
60 or even 70 or more hours in a single week without paying a dime in
overtime. The employer's only obligation would be, for every extra hour
worked, to give the employee an hour off the following week. The
flexible credit hour program would permit the same sort of variability
in hours, and require the employer only to promise a future hour off
for each overtime hour worked. There are few employees anywhere who
will view such on-again, off-again work schedules as advantageous--or
family friendly.
To be sure, the biweekly work programs and flexible credit
hour programs purport to require employee agreement, just as
comp time does. But the provisions supposedly protecting free
choice suffer from all of the flaws of the provisions relating
to comp time.
It bears repeating that under S. 4 it is up to the employer
to decide in the first instance which types of so-called
``family friendly'' policies to implement. And it is difficult
to understand why any employer would offer comptime--with the
requirement of time-and-a-one-half off--when the employer can
offer biweekly work weeks and flexible credit hours and provide
only one hour off for each overtime hour worked. Thus, these
provisions of the bill would, in practice, trump the comp time
provisons--and trump the requirement of time and one half for
overtime work.
pay docking for salaried employees
The FLSA requires overtime pay only for covered (``non-
exempt'') employees. The Act exempts workers employed in a
``bona fide executive, administrative or professional
capacity.'' 29 U.S.C. 213(a)(1). As of 1990, the Labor
Department estimated that there were 21.9 million exempt
workers.\6\
---------------------------------------------------------------------------
\6\ Employment Standards Administration, supra n. ____, at Table 7.
---------------------------------------------------------------------------
For at least four decades, the Department of Labor--through
Republican and Democratic administrations alike--has held the
view that the FLSA exemption excludes only salaried, as
distinguished from hourly, employees. The Department has
likewise held the view, for over 40 years, that a salaried
employee is, by definition, one who ``regularly receives * * *
a predetermined amount * * * which amount is not subject to
reduction because of variations in the * * * quantity of the
work performed.''
In practical terms, this means that while salaried
employees do not receive overtime when they work extra hours,
they are entitled to take part of a day off, without loss of
pay, when pressing family needs arise. Just a few weeks ago,
the United States Supreme Court sustained the DOL's regulations
and held that employees are not exempt if their pay is subject
to reduction for missing part of a day's work.\7\ Under current
law, then, salaried employees--in lieu of receiving overtime
pay--at least enjoy the flexibility that the majority claims to
value so highly as a means of balancing work and family.
---------------------------------------------------------------------------
\7\ Auer v. Robbins, 65 U.S. L.W. 4136 (Feb. 19, 1997).
---------------------------------------------------------------------------
Remarkably, however, this so-called Family Friendly
Workplace Act would take away this very flexibility for these
salaried employees. S. 4 would create a new ``heads-I-win,
tails-you-lose'' world in which a salaried employee would have
no right to overtime for extra work, but could be subject to
having her pay docked if the employee took an hour off to bring
her child to the doctor, or to meet with the child's teacher.
Indeed, under the majority's bill, an employee who worked 60,
70 or even 80 hours in a week could still suffer a pay
reduction if on one day in that week the employee worked less
than a full day.
Once again, then, the majority's bill turns out to be
employer-friendly, but family-hostile.
democratic amendments
Family and Medical Leave Act amendments--Senators Dodd and Murray
S. 4 does not solve the problems of working families.
Although it purports to offer more time for employees to spend
time with their families, it would actually help only a small
group of employees who would qualify for compensatory time:
employees who are not exempt from the FLSA; who work overtime;
whose employers voluntarily agree to offer comp time; and who
themselves agree to participate in the comp time program. Most
importantly, S. 4 offers no guarantees to employees: it
provides no meaningful penalty for employers who deny
employees' requests for comp time, and it fails to ensure that
employees can use comp time when they need it.
Unlike S. 4, the FMLA expansion amendments offered by
Senators Dodd and Murray would guarantee more employees more
time to spend with their families. Senator Dodd's amendment
would lower the threshold of the FMLA to apply to employers of
at least 25 employees. Senator Murray's amendment would provide
24 hours leave per year, within the 12 weeks currently
guaranteed by the FMLA, for employees to participate in
children's schools activities or literacy training under a
family literacy program.
Since its enactment in 1993, the FMLA has proven by a
successful track recordthat it provides real flexibility to
American employees. The FMLA guarantees covered employees 12 weeks
unpaid leave each year to care for a newborn or newly adopted child or
a seriously ill family member, or to recover from their own serious
health conditions. It applies to employers of at least 50 employees,
covering more than 57% of this country's private workforce, or more
than 55 million private employees, and 66% of the entire workforce,
including government employees. More than 12 million working Americans
have taken family or medical leave since the FMLA became law.
Businesses have found it easy and inexpensive to comply
with the FMLA. According to the bipartisan Family Leave
Commission, 93.3% of covered worksites experienced no or only
small increases in benefit costs; 94.8% experienced no or only
small increases in hiring and training costs; 89.2% experienced
no or small increases in administrative costs; and 98.5%
experienced no or only small increases in other costs. In
addition, 92% of covered worksites found it very or somewhat
easy to determine employee eligibility; 76% found it very or
somewhat easy to maintain additional records. The FMLA's
success for both employees and employers is reflected in the
overwhelming bipartisan support the law has received: according
to the LA Times, 82% of Americans support the FMLA. However,
the FMLA is not working for everyone: due to the 50-employee
threshold, more than 41 million private employees--almost 43%
of the private workforce--are not protected by FMLA.
By lowering the threshold to 25 employees, Senator Dodd's
amendment would cover 71% of the private workforce, adding more
than 13 million private employees for a total of more than 68
million private employees across the United States.
This amendment, which would provide a job-guaranteed leave
to more working Americans, would not hurt businesses. The FMLA
already covers small worksites that have fewer than 50
employees if those worksites are part of a larger company with
at least 50 employees within a 75-mile radius. In fact,
according to the Family Leave Commission, the majority of the
58,000 covered worksites of 25-49 employees found it easier to
comply with the FMLA than larger employers. 93% of these
worksites found it very or somewhat easy to determine worksite
coverage, and 98% of these worksites found it very or somewhat
easy to determine employee eligibility.
Senator Murray's amendment, which would allow employees to
take leave to participate in children's school activities or
literacy training under a family literacy program, would give
employees the time they need to spend with their children,
regardless of hours worked overtime or agreements between
employers and employees. Attending to children's education is
critical to their development. Studies show that attending
parent-teacher conferences may significantly influence
children's academic performance. Parental involvement is more
important than family education level or income in determining
student success. Under current law, however, working parents
have to risk losing their jobs if they take time off to do the
right thing. 28% of employed parents report that they have
problems getting time off to attend school activities; 23% of
employed parents report problems getting time off to meet with
their children's teachers. Not surprisingly, in light of those
statistics, 40% of employed parents believe they aren't
devoting enough time to their children's education. Further,
89% of company executives--the very groups now supporting S.
4--identified the biggest obstacle to school reform as the lack
of parental involvement. Senator Murray's amendment would give
parents the flexibility they need to change those sobering
statistics.
A large majority--86%--of American voters support expansion
of the FMLA. Yet this Committee rejected Senators Dodd's and
Murray's amendments to do just that by party-line votes of 8 to
10.
Guaranteeing real employee choice--Senator Wellstone's amendment
S. 4 contains sections that are totally unacceptable in
concept, such as those creating an 80-hour, biweekly work
period and so-called ``flexible credit hours''. Those changes
would cut workers' pay and undercut the basic principle of a
regular 40-hour work-week, turning back the clock on essential
labor protections. But the compensatory time provisions of the
bill are also fundamentally flawed. Minority members of the
Committee offered a number of amendments aimed at improving S.
4 in an effort to highlight these critical deficiencies, taking
majority members at their word that flexibility and increased
control over work schedule for employees is a desirable goal.
Unfortunately, each amendment was defeated on a party-line
vote, despite acknowledgement by majority members of legitimate
concerns raised during debate of the amendments.
Senator Wellstone offered the first such amendment, a
provision to ensure that an employee could actually use earned
comp time when he or she really wants or needs to use it. With
reasonable exceptions, employees should be able to use comp
time at their discretion. After all, comp time is earned
compensation, not vacation time or a gift from the employer.
First, the amendment would have given an employee the right to
use accumulated comp time for any of the reasons enumerated in
the Family and Medical Leave Act, such as a serious family
illness or a new child in the family.Second, the amendment
would have required employers to meet a much higher standard in order
to deny an employee's request to use earned comp time when the employee
gives at least two weeks' notice. If the employee gave two weeks'
notice, an employer could only deny the request if the employer could
show that the requested time off would cause ``substantial and
grievous'' injury to the business. Finally, if an employee gave less
than two weeks' notice of an intent to use comp time, the amendment
permitted an employer to deny that request if granting it would
``unduly disrupt'' the employer's operation.
The majority rejected this amendment, which goes to the
heart of whether comp time is actually intended to provide
flexibility to employees, on a party-line vote. The majority
thereby demonstrated that S. 4 apparently is not intended to
allow employees real flexibility. If an employee cannot take
earned time off on short notice in case of a family illness,
and cannot plan in advance to use earned comp time, then where
is the choice and flexibility for employees and their families
which the bill purports to offer? If an employer can decide
when the employee can use earned comp time, the bill not only
reserves flexibility exclusively for employers, it creates a
new ability for employers actually to delay providing earned
compensation for hours previously worked by denying use of
earned comp time for non-substantial reasons.
Ensuring nondiscrimination--Senator Kennedy's amendment
Senator Ashcroft, the principal sponsor of S. 4, testified
before the Subcommittee on Employment and Job Training on
February 13, 1997 that ``to safeguard against abuse, this bill
would prohibit an employer from forcing employees to accept
compensatory time off in lieu of financial compensation. * * *
This bill in no way alters the 40 hour work week [because] no
employee can be forced to work such a [flexible] schedule nor
could working flexible schedules be made a condition of
employment.''
Senator Ashcroft also conceded that abuses of flexible
schedules can only be deterred by strong enforcement provisions
in the bill itself. Accordingly, in the same hearing, he called
for quadruple damages for employers who violate the provisions
of S. 4: ``If the employee says, No thanks; I like 40 hours a
week, and if you intimidate me into doing this, there are
quadruple penalties for you * * * ''
But the actual text of S. 4 provides no quadruple damages
for violators, despite Senator Ashcroft's stated preference for
them. Worst of all, the bill fails to prohibit employers from
discriminating against workers for their choice of overtime pay
instead of comp time. As drafted, the bill gives an employer
the option to assign overtime hours only to workers who express
a preference for comp time, and cut off all overtime hours for
workers who would prefer to earn overtime pay. Since it is
predominantly low-wage workers who rely on overtime to make
ends meet, this bill is, in effect, a pay cut for low-wage
workers. Employers can tell their workers, ``from now on, all
the overtime hours will go to people who choose comp time.
Overtime pay no longer exists.'' Unfortunately, under S. 4,
such conduct would not be illegal.
Senator Kennedy's amendment would have accomplished what
the Republican leadership said they wanted their bill to do--
prevent discrimination and deter violations of the labor law.
The amendment would have prohibited employers from distributing
overtime hours solely to employees who express a preference for
comp time. Further, the amendment actually provided for
quadruple damages for violations. Despite Senator Ashcroft's
representations, his bill in fact did not. Notwithstanding
their self-righteous rhetoric, the members of the Committee
majority refused in a party-line vote to provide either genuine
protection against discrimination or true quadruple damages.
Comp time hours constitute hours worked--Senator Wellstone's amendment
Senator Wellstone offered a second amendment, intended like
his first one to make the bill's comp time provisions operate
in a way that would be beneficial to employees--not just to
employers. The amendment sought to ensure that comp time would
be treated as ``hours worked'' for the purpose of calculating
an employee's entitlement both to overtime and to certain
employee benefits that are tied to the number of hours worked.
The need for such an amendment is obvious, if the intent of
comp time is not to cut workers' pay or reduce their benefits.
Take the example of a worker who decides to use eight
accumulated hours of comp time in order to enjoy a 3-day
weekend by taking a Monday off. Without the amendment, no
provision in the bill or in law would prevent an employer from
requiring that employee to work 10-hour days Tuesday through
Friday without paying overtime because only 40 hours would have
been counted as worked. The employee would have been denied
what should be considered earned overtime, as well as the
``flexibility'' promised by supporters of the bill. The
supposedly previously-earned comp day off would have served
only to increase the employee's hours worked on other days in
the same week.
The need to count comp time when used as hours worked for
the purpose of calculating employee benefits is equally clear.
In many industries, employers andemployees make contributions
to an employee's pension plan for each hour that the employee works.
Such arrangements are particularly common in industries characterized
by multi-employer pension plans, such as the construction industry.
Overtime hours are considered hours worked for purposes of making
contributions under such plans. If S. 4 becomes law, however, comp time
hours when used will not be counted toward such employees' pension
benefit. In short, workers taking comp time not only will lose overtime
pay, but they will suffer a reduction in pension benefits as well.
The majority argues weakly that, under current law,
vacation time is not counted as hours worked when calculating
overtime and other employee benefits. This is both irrelevant
and insulting. Comp time off is not vacation time. It is earned
compensation. The majority's equation of the two reflects
either a fundamental misunderstanding of their own bill, or yet
another disingenuous attempt to reduce employees' compensation.
Regardless of the motive, the outcome was the same: another
partyline vote against the amendment.
Excluding vulnerable employees--Senator Wellstone's amendment
The third Wellstone amendment was yet another effort to
improve the employee protections in the bill. It would have
excluded from coverage under S. 4 workers who would be
particularly vulnerable to exploitation should comp time be
offered as a tool to their employers. It would have excluded
part-time, seasonal and temporary employees, as well as
employees in the garment industry. Workers in these sectors
generally do not enjoy a relationship of equal power with their
employers. The voluntariness of the comp time ``option'' would
be extremely questionable. Unscrupulous employers would gain
too many new opportunities to exploit or deny earned pay and
benefits to workers in these sectors.
The garment industry is particularly illustrative. In 1996,
the Department of Labor's Wage and Hour Division undertook a
compliance survey among garment contractor shops in the Los
Angeles area. The survey found that 55 percent of the shops
were failing to honor current overtime requirements. The
Department of Labor reports that overtime violations in the
garment industry have totalled nearly $12 million since 1992,
affecting over 32,000 garment workers and averaging roughly
$375 in lost wages per worker. These are cases that have been
identified and remedied. The Department of Labor estimates that
minimum wage and overtime violations prevail in more than 50
percent of the 22,000 American apparel industries. It would be
unconscionable to give employers in this industry another
opportunity to deny hard-earned pay to their employees--yet
that is precisely what the majority did, in still another
party-line vote.
Delay implementation until enforcement resources available--Senator
Wellstone's amendment
Senator Ashcroft admitted to the Employment and Training
Subcommittee that adequate enforcement resources were essential
in order to implement his bill properly. The fourth Wellstone
amendment, also defeated, took this representation seriously.
Noting that the current backlog of complaints in the Department
of Labor's Wage and Hour Division is approximately 40 percent
of the annual number of complaints, Senator Wellstone proposed
delaying implementation of the bill until the backlog could be
reduced to 10 percent. The Wage and Hour Division is
responsible for investigating and remedying most reported
violations of the FLSA. It receives approximately 40,000
complaints annually, and managed in 1996 to reduce its backlog
to approximately 16,000. Assuming that complaints would likely
increase with new opportunities for disputes regarding earned
comp time, and noting that justice delayed can often be justice
denied for employees in such cases, minority members found it
reasonable to require that adequate enforcement resources be in
place before the bill could be implemented. Once again,
however, the majority failed to conform its actions to its
words. The amendment was defeated along straight party lines.
conclusion
This bill is totally unacceptable, for all the reasons
described above. Even those who believe that a genuine comp
time bill is an appropriate legislative goal must stand in
opposition to this bill. President Clinton, for one, has
endorsed the concept of comp time. However, he has stated that
he would be forced to veto S. 4. The Department of Labor
effectively conveyed the President's views on the failings of
this legislation in a letter sent to the Committee Chairman
before the markup of S. 4. While its full text is appended to
this report, the following excerpt succinctly identifies the
bill's deficiencies:
Any comp time legislation must effectively and
satisfactorily address three fundamental principles:
real choice for employees; real protection against
employer abuse; and preservation of basic worker
rights, including the 40-hour work week. President
Clinton will veto any bill that does not meet these
fundamental principles. . . . While the President has
called for and strongly supports enactment of
responsible comp time legislation, he will not sign any
bill--including S. 4--that obliterates the principle of
time-and-a-half for overtime or that destroys the 40-
hour workweek. Workers--not employers--must be able to
decide how best to meet the current needs of their
family.
For these and all the foregoing reasons, we urge our
colleagues to oppose this legislation.
Edward M. Kennedy.
Chris Dodd.
Tom Harkin.
Barbara A. Mikulski.
Jeff Bingaman.
Paul D. Wellstone.
Patty Murray.
Jack Reed.
Appendix To S.4 Minority Views
U.S. Department of Labor,
Secretary of Labor,
Washington, DC, February 26, 1997.
Hon. James M. Jeffords,
Chairman, Committee on Labor and Human Resources,
Washington, DC.
Dear Chairman Jeffords: We understand that your Committee
will consider S. 4, the ``Family Friendly Workplace Act,'' on
Wednesday, February 26. I am writing to emphasize the
Administration's strong opposition to S. 4, and to urge your
Committee not to order the bill reported.
The Administration believes strongly that any legislation
to authorize compensatory time--``comp time,'' or paid time-
off--under the Fair Labor Standards Act (FLSA) should be linked
to expansion of the Family and Medical Leave Act (FMLA), as the
President proposed during the last Congress. The FMLA provides
important benefits to working families and has proved effective
in meeting the needs of both families and businesses. And,
unlike comp time which would be optional, family and medical
leave is a right that covered employers may not deny to
eligible employees. Expanding FMLA to give working families the
flexibility they need for greater involvement in the education
of their children and elder care will go a long way toward
achieving the stated goals of S. 4. The bill before your
Committee does not include FMLA expansion, and it should.
Any comp time legislation must effectively and
satisfactorily address three fundamental principles: real
choice for employees; real protection against employer abuse;
and preservation of basic worker rights, including the 40-hour
workweek.
Real choice for employees must include the right to choose
whether to earn comp time or overtime premium pay; the right to
take comp time when needed for FMLA purposes; the right to
choose to use comp time for any purpose with two weeks notice
unless its use would cause substantial injury to the employer;
and the right to ``cash out'' accrued comp time for pay on 15
days notice, as well as a prohibition against giving employers
the unilateral right to cash out an employee's accrued comp
time at their discretion. Real protection against employer
abuse must include a number of protections that are entirely
absent from S. 4, such as the exclusion of vulnerable workers;
special protection in cases where the employer goes bankrupt or
out-of-business; prohibitions against employers' substituting
comp time for paid vacation or sick leave benefits, or
penalizing employees who choose overtime premium pay instead of
comp time; damages that allow an employee to obtain adequate
relief if denied the use of comp time or denied overtime
assignments; and strong effective provisions for enforcement.
Preservation of worker rights requires preserving the 40-hour
workweek, the right to receive premium pay for overtime work,
and the cardinal FLSA principle that overtime is earned
whenever an employer knows or has reason to know that overtime
is being worked. Several provisions of S. 4., including the 80-
hour biweekly work program and the flexible credit hour
program, could effectively eliminate these rights.
President Clinton will veto any bill that does not meet
these fundamental principles. While the President has called
for and strongly supports enactment of responsible comp time
legislation, he will not sign any bill--including S. 4--that
obliterates the principle of time-and-a-half for overtime or
that destroys the 40-hour workweek. Workers--not employers--
must be able to decide how best to meet the current needs of
their family.
The Office of Management and Budget advises that there is
no objection to the submission of this report.
Sincerely,
Cynthia A. Metzler,
Acting Secretary of Labor.
XI. Changes in Existing Law
In compliance with rule XXVI paragraph 12 of the Standing
Rules of the Senate, the following provides a print of the
statute or the part or section thereof to be amended or
replaced (existing law proposed to be omitted is enclosed in
black brackets, new matter is printed in italic, existing law
in which no change is proposed is shown in roman):
FAMILY FRIENDLY WORKPLACE ACT
* * * * * * *
TITLE 29--UNITED STATES CODE
* * * * * * *
SEC. 13. POWERS AND DUTIES OF BUREAU.
It shall * * *
* * * * * * *
SEC. 13A. BIWEEKLY WORK PROGRAMS AND FLEXIBLE CREDIT HOUR PROGRAMS.
(a) Voluntary Participation.--
(1) In general.--Except as provided in paragraph (2),
no employee may be required to participate in a program
described in this section. Participation in a program
described in this section may not be a condition of
employment.
(2) Collective bargaining agreement.--In a case in
which a valid collective bargaining agreement exists,
an employee may only be required to participate in such
a program in accordance with the agreement.
(b) Biweekly Work Programs.--
(1) In general.--Notwithstanding section 7, an
employer may establish biweekly work programs that
allow the use of a biweekly work schedule--
(A) that consists of a basic work requirement
of not more than 80 hours, over a 2-week
period; and
(B) in which more than 40 hours of the work
requirement may occur in a week of the period.
(2) Conditions.--An employer may carry out a biweekly
work program described in paragraph (1) for employees
only pursuant to the following:
(A) Agreement or understanding.--The program
may be carried out only in accordance with--
(i) applicable provisions of a
collective bargaining agreement between
the employer and the representative of
the employees that is recognized as
provided for in section 9(a) of the
National Labor Relations Act (29 U.S.C.
159(a)); or
(ii) in the case of an employee who
is not represented by a labor
organization that is recognized as
provided for in section 9(a) of the
National Labor Relations Act, an
agreement or understanding arrived at
between the employer and employee
before the performance of the work
involved if the agreement or
understanding was entered into
knowingly and voluntarily by such
employee and was not a condition of
employment.
(B) Statement.--The program shall apply to an
employee described in subparagraph (A)(ii) if
such employee has affirmed, in a written or
otherwise verifiable statement that is made,
kept, and preserved in accordance with section
11(c), that the employee has chosen to
participate in the program.
(3) Compensation for hours in schedule.--
Notwithstanding section 7, in the case of an employee
participating in such a biweekly work program, the
employee shall be compensated for each hour in such a
biweekly work schedule at a rate not less than the
regular rate at which the employee is employed.
(4) Computation of overtime.--All hours worked by the
employee in excess of such a biweekly work schedule or
in excess of 80 hours in the 2-week period, that are
requested in advance by the employer, shall be overtime
hours.
(5) Overtime compensation provision.--The employee
shall be compensated for each such overtime hour at a
rate not less than one and one-half times the regular
rate at which the employee is employed, in accordance
with section 7(a)(1), or receive compensatory time off
in accordance with section 7(r) for each such overtime
hour.
(6) Discontinuance of program or withdrawal.--
(A) Discontinuance of program.--An employer
that has established a biweekly work program
under paragraph (1) may discontinue the program
for employees described in paragraph (2)(A)(ii)
after providing 30 days' written notice to the
employees who are subject to an agreement or
understanding described in paragraph
(2)(A)(ii).
(B) Withdrawal.--An employee may withdraw an
agreement or understanding described in
paragraph (2)(A)(ii) at the end of any 2-week
period described in paragraph (1)(A), by
submitting a written notice of withdrawal to
the employer of the employee.
(c) Flexible Credit Hour Programs.--
(1) In general.--Notwithstanding section 7, an
employer may establish flexible credit hour programs,
under which, at the election of an employee, the
employer and the employee jointly designate hours for
the employee to work that are in excess of the basic
work requirement of the employee so that the employee
can accrue flexible credit hours to reduce the hours
worked in a week or a day subsequent to the day on
which the flexible credit hours are worked.
(2) Conditions.--An employer may carry out a flexible
credit hour program described in paragraph (1) for
employees only pursuant to the following:
(A) Agreement or understanding.--The program
may be carried out only in accordance with--
(i) applicable provisions of a
collective bargaining agreement between
the employer and the representative of
the employees that is recognized as
provided for in section 9(a) of the
National Labor Relations Act (29 U.S.C.
159(a)); or
(ii) in the case of an employee who
is not represented by a labor
organization that is recognized as
provided for in section 9(a) of the
National Labor Relations Act, an
agreement or understanding arrived at
between the employer and employee
before the performance of the work
involved if the agreement or
understanding was entered into
knowingly and voluntarily by such
employee and was not a condition of
employment.
(B) Statement.--The program shall apply to an
employee described in subparagraph (A)(ii) if
such employee has affirmed, in a written or
otherwise verifiable statement that is made,
kept, and preserved in accordance with section
11(c), that the employee has chosen to
participate in the program.
(C) Hours.--An agreement or understanding
that is entered into under subparagraph (A)
shall provide that, at the election of an
employee, the employer and the employee will
jointly designate, for an applicable workweek,
flexible credit hours for the employee to work.
(D) Limit.--An employee shall be eligible to
accrue flexible credit hours if the employee
has not accrued flexible credit hours in excess
of the limit applicable to the employee
prescribed by paragraph (3).
(3) Hour limit.--
(A) Maximum hours.--An employee who is
participating in such a flexible credit hour
program may accrue not more than 50 flexible
credit hours.
(B) Compensation date.--Not later than
January 31 of each calendar year, the employer
of an employee who is participating in such a
flexible credit hour program shall provide
monetary compensation for any flexible credit
hours accrued during the preceding calendar
year that were not used prior to December 31 of
the preceding calendar year at a rate not less
than the regular rate at which the employee is
employed on the date the employee receives the
compensation. An employer may designate and
communicate to the employees of the employer a
12-month period other than the calendar year,
in which case the compensation shall be
provided not later than 31 days after the end
of the 12-month period.
(4) Compensation for flexible credit hours.--
Notwithstanding section 7, in the case of an employee
participating in such a flexible credit hour program,
the employee shall be compensated for each flexible
credit hour at a rate not less than the regular rate at
which the employee is employed.
(5) Computation of overtime.--All hours worked by the
employee in excess of 40 hours in a week that are
requested in advance by the employer, other than
flexible credit hours, shall be overtime hours.
(6) Overtime compensation provision.--The employee
shall be compensated for each such overtime hour at a
rate not less than one and one-half times the regular
rate at which the employee is employed, in accordance
with section 7(a)(1), or receive compensatory time off
in accordance with section 7(r) for each such overtime
hour.
(7) Use of time.--An employee--
(A) who has accrued flexible credit hours;
and
(B) who has requested the use of the accrued
flexible credit hours,
shall be permitted by the employer of the employee to
use the accrued flexible credit hours within a
reasonable period after making the request if the use
of the accrued flexible credit hours does not unduly
disrupt the operations of the employer.
(8) Discontinuance of program or withdrawal.--
(A) Discontinuance of program.--An employer
that has established a flexible credit hour
program under paragraph (1) may discontinue the
program for employees described in paragraph
(2)(A)(ii) after providing 30 days' written
notice to the employees who are subject to an
agreement or understanding described in
paragraph (2)(A)(ii).
(B) Withdrawal.--An employee may withdraw an
agreement or understanding described in
paragraph (2)(A)(ii) at any time, by submitting
a written notice of withdrawal to the employer
of the employee. An employee may also request
in writing that monetary compensation be
provided, at any time, for all flexible credit
hours accrued that have not been used. Within
30 days after receiving the written request,
the employer shall provide the employee the
monetary compensation due at a rate not less
than the regular rate at which the employee is
employed on the date the employee receives the
compensation.
(d) Prohibition of Coercion.--
(1) In general.--An employer shall not directly or
indirectly intimidate, threaten, or coerce, or attempt
to intimidate, threaten, or coerce, any employee for
the purpose of--
(A) interfering with the rights of the
employee under this section to elect or not to
elect to work a biweekly work schedule;
(B) interfering with the rights of the
employee under this section to elect or not to
elect to participate in a flexible credit hour
program, or to elect or not to elect to work
flexible credit hours (including working
flexible credit hours in lieu of overtime
hours);
(C) interfering with the rights of the
employee under this section to use accrued
flexible credit hours in accordance with
subsection (c)(7); or
(D) requiring the employee to use the
flexible credit hours.
(2) Definition.--In paragraph (1), the term
``intimidate, threaten, or coerce'' includes promising
to confer or conferring any benefit (such as
appointment, promotion, or compensation) or effecting
or threatening to effect any reprisal (such as
deprivation of appointment, promotion, or
compensation).
(e) Definitions.--In this section:
(1) Basic work requirement.--The term ``basic work
requirement'' means the number of hours, excluding
overtime hours, that an employee is required to work or
is required to account for by leave or otherwise.
(2) Collective bargaining.--The term ``collective
bargaining'' means the performance of the mutual
obligation of the representative of an employer and the
representative of employees of the employer that is
recognized as provided for in section 9(a) of the
National Labor Relations Act (29 U.S.C. 159(a)) to meet
at reasonable times and to consult and bargain in a
good-faith effort to reach agreement with respect to
the conditions of employment affecting such employees
and to execute, if requested by either party, a written
document incorporating any collective bargaining
agreement reached, but the obligation referred to in
this paragraph shall not compel either party to agree
to a proposal or to make a concession.
(3) Collective bargaining agreement.--The term
``collective bargaining agreement'' means an agreement
entered into as a result of collective bargaining.
(4) Election.--The term ``at the election of '', used
with respect to an employee, means at the initiative
of, and at the request of, the employee.
(5) Employee.--The term ``employee'' does not include
an employee of a public agency.
(6) Employer.--The term ``employer'' does not include
a public agency.
(7) Flexible credit hours.--The term ``flexible
credit hours'' means any hours, within a flexible
credit hour program established under subsection (c),
that are in excess of the basic work requirement of an
employee and that, at the election of the employee, the
employer and the employee jointly designate for the
employee to work so as to reduce the hours worked in a
week or a day subsequent to the day on which the
flexible credit hours are worked.
(8) Overtime hours.--The term ``overtime hours''--
(A) when used with respect to biweekly work
programs under subsection (b), means all hours
worked in excess of the biweekly work schedule
involved or in excess of 80 hours in the 2-week
period involved, that are requested in advance
by an employer; or
(B) when used with respect to flexible credit
hour programs under subsection (c), means all
hours worked in excess of 40 hours in a week
that are requested in advance by an employer,
but does not include flexible credit hours.
(9) Regular rate.--The term ``regular rate'' has the
meaning given the term in section 7(e).
* * * * * * *
SEC. 207. MAXIMUM HOURS.
(a) Employees Engaged in Interstate Commerce; Additional
Applicability to Employees Pursuant to Subsequent Amendatory
Provisions.--
(1) Except * * *
* * * * * * *
(r) Compensatory Time Off for Private Employees.--
(1) Voluntary participation.--
(A) In general.--Except as provided in
subparagraph (B), no employee may be required
under this subsection to receive compensatory
time off in lieu of monetary overtime
compensation. The acceptance of compensatory
time off in lieu of monetary overtime
compensation may not be a condition of
employment.
(B) Collective bargaining agreement.--In a
case in which a valid collective bargaining
agreement exists between an employer and the
representative of the employees that is
recognized as provided for in section 9(a) of
the National Labor Relations Act (29 U.S.C.
159(a)), an employee may only be required under
this subsection to receive compensatory time
off in lieu of monetary overtime compensation
in accordance with the agreement.
(2) General rule.--
(A) Compensatory time off.--An employee may
receive, in accordance with this subsection and
in lieu of monetary overtime compensation,
compensatory time off at a rate not less than
one and one-half hours for each hour of
employment for which monetary overtime
compensation is required by this section.
(B) Definitions.--In this subsection:
(i) Employee.--The term ``employee''
does not include an employee of a
public agency.
(ii) Employer.--The term ``employer''
does not include a public agency.
(3) Conditions.--An employer may provide compensatory
time off to employees under paragraph (2)(A) only
pursuant to the following:
(A) The compensatory time off may be provided
only in accordance with--
(i) applicable provisions of a
collective bargaining agreement between
the employer and the representative of
the employee that is recognized as
provided for in section 9(a) of the
National Labor Relations Act (29 U.S.C.
159(a)); or
(ii) in the case of an employee who
is not represented by a labor
organization that is recognized as
provided for in section 9(a) of the
National Labor Relations Act, an
agreement or understanding arrived at
between the employer and employee
before the performance of the work
involved if the agreement or
understanding was entered into
knowingly and voluntarily by such
employee and was not a condition of
employment.
(B) The compensatory time off may only be
provided to an employee described in
subparagraph (A)(ii) if such employee has
affirmed, in a written or otherwise verifiable
statement that is made, kept, and preserved in
accordance with section 11(c), that the
employee has chosen to receive compensatory
time off in lieu of monetary overtime
compensation.
(C) An employee shall be eligible to accrue
compensatory time off if such employee has not
accrued compensatory time off in excess of the
limit applicable to the employee prescribed by
paragraph (4).
(4) Hour limit.--
(A) Maximum hours.--An employee may accrue
not more than 240 hours of compensatory time
off.
(B) Compensation date.--Not later than
January 31 of each calendar year, the employer
of the employee shall provide monetary
compensation for any unused compensatory time
off accrued during the preceding calendar year
that was not used prior to December 31 of the
preceding calendar year at the rate prescribed
by paragraph (8). An employer may designate and
communicate to the employees of the employer a
12-month period other than the calendar year,
in which case the compensation shall be
provided not later than 31 days after the end
of the 12-month period.
(C) Excess of 80 hours.--The employer may
provide monetary compensation for an employee's
unused compensatory time off in excess of 80
hours at any time after providing the employee
with at least 30 days' written notice. The
compensation shall be provided at the rate
prescribed by paragraph (8).
(5) Discontinuance of policy or withdrawal.--
(A) Discontinuance of policy.--An employer
that has adopted a policy offering compensatory
time off to employees may discontinue the
policy for employees described in paragraph
(3)(A)(ii) after providing 30 days' written
notice to the employees who are subject to an
agreement or understanding described in
paragraph (3)(A)(ii).
(B) Withdrawal.--An employee may withdraw an
agreement or understanding described in
paragraph (3)(A)(ii) at any time, by submitting
a written notice of withdrawal to the employer
of the employee. An employee may also request
in writing that monetary compensation be
provided, at any time, for all compensatory
time off accrued that has not been used. Within
30 days after receiving the written request,
the employer shall provide the employee the
monetary compensation due in accordance with
paragraph (8).
(6) Additional requirements.--
(A) Prohibition of coercion.--
(i) In general.--An employer that
provides compensatory time off under
paragraph (2) to an employee shall not
directly or indirectly intimidate,
threaten, or coerce, or attempt to
intimidate, threaten, or coerce, any
employee for the purpose of--
(I) interfering with the
rights of the employee under
this subsection to request or
not request compensatory time
off in lieu of payment of
monetary overtime compensation
for overtime hours;
(II) interfering with the
rights of the employee to use
accrued compensatory time off
in accordance with paragraph
(9); or
(III) requiring the employee
to use the compensatory time
off.
(ii) Definition.--In clause (i), the
term `intimidate, threaten, or coerce'
has the meaning given the term in
section 13A(d)(2).
(B) Election of overtime compensation or
compensatory time.--An agreement or
understanding that is entered into by an
employee and employer under paragraph
(3)(A)(ii) shall permit the employee to elect,
for an applicable workweek--
(i) the payment of monetary overtime
compensation for the workweek; or
(ii) the accrual of compensatory time
off in lieu of the payment of monetary
overtime compensation for the workweek.
(7) Termination of employment.--An employee who has
accrued compensatory time off authorized to be provided
under paragraph (2) shall, upon the voluntary or
involuntary termination of employment, be paid for the
unused compensatory time off in accordance with
paragraph (8).
(8) Rate of compensation for compensatory time off.--
(A) General rule.--If compensation is to be
paid to an employee for accrued compensatory
time off, the compensation shall be paid at a
rate of compensation not less than--
(i) the regular rate received by such
employee when the compensatory time off
was earned; or
(ii) the final regular rate received
by such employee,
whichever is higher.
(B) Consideration of payment.--Any payment
owed to an employee under this subsection for
unused compensatory time off shall be
considered unpaid monetary overtime
compensation.
(9) Use of time.--An employee--
(A) who has accrued compensatory time off
authorized to be provided under paragraph (2);
and
(B) who has requested the use of the accrued
compensatory time off,
shall be permitted by the employer of the employee to
use the accrued compensatory time off within a
reasonable period after making the request if the use
of the accrued compensatory time off does not unduly
disrupt the operations of the employer.
(10) Definitions.--The terms `monetary overtime
compensation' and `compensatory time off' shall have
the meanings given the terms `overtime compensation'
and `compensatory time', respectively, by subsection
(o)(7).
* * * * * * *
SEC. 213. EXEMPTIONS.
(a) The provisions * * *
* * * * * * *
(m)(1)(A) In the case of a determination of whether an
employee is an exempt employee described in subsection (a)(1),
the fact that the employee is subject to deductions in
compensation for--
(i) absences of the employee from employment of less
than a full workday; or
(ii) absences of the employee from employment of less
than a full pay period,
shall not be considered in making such determination.
(B) In the case of a determination described in
subparagraph (A), an actual reduction in pay of the employee
may be considered in making the determination for that
employee.
(C) For the purposes of this paragraph, the term `actual
reduction in compensation' does not include any reduction in
accrued paid leave, or any other practice, that does not reduce
the amount of pay an employee receives for a pay period.
(2) The payment of overtime compensation or other additions
to the compensation of an employee employed on a salary based
on hours worked shall not be considered in determining if the
employee is an exempt employee described in subsection (a)(1).
* * * * * * *
SEC. 215. PROHIBITED ACTS; PRIMA FACIE EVIDENCE.
(a) After the expiration of one hundred and twenty days
from June 25, 1938, it shall be unlawful for any person--
(1) * * *
* * * * * * *
(3)(A) to discharge or in any other manner
discriminate against any employee because such employee
has filed any complaint or instituted or caused to be
instituted any proceeding under or related to this
chapter, or has testified or is about to testify in any
such proceeding, or has served or is about to serve on
an industry committee; or
(B) to violate any of the provisions of section 13A;
* * * * * * *
SEC. 216. PENALTIES.
(a) Fines and Imprisonment.--
(f)(1) In addition to any amount that an employer is liable
under subsection (b) for a violation of a provision of section
7, an employer that violates section 7(r)(6)(A) shall be liable
to the employee affected in an amount equal to--
(A) the product of--
(i) the rate of compensation (determined in
accordance with section 7(r)(8)(A)); and
(ii)(I) the number of hours of compensatory
time off involved in the violation that was
initially accrued by the employee; minus
(II) the number of such hours used by the
employee; and
(B) as liquidated damages, the product of--
(i) such rate of compensation; and
(ii) the number of hours of compensatory time
off involved in the violation that was
initially accrued by the employee.
(2) The employer shall be subject to such liability in
addition to any other remedy available for such violation under
this section or section 17, including a criminal penalty under
subsection (a) and a civil penalty under subsection (e).
* * * * * * *