[House Report 117-540]
[From the U.S. Government Publishing Office]
117th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 117-540
======================================================================
WAGE THEFT PREVENTION AND WAGE RECOVERY ACT OF 2022
_______
October 7, 2022.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Scott of Virginia, from the Committee on Education and Labor,
submitted the following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 7701]
The Committee on Education and Labor, to whom was referred
the bill (H.R. 7701) to amend the Fair Labor Standards Act of
1938 and the Portal-to-Portal Act of 1947 to prevent wage theft
and assist in the recovery of stolen wages, to authorize the
Secretary of Labor to administer grants to prevent wage and
hour violations, and for other purposes, having considered the
same, reports favorably thereon with an amendment and
recommends that the bill as amended do pass.
CONTENTS
Page
Purpose and Summary.............................................. 9
Committee Action................................................. 9
Committee Views.................................................. 11
Section-by-Section Analysis...................................... 17
Explanation of Amendments........................................ 19
Application of Law to the Legislative Branch..................... 19
Unfunded Mandate Statement....................................... 19
Earmark Statement................................................ 20
Roll Call Votes.................................................. 20
Statement of Performance Goals and Objectives.................... 26
Duplication of Federal Programs.................................. 26
Hearings......................................................... 26
Statement of Oversight Findings and Recommendations of the
Committee...................................................... 26
New Budget Authority and CBO Cost Estimate....................... 26
Committee Cost Estimate.......................................... 26
Changes in Existing Law Made by the Bill, as Reported............ 27
Minority Views................................................... 45
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Wage Theft Prevention and Wage
Recovery Act of 2022''.
TITLE I--AMENDMENTS TO THE FAIR LABOR STANDARDS ACT OF 1938
SEC. 101. REQUIREMENTS TO PROVIDE CERTAIN DISCLOSURES, REGULAR
PAYSTUBS, AND FINAL PAYMENTS.
The Fair Labor Standards Act of 1938 is amended by inserting after
section 4 (29 U.S.C. 204) the following:
``SEC. 5. REQUIREMENTS TO PROVIDE CERTAIN DISCLOSURES, REGULAR
PAYSTUBS, AND FINAL PAYMENTS.
``(a) Disclosures.--
``(1) Initial disclosures.--Not later than 15 days after the
date on which an employer hires an employee who in any workweek
is engaged in commerce or in the production of goods for
commerce, or is employed in an enterprise engaged in commerce
or in the production of goods for commerce, the employer of
such employee shall provide such employee with an initial
disclosure containing the information described in paragraph
(3). Such initial disclosure shall be--
``(A) provided as a written statement or, if the
employee so chooses, as a digital document provided
through electronic communication; and
``(B) made available in the employee's primary
language.
``(2) Modification disclosures.--Not later than the earlier
of 5 days after the date on which any of the information
described in paragraph (3) changes with respect to an employee
described in paragraph (1) or the date of the next paystub
following the date on which such information changes, the
employer of such employee shall provide the employee with a
modification disclosure containing all the information
described in paragraph (3).
``(3) Information.--The information described in this
paragraph shall include--
``(A) the rate of pay and whether the employee is
paid by the hour, shift, day, week, or job, or by
salary, piece rate, commission, or other form of
compensation;
``(B)(i) an indication of whether the employee is
being classified by the employer as an employee subject
to the minimum wage requirements of section 6 or as an
employee that is exempt from (or otherwise not subject
to) such requirements as provided under section
3(m)(2), 6, 13, or 14, as well as the reason for the
exemption; and
``(ii) in the case that such employee is not
classified as being an employee subject to such minimum
wage requirements, an identification of the section
described in clause (i) providing for such
classification;
``(C)(i) an indication of whether the employee is
being classified by the employer as an employee subject
to the overtime compensation requirements of section 7
or as an employee exempt from such requirements as
provided under section 7 or 13; and
``(ii) in the case that such employee is not
classified as being an employee subject to such
overtime compensation requirements, an identification
of the section described in clause (i) providing for
such classification;
``(D) the name of the employer and any other name
used by the employer to conduct business; and
``(E) the physical address of and telephone number
for the employer's main office or principal place of
business, and a mailing address for such office or
place of business if the mailing address is different
than the physical address.
``(b) Paystubs.--
``(1) In general.--Every employer shall provide each employee
of such employer who in any workweek is engaged in commerce or
in the production of goods for commerce, or is employed in an
enterprise engaged in commerce or in the production of goods
for commerce, a paystub that corresponds to work performed by
the employee during the applicable pay period and contains the
information required under paragraph (3) in any form provided
under paragraph (2).
``(2) Forms.--A paystub required under this subsection shall
be a written statement and may be provided in any of the
following forms:
``(A) As a separate document accompanying any payment
to an employee for work performed during the applicable
pay period.
``(B) In the case of an employee who receives
paychecks from the employer, as a detachable statement
accompanying each paycheck.
``(C) As a digital document provided through
electronic communication, subject to the employee
affirmatively consenting to receive the paystubs in
this form.
``(3) Contents.--Each paystub shall contain all of the
following information:
``(A) The name of the employee.
``(B) Except in the case of an employee who is
exclusively paid a salary and is exempt from the
overtime requirements of section 7, the total number of
hours worked by the employee, including the number of
hours worked per workweek, during the applicable pay
period.
``(C) The total gross and net wages paid, and, except
in the case of an employee who is exclusively paid a
salary and is exempt from the overtime requirements of
section 7, the rate of pay for each hour worked during
the applicable pay period.
``(D) In the case of an employee who is paid any
salary, the amount of any salary paid during the
applicable pay period.
``(E) In the case of an employee employed at piece
rates, the number of piece rate units earned, the
applicable piece rates, and the total amount paid to
the employee per workweek for the applicable pay period
in accordance with such piece rates.
``(F) The rate of pay per workweek of the employee
during the applicable pay period and an explanation of
the basis for such rate.
``(G) The number of overtime hours per workweek
worked by the employee during the applicable pay period
and the compensation required under section 7 that is
provided to the employee for such hours.
``(H) Any additional compensation provided to the
employee during the applicable pay period, with an
explanation of each type of compensation, including any
allowances or reimbursements such as amounts related to
meals, clothing, lodging, or any other item.
``(I) Itemized deductions from the gross income of
the employee during the applicable pay period, and an
explanation for each deduction.
``(J) The date that is the beginning of the
applicable pay period and the date that is the end of
such applicable pay period.
``(K) The name of the employer and any other name
used by the employer to conduct business.
``(L) The name and phone number of a representative
of the employer for contact purposes.
``(M) Any additional information that the Secretary
reasonably requires to be included through notice and
comment rulemaking.
``(c) Model Disclosures and Pay Stub.--The Secretary shall prescribe
model disclosures and a model pay stub that may be used to satisfy the
requirements of subsections (a) and (b), respectively. The Secretary
shall make the model disclosures and the model pay stub publicly
available to employers.
``(d) Final Payments.--
``(1) In general.--Not later than 14 days after an individual
described in paragraph (4) terminates employment with an
employer (by action of the employer or the individual), or on
the date on which such employer pays other employees for the
pay period during which the individual so terminates such
employment, whichever date is earlier, the employer shall
provide the individual with a final payment, which includes all
compensation due to such individual for all time worked and
benefits incurred (including retirement, health, leave, fringe,
and other benefits) by the individual as an employee for the
employer.
``(2) Continuing wages.--An employer who violates the
requirement under paragraph (1) shall, for each day, not to
exceed 30 days, of such violation provide the individual
described in paragraph (4) with compensation at a rate that is
equal to the regular rate of compensation, as determined under
this Act, to which such individual was entitled when such
individual was an employee of such employer.
``(3) Limitation.--Notwithstanding paragraphs (1) and (2), an
individual described in paragraph (4) shall not be entitled to
the compensation described under paragraph (2) if the employer
successfully demonstrates that--
``(A) the employer made a good-faith effort to
provide the final payment described in paragraph (1);
and
``(B) the individual refused or otherwise
intentionally avoided receiving such final payment.
``(4) Individual.--An individual described in this paragraph
is an individual who was employed by the employer, and through
such employment, in any workweek, was engaged in commerce or in
the production of goods for commerce, or was employed in an
enterprise engaged in commerce or in the production of goods
for commerce.''.
SEC. 102. RIGHT TO FULL COMPENSATION.
(a) In General.--The Fair Labor Standards Act of 1938 is amended by
inserting after section 7 (29 U.S.C. 207) the following:
``SEC. 8. RIGHT TO FULL COMPENSATION.
``(a) In General.--In the case of an employment contract or other
employment agreement, including a collective bargaining agreement, that
specifies that an employer shall compensate an employee (who is
described in subsection (b)) at a rate that is higher than the rate
otherwise required under this Act, the employer shall compensate such
employee at the rate specified in such contract or other employment
agreement.
``(b) Employee Engaged in Commerce.--The requirement under subsection
(a) shall apply with respect to any employee who in any workweek is
engaged in commerce or in the production of goods for commerce, or is
employed in an enterprise engaged in commerce or in the production of
goods for commerce.''.
(b) Conforming Amendment.--The Fair Labor Standards Act of 1938 is
amended by repealing section 10 (29 U.S.C. 210).
SEC. 103. CIVIL AND CRIMINAL ENFORCEMENT.
(a) Prohibited Acts.--Section 15(a) of the Fair Labor Standards Act
of 1938 (29 U.S.C. 215(a)) is amended--
(1) in paragraph (1), by striking ``section 6 or section 7''
and inserting ``section 6, 7, or 8''; and
(2) in paragraph (2), by striking ``section 6 or section 7''
and inserting ``section 5, 6, 7, or 8''.
(b) Damages.--The Fair Labor Standards Act of 1938 (29 U.S.C. 201 et
seq.) is amended--
(1) in section 4(f) (29 U.S.C. 204(f)), in the third
sentence, by striking ``for unpaid minimum wages, or unpaid
overtime compensation, and liquidated damages'' and inserting
``for unpaid wages, or unpaid overtime compensation, as well as
interest and liquidated damages,'';
(2) in section 6(d)(3) (29 U.S.C. 206(d)(3)), by striking
``minimum'';
(3) in section 16 (29 U.S.C. 216)--
(A) in subsection (b)--
(i) by striking ``section 6 or section 7''
each place it appears and inserting ``section
6, 7, or 8'';
(ii) by striking ``minimum'' each place it
appears;
(iii) in the first sentence, by striking
``and in an additional equal amount as
liquidated damages'' and inserting ``the amount
of any interest on such unpaid wages or unpaid
overtime compensation accrued at the prevailing
rate, and an additional amount as liquidated
damages that is equal to (subject to the second
sentence of this subsection) 2 times such
amount of unpaid wages or unpaid overtime
compensation'';
(iv) in the second sentence, by striking
``wages lost and an additional equal amount as
liquidated damages'' and inserting ``wages
lost, including any unpaid wages or any unpaid
overtime compensation, the amount of any
interest on such wages lost accrued at the
prevailing rate, and an additional amount as
liquidated damages that is equal to 3 times the
amount of such wages lost'';
(v) by striking the fifth sentence; and
(vi) by adding at the end the following:
``Notwithstanding chapter 1 of title 9, United
States Code (commonly known as the `Federal
Arbitration Act'), or any other law, the right
to bring an action, including a joint, class,
or collective claim, in court under this
section cannot be waived by an employee as a
condition of employment or in a pre-dispute
arbitration agreement.''; and
(B) in subsection (c)--
(i) by striking ``minimum'' each place the
term appears;
(ii) in the first sentence--
(I) by striking ``section 6 or 7''
and inserting ``section 6, 7, or 8'';
and
(II) by striking ``and an additional
equal amount as liquidated damages''
and inserting ``, any interest on such
unpaid wages or unpaid overtime
compensation accrued at the prevailing
rate, and an additional amount as
liquidated damages that is equal to
(subject to the third sentence of this
subsection) 2 times such amount of
unpaid wages or unpaid overtime
compensation'';
(iii) in the second sentence, by striking
``and an equal amount as liquidated damages.''
and inserting ``, any interest on such unpaid
wages or unpaid overtime compensation accrued
at the prevailing rate, and an additional
amount as liquidated damages that is equal to
(subject to the third sentence of this
subsection) 2 times such amount of unpaid wages
or unpaid overtime compensation. In the event
that the employer violates section 15(a)(3),
the Secretary may bring an action in any court
of competent jurisdiction to recover the amount
of any wages lost, including any unpaid wages
or any unpaid overtime compensation, any
interest on such wages lost accrued at the
prevailing rate, an additional amount as
liquidated damages that is equal to 3 times the
amount of such wages lost, and any such legal
or equitable relief as may be appropriate.'';
and
(iv) in the third sentence, by striking
``sections 6 and 7'' and inserting ``section 6,
7, or 8''; and
(4) in section 17 (29 U.S.C. 217), by striking ``minimum''.
(c) Civil Fines.--Section 16(e) of the Fair Labor Standards Act of
1938 (29 U.S.C. 216(e)) is amended--
(1) by striking paragraph (2) and inserting the following:
``(2)(A) Subject to subparagraph (B), any person who violates section
6, 7, or 8, relating to wages, shall be subject to a civil fine that is
not to exceed $22,030 per each employee affected for each initial
violation of such section.
``(B) Any person who repeatedly or willfully violates section 6, 7,
or 8, relating to wages, shall be subject to a civil fine that is not
to exceed $110,150 per each employee affected for each such violation.
``(C) Any person who violates section 3(m)(2)(B) shall be subject to
a civil penalty not to exceed $12,340 for each such violation, as the
Secretary determines appropriate, in addition to being liable to the
employee or employees affected for all tips unlawfully kept, any
interest on wages lost accrued at the prevailing rate, and an
additional amount as liquidated damages that is equal to 2 times the
amount of wages lost, as described in subsection (b).'';
(2) by redesignating paragraphs (3), (4), and (5) as
paragraphs (5), (6), and (7), respectively; and
(3) by inserting after paragraph (2) the following:
``(3) Any person who violates subsection (a) or (b) of section 5
shall--
``(A) for the initial violation of such subsection, be
subject to a civil fine that is not to exceed $50 per each
employee affected; and
``(B) for each repeated or willful violation of such
subsection, be subject to a civil fine that is not to exceed
$100 per each employee affected.
``(4) Any person who violates section 11(c) shall--
``(A) for the initial violation, be subject to a civil fine
that is not to exceed $1,000 per each employee affected; and
``(B) for each repeated or willful violation, be subject to a
civil fine that is not to exceed $5,000 per each employee
affected.''.
(d) Criminal Penalties.--Section 16(a) of the Fair Labor Standards
Act of 1938 (29 U.S.C. 216(a)) is amended--
(1) by striking ``Any person'' and inserting ``(1) Any
person'';
(2) in the first sentence, by striking ``$10,000'' and
inserting ``$10,000 per each employee affected'';
(3) in the second sentence, by striking ``No person'' and
inserting ``Subject to paragraph (2), no person''; and
(4) by adding at the end the following:
``(2)(A) Notwithstanding any other provision of this Act, the
Secretary shall refer any case involving a covered offender described
in subparagraph (B) to the Department of Justice for prosecution.
``(B) A covered offender described in this subparagraph is a person
who willfully violates any of the following:
``(i) Section 11(c) by falsifying any records described in
such section.
``(ii) Section 6, 7, or 8, relating to wages.
``(iii) Section 15(a)(3).''.
SEC. 104. RECORDKEEPING.
(a) In General.--Section 11(c) of the Fair Labor Standards Act of
1938 (29 U.S.C. 211(c)) is amended by adding at the end the following:
``In the event that an employee requests an inspection of the records
described in this subsection that pertain to such employee from the
employer, orally or in writing, the employer shall provide the employee
with a copy of the records for a period of up to 5 years prior to such
request being made. Not later than 21 days after an employee requests
such an inspection, the employer shall comply with the request.''.
(b) Rebuttable Presumption.--Section 15 of the Fair Labor Standards
Act of 1938 (29 U.S.C. 215) is amended by adding at the end the
following:
``(c) In the event that an employer violates section 11(c) and any
regulations issued pursuant to such section, resulting in a lack of a
complete record of an employee's hours worked or wages owed, the
employee's production of credible evidence and testimony regarding the
amount or extent of the work for which the employee was not compensated
in compliance with the requirements under this Act shall be sufficient
to create a rebuttable presumption that the employee's records are
accurate. Such presumption shall be rebutted only if the employer
produces evidence of the precise amount or extent of work performed or
evidence to show that the inference drawn from the employee's evidence
is not reasonable.''.
TITLE II--AMENDMENTS TO THE PORTAL-TO-PORTAL ACT OF 1947
SEC. 201. INCREASING AND TOLLING STATUTE OF LIMITATIONS.
Section 6 of the Portal-to-Portal Act of 1947 (29 U.S.C. 255) is
amended--
(1) in the matter preceding paragraph (a), by striking
``minimum'';
(2) in paragraph (a)--
(A) by striking ``may be commenced within two years''
and inserting ``may be commenced within 4 years'';
(B) by striking ``unless commenced within two years''
and inserting ``unless commenced within 4 years''; and
(C) by striking ``may be commenced within three
years'' and inserting ``may be commenced within 5
years'';
(3) in paragraph (d), by striking the period and inserting
``; and''; and
(4) by adding at the end the following:
``(e) with respect to the running of any statutory period of
limitation described in this section, the running of such
statutory period shall be deemed suspended during the period
beginning on the date on which the Secretary of Labor notifies
an employer of an initiation of an investigation or enforcement
action and ending on the date on which the Secretary notifies
the employer that the matter has been officially resolved by
the Secretary.''.
TITLE III--WAGE THEFT PREVENTION AND WAGE RECOVERY GRANT PROGRAM
SEC. 301. DEFINITIONS.
In this title:
(1) Community partner.--The term ``community partner'' means
any stakeholder with a commitment to enforcing wage and hour
laws and preventing abuses of such laws, including any--
(A) State department of labor;
(B) attorney general of a State, or other similar
authorized official of a political subdivision thereof;
(C) law enforcement agency;
(D) consulate;
(E) employee or advocate of employees, including a
labor organization, community-based organization,
faith-based organization, business association, or
nonprofit legal aid organization;
(F) academic institution that plans, coordinates, and
implements programs and activities to prevent wage and
hour violations and recover unpaid wages, damages, and
penalties; or
(G) any municipal agency responsible for the
enforcement of local wage and hour laws.
(2) Community partnership.--The term ``community
partnership'' means a partnership between--
(A) a working group consisting of community partners;
and
(B) the Department of Labor.
(3) Eligible entity.--The term ``eligible entity'' means an
entity that is any of the following:
(A) A nonprofit organization, including such an
organization that is a community-based organization,
faith-based organization, or labor organization, that
provides services and support to employees, including
assisting such employees in recovering unpaid wages.
(B) An employer.
(C) A business association.
(D) An institution of higher education, as defined by
section 101(a) of the Higher Education Act of 1965 (20
U.S.C. 1001(a)).
(E) A partnership between any of the entities
described in subparagraphs (A) through (D).
(4) Employ; employee; employer.--The terms ``employ'',
``employee'', and ``employer'' have the meanings given such
terms in section 3 of the Fair Labor Standards Act of 1938 (29
U.S.C. 203).
(5) Secretary.--The term ``Secretary'' means the Secretary of
Labor.
(6) Wage and hour law.--The term ``wage and hour law'' means
any Federal law enforced by the Wage and Hour Division of the
Department of Labor, including any provision of this Act
enforced by such division.
(7) Wage and hour violation.--The term ``wage and hour
violation'' refers to any violation of a Federal law enforced
by the Wage and Hour Division of the Department of Labor,
including any provision of this Act enforced by such division.
SEC. 302. WAGE THEFT PREVENTION AND WAGE RECOVERY GRANT PROGRAM.
(a) In General.--The Secretary shall provide grants to eligible
entities to assist amployees and employers.
(b) Grants.--A grant provided under this section shall be designed
to--
(1) support an eligible entity in establishing and supporting
the activities described in subsection (c)(1); and
(2) develop community partnerships to expand and improve
cooperative efforts to--
(A) prevent and reduce wage and hour violations;
(B) assist employees in recovering back pay for any
such violations; and
(C) assist employers in complying with wage and hour
laws.
(c) Use of Funds.--The grants described in this section shall assist
eligible entities in establishing and supporting activities that
include--
(1) disseminating information and conducting outreach and
training to educate employees about their rights under wage and
hour laws;
(2) conducting educational and compliance training for
employers about their obligations under wage and hour laws;
(3) providing assistance to employees in filing claims of
wage and hour violations; and
(4) any other activities as the Secretary may reasonably
prescribe through notice and comment rulemaking.
(d) Term of Grants.--Each grant made under this section shall be
available for expenditure for a period that is not to exceed 3 years.
(e) Applications.--
(1) In general.--An eligible entity seeking a grant under
this section shall submit an application for such grant to the
Secretary in accordance with this subsection.
(2) Partnerships.--In the case of an eligible entity that is
a partnership described in section 301(4)(E), the eligible
entity may submit a joint application that designates a single
entity as the lead entity for purposes of receiving and
disbursing funds.
(3) Contents.--An application under this subsection shall
include--
(A) a description of a plan for the program that the
eligible entity proposes to carry out with a grant
under this section, including a long-term strategy and
detailed implementation plan that reflects expected
participation of, and partnership with, community
partners;
(B) information on the prevalence of wage and hour
violations in each community or State the eligible
entity proposes to serve;
(C) information on any industry or geographic area
targeted by the plan for such program;
(D) information on the type of outreach and
relationship building that will be conducted under such
program;
(E) information on the training and education that
will be provided to employees and employers under such
program; and
(F) any additional information the Secretary deems
relevant.
(f) Selection.--
(1) Competitive basis.--In accordance with this subsection,
the Secretary shall, on a competitive basis, select grant
recipients from among eligible entities that have submitted an
application under subsection (e).
(2) Priority.--In selecting grant recipients under paragraph
(1), the Secretary shall give priority to eligible entities
that--
(A) serve employees or employers in any industry or
geographic area that is most highly at risk for
noncompliance with wage and hour violations, as
identified by the Secretary; and
(B) demonstrate past and ongoing work to prevent wage
and hour violations or to recover unpaid wages.
(g) Memoranda of Understanding.--
(1) In general.--Not later than 60 days after receiving
notification of selection for a grant under this section, the
grant recipient shall negotiate and finalize with the Secretary
a memorandum of understanding that sets forth specific goals,
objectives, strategies, and activities that will be carried out
under the grant by such recipient through a community
partnership.
(2) Signatures.--A representative of the grant recipient (or,
in the case of a grant recipient that is an eligible entity
described in section 301(4)(E), a representative of each entity
that composes the grant recipient) and the Secretary shall sign
the memorandum of understanding under this subsection.
(3) Revisions.--The memorandum of understanding under this
subsection shall be reviewed and revised by the grant recipient
and the Secretary each year for the duration of the grant.
(h) Performance Evaluations.--The Secretary shall develop guidelines
for evaluating the activities of each program or project funded under
this section.
(i) Revocation or Suspension of Funding.--If the Secretary determines
that a recipient of a grant under this section is not in compliance
with the terms and requirements of the memorandum of understanding
under subsection (g), the Secretary may revoke or suspend (in whole or
in part) the funding of the grant.
SEC. 303. AUTHORIZATION OF APPROPRIATIONS.
There is authorized to be appropriated $50,000,000 for fiscal year
2023 and for each subsequent fiscal year through fiscal year 2026, to
remain available until expended, to carry out the grant program under
section 302.
TITLE IV--RELATION TO OTHER LAWS, REGULATIONS, AND EFFECTIVE DATE
SEC. 401. RELATION TO OTHER LAWS.
(a) In General.--Section 18(a) of the Fair Labor Standards Act of
1938 (29 U.S.C. 218(a)) is amended by adding at the end the following:
``The requirements of section 5 shall not preempt or supercede any
requirement under State or local law that an employer disclose the
rate, frequency, or classification of pay at any time during an
individual's employ, or that an employer provide regular paystubs or
earnings statements to employees, so long as such requirement is at
least as comprehensive as the requirements described under such
section.''.
(b) Assistance to Employers.--The Secretary of Labor shall provide
such assistance to employers operating in more than one State as may be
necessary to ensure compliance with the amendments made by this Act.
SEC. 402. REGULATIONS.
Not later than 18 months after the date of enactment of this Act, the
Secretary of Labor shall promulgate such regulations as are necessary
to carry out this Act and the amendments made by this Act.
SEC. 403. EFFECTIVE DATE.
The amendments made by titles I and II shall take effect on the date
that is the earlier of--
(1) the date that is 6 months after the date on which the
final regulations are promulgated by the Secretary of Labor
under section 401; or
(2) the date that is 18 months after the date of enactment of
this Act.
Purpose and Summary
The purpose of H.R. 7701, the Wage Theft Prevention and
Wage Recovery Act of 2022 (Wage Theft Act), is to protect
workers and law-abiding businesses. It does so by amending the
Fair Labor Standards Act (FLSA) and Portal-to-Portal Act to
require employers covered by the FLSA to provide regular
paystubs and access to employment records to their workers;
increasing maximum civil monetary penalties and damages to
fully compensate workers for and deter wage violations;
allowing workers to recover full back wages under the FLSA
rather than only up to the federal minimum wage; prohibiting
the use of mandatory arbitration and collective action waivers
in employment agreements; increasing the statute of limitations
so workers have additional time to bring wage claims; and
establishing a grant program to educate workers about their
rights under wage and hour laws, help employers comply with
those laws, and provide assistance to employees in filing
claims for wage and hour violations.
The Wage Theft Act has been endorsed by the National
Employment Law Project (NELP), Economic Policy Institute (EPI),
AFL-CIO, Service Employees International Union (SEIU),
International Brotherhood of Teamsters, American Federation of
State, County and Municipal Employees (AFSCME), American
Federation of Teachers (AFT), Transport Workers Union (TWU),
United Mineworkers of America (UMWA), United Food and
Commercial Workers International Union (UFCW), International
Association of Machinists and Aerospace Workers (IAM), American
Federation of Government Employees (AFGE), Kalmanovitz
Initiative for Labor & the Working Poor at Georgetown
University, Main Street Alliance, National Women's Law Center
(NWLC), TakeRoot Justice, Jewish Labor Committee, Arise
Chicago, Faith Action for All, Reconstructionist Rabbinical
Association, T'ruah: The Rabbinic Call for Human Rights, and
Disciples Center for Public Witness (Disciples of Christ).
Committee Action
114TH CONGRESS
On January 13, 2016, Rep. Robert C. ``Bobby'' Scott (D-VA-
3) introduced H.R. 4376, the Pay Stub Disclosure Act. H.R. 4376
was referred to the Committee on Education and the Workforce.
On March 16, 2016, Rep. Rosa DeLauro (D-CT-3) introduced
H.R. 4763, the Wage Theft Prevention and Wage Recovery Act.
H.R. 4763 was referred to the Committee on Education and the
Workforce.
115TH CONGRESS
On July 27, 2017, Rep. DeLauro introduced H.R. 3467, the
Wage Theft Prevention and Wage Recovery Act. H.R. 3467 was
referred to the Committee on Education and the Workforce.
116TH CONGRESS
On July 11, 2019, Rep. DeLauro introduced H.R. 3712, the
Wage Theft Prevention and Wage Recovery Act. H.R. 3712 was
referred to the Committee on Education and Labor.
117TH CONGRESS
On May 10, 2022, Rep. DeLauro introduced H.R. 7701, the
Wage Theft Prevention and Wage Recovery Act. H.R. 7701 was
referred to the Committee on Education and Labor.
On May 11, 2022, the Committee on Education and Labor's
(Committee) Subcommittee on Workforce Protections held a
hearing entitled ``Standing Up for Workers: Preventing Wage
Theft and Recovering Stolen Wages'' (May 11th Hearing). The
witnesses were: Ms. Karen Cacace, Labor Bureau Chief, New York
State Office of the Attorney General, New York, NY; Mr.
Francisco Esparza, Representative, United Brotherhood of
Carpenters, Upper Marlboro, MD; Ms. Tammy McCutchen, Senior
Affiliate, Resolution Economics, Washington, DC; and Mr. Daniel
Swenson-Klatt, Owner, Butter Bakery Cafe, Minneapolis, MN. The
Committee heard testimony on how stronger state wage and hour
law provisions could serve as examples to improve the FLSA, the
harmful impact the wage theft crisis is having on workers, and
how honest businesses are left at a competitive disadvantage
when unscrupulous employers do not pay workers what they are
owed.
On May 18, 2022, the Committee marked up H.R. 7701. An
Amendment in the Nature of a Substitute (ANS) was offered by
Rep. Alma Adams (D-NC-12) that incorporated the provisions of
H.R. 7701, as introduced, and made the following modifications:
requires the Secretary of Labor (Secretary)
to prescribe model disclosures and pay stubs and make
them publicly available to employers;
narrows and clarifies the Wage Theft
Prevention and Wage Recovery Grant Program established
in section 302 of the bill;
eliminates the Government Accountability
Office (GAO) study that would review the Wage Theft
Prevention and Wage Recovery Grant Program;
ensures state laws that are more
comprehensive than those established in the bill are
not preempted;
directs the Department of Labor (DOL) to
provide compliance assistance to employers operating in
more than one state; and
makes technical and clarifying changes.
Four amendments to the ANS were offered:
Rep. Fred Keller (R-PA-12) offered an
amendment specifying that, for the purposes of the
bill's pay stub, disclosure requirements, and right to
full compensation provisions, the nature and degree of
an individual's control over his or her work and the
opportunity to earn profits or incur losses based on
individual initiative are core factors in determining a
worker's classification as an employee or independent
contractor. The amendment was defeated by a vote of 19
Yeas and 27 Nays.
Rep. Bob Good (R-VA-5) offered an amendment
exempting employers with either fewer than 10 employees
or annual sales under $1,000,000 from the bill's
increased civil penalties. The amendment was defeated
by a vote of 19 Yeas and 27 Nays.
Rep. James Comer (R-KY-1) offered an
amendment specifying that, for the purposes of the
bill's pay stub, disclosure requirements, and right to
full compensation provisions, employers may only be
considered a joint employer of another employer's
employee when the initial employer directly, actually,
and immediately exercises significant control over the
employee's essential terms and conditions of
employment. The amendment was defeated by a vote of 19
Yeas and 27 Nays.
Rep. Mariannette Miller-Meeks (R-IA-2)
offered a substitute amendment striking the text of the
ANS and inserting the text of H.R. 5743, the Ensuring
Workers Get PAID Act of 2021, which codifies the Trump
Administration's Payroll Audit Independent
Determination (PAID) program. The amendment was
defeated by a vote of 17 Yeas and 27 Nays.
The ANS was adopted by voice vote. The Committee ordered
H.R. 7701 to be reported favorably, as amended, to the House of
Representatives by a vote of 27 Yeas and 19 Nays.
Committee Views
The Committee has jurisdiction over federal wage and hour
laws and a history of advancing consequential legislation in
this area.
WAGE THEFT IS A MULTI-BILLION DOLLAR CRISIS THAT DISPROPORTIONATELY
IMPACTS LOW-WAGE WORKERS, WOMEN, AND WORKERS OF COLOR
Wage theft is the failure to pay workers the full amount of
wages for which they are legally entitled.\1\ Wage theft occurs
in various ways, including paying workers less than the legal
minimum wage, failing to pay for hours in excess of a 40-hour
work week, making employees work off-the-clock, taking illegal
deductions from wages, and confiscating tips.\2\ Wage theft is
a multi-billion-dollar problem.\3\ Each year, employers steal
at least $15 billion from workers' paychecks in minimum wage
violations alone,\4\ with all forms of wage theft possibly
exceeding $50 billion annually in stolen compensation.\5\
Dollar-for-dollar, wage theft is larger than all forms of
property crime combined.\6\
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\1\David Cooper & Teresa Kroeger, Econ. Pol'y Inst., Employers
steal billions from workers' paychecks each year 7 (2017), https://
www.epi.org/publication/employers-steal-
billions-from-workers-paychecks-each-year/.
\2\Id. at 4.
\3\Celine Mcnicholas et al., Econ. Pol'y Inst., Two billion dollars
in stolen wages were recovered for workers in 2015 and 2016--and that's
just a drop in the bucket 3 (2017), https://files.epi.org/pdf/
138995.pdf.
\4\Cooper & Kroeger, supra note 1 at 2.
\5\Mcnicholas et al., supra note 3 at 3.
\6\See Jeff Spross, One of the biggest crime waves in America isn't
what you think it is, The Week (Aug. 16, 2016), https://theweek.com/
articles/642568/biggest-crime-waves-america-isnt-what-think.
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Wage theft disproportionately hurts lower paid and
vulnerable segments of the workforce, as 17% of low-wage
workers report being paid less than their state's minimum
wage.\7\ In the service industry, 35% of tipped workers report
being paid below their state's minimum wage, and 47% say they
are not being compensated for time-and-a-half overtime work.\8\
In one recent example in New Hampshire, the DOL found that two
restaurants--operating under the same name in two different
cities--along with a general manager stole over $445,000 in
wages from their workers through their failure to pay overtime
and wages at or above the minimum wage rate.\9\
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\7\Id. at 9.
\8\One Fair Wage & U.C. Berkeley Food Labor Rsch. Ctr., No Rights,
Low Wages, No Service 2 (2021), https://onefairwage.site/wp-content/
uploads/2021/09/OFW_NationalWageTheft_
UpdatedPhoto-1.pdf.
\9\Dep't of Labor, Two New Hampshire restaurants to pay $890K in
back wages, damages to 63 employees after US Department of Labor
investigation, litigation, (April 25, 2022) https://www.dol.gov/
newsroom/releases/whd/whd20220425.
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Minimum wage violations also disproportionately impact
women and workers of color.\10\ 55% of wage theft victims are
women despite making up 46.6% of the total minimum wage
eligible workforce.\11\ 52.9% of wage theft victims are workers
of color despite constituting 44.3% of the minimum wage
eligible workforce.\12\
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\10\Cooper & Kroeger, supra note 1 at 15-16.
\11\Id. at 17.
\12\Id. at 19. Overall, minimum wage violations affect 4.9% of
Black and 5.1% of Hispanic workers generally compared to 3.5% of White
workers. Id.
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Workers in poverty are also disproportionately affected by
the wage theft crisis. Workers who are victims of a minimum
wage violation are ``more than three times as likely to be in
poverty as someone chosen at random in the eligible
workforce.''\13\ Reducing wage theft would have the additional
benefit of poverty reduction:
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\13\Cooper & Kroeger, supra note 1 at 14.
If all workers experiencing minimum wage violations
were paid the applicable minimum wage for all reported
hours worked, it would lift 31 percent of those in
poverty above the poverty line. Consequently, the
poverty rate among these workers would fall from 21.4
percent to 14.8 percent, and the overall poverty rate
among the minimum-wage-eligible workforce would decline
from 6.9 percent to 6.6 percent.\14\
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\14\Id.
At the May 11th Hearing, Mr. Esparza shared his own
experience as a victim of wage theft and now as an organizer
helping other workers who have experienced wage theft. Mr.
---------------------------------------------------------------------------
Esparza stated:
[W]e see wage theft, worker misclassification, and
construction industry tax fraud running rampant in the
underground economy. The actions workers have taken [to
recover wages] have not deterred unscrupulous
contractors and labor brokers from stealing wages on
the most vulnerable workers so that they can profit
more. These profits are not only on the backs of the
workers they victimize, but the honest U.S. taxpayers,
like me.\15\
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\15\Standing Up for Workers: Preventing Wage Theft and Recovering
Stolen Wages, Hearing Before the Subcomm. on Worker Protections of the
H. Comm. on Educ. and Lab., 117th Cong. (2022) (Statement of Francisco
Esparza, Representative, United Brotherhood of Carpenters, at 2).
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CURRENT CIVIL PENALTIES AND DAMAGES FAIL TO DETER WAGE THEFT VIOLATIONS
Although practices such as failure to pay minimum wage and
overtime for all hours worked are already illegal under the
FLSA,\16\ the law's penalties and damages provisions fail to
deter wage theft. Furthermore, employers use a variety of legal
loopholes to evade full accountability. In effect, dishonest
employers can exploit current law to steal workers' wages and
use those savings on labor costs to offer below-market rates
for their products and services and pay minor penalties in the
rare circumstances that they are caught. As a result,
unscrupulous employers gain an edge over their law-abiding
competitors. As noted in Mr. Swenson-Klatt's written testimony
for the May 11th Hearing, these illegal actions are a
``profitable practice [for low road employers] that hurts small
businesses like mine by creating an unfair playing field in a
competitive market.''\17\
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\16\Fair Labor Standards Act of 1938, Pub. L. No. 75-718, 52 Stat.
1060, 29 U.S.C. Sec. 201 etseq.
\17\Standing Up for Workers: Preventing Wage Theft and Recovering
Stolen Wages, Hearing Before the Subcomm. on Worker Protections of the
H. Comm. on Educ. and Lab., 117th Cong. (2022) (Statement of Daniel
Swenson-Klatt, Owner/Operator, Butter Bakery Cafe, at 3).
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Currently, the FLSA's maximum civil monetary penalties for
wage theft are just $2,203, and penalties are only assessed for
repeated or willful violations.\18\ Only employers that fail to
pay their tipped workers can face a penalty for an initial
violation, and the maximum penalty is only $1,234.\19\
Additionally, there are no civil monetary penalties for
recordkeeping violations.\20\ Meanwhile, according to a 2017
study conducted by the Economic Policy Institute (EPI), on
average, hourly workers who are victims of wage theft lost 25
percent of their annual earnings, or $3,300, in stolen
wages.\21\ According to Jenn Round, who is a fellow at the
Center for Innovation in Worker Organization at Rutgers
University, ``Some companies are doing a cost-benefit analysis
and realize it's cheaper to violate the law, even if you get
caught.''\22\
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\18\FLSA statutory language sets the original penalty amount at
$1,100, but the DOL has updated the penalty amount for inflation via
federal regulation. See 87 Fed. Register 2335 (Jan. 14, 2022); 29 CFR
578.3.
\19\Id.
\20\See 29 U.S.C. Sec. Sec. 211, 216.
\21\Cooper & Kroeger, supra note 1 at 1.
\22\U.S. companies are stealing pay from low-wage workers, report
says, CBS NEWS (May 4, 2021), https://www.cbsnews.com/news/wage-theft-
us-companies-workers/ (quoting Jenn Round, Fellow at Center for
Innovation in Worker Organization at Rutgers University).
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Unfortunately, this is a decades-old problem. In 1981, the
General Accounting Office\23\ concluded that ``many employers
appear to have willfully violated the [FLSA] and that current
enforcement actions have not resulted in penalties that would
deter these violations.''\24\ Ms. Karen Cacace, the Labor
Bureau Chief for the New York State Office of Attorney General,
also noted the inadequacy of current civil penalties under the
FLSA in her testimony at the May 11th Hearing, stating that:
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\23\In 2004, the U.S. General Accounting Office became the U.S.
Government Accountability Office--maintaining the same initials (GAO)--
following the enactment of the GAO Human Capital Reform Act of 2004,
P.L. 108-271. See Cong. Research Serv., GAO: Government Accountability
Office and General Accounting Office, at 1 (2008).
\24\U.S. Gov't Accountability Off., GAO-18276, Changes Needed To
Deter Violations Of Fair Labor Standards Act, at iii (1981).
Increasing penalties overall may be the most
effective method of deterring employers from violating
the substantive provisions of the FLSA. For many
employers, the cost of having to pay their employees
once a wage theft claim is filed is not significant
enough to deter them from violating the law.\25\
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\25\Standing Up for Workers: Preventing Wage Theft and Recovering
Stolen Wages, Hearing Before the Subcomm. on Worker Protections of the
H. Comm. on Educ. and Lab., 117th Cong. (2022) (Statement of Karen
Cacace, Labor Bureau Chief, New York State Office of the Attorney
General, at 3).
The FLSA's damages provisions are also inadequate at
deterring wage theft. Currently, employers found liable for
unpaid wages and overtime are only required to pay an ``equal''
amount as liquidated damages, which are additional damages
awarded to reflect the harm of the violation.\26\ Because an
employee can only recover the federal minimum wage in an action
under the FLSA, their back wages and equal damages are often
less than the amount of actual back wages stolen from the
employee, reducing the incentive to even bring a claim.\27\ To
illustrate, under current federal law, a worker earning $15 per
hour who is a victim of wage theft could only collect her back
wages at the federal minimum wage rate of $7.25 per hour.
Combined with an award of an equal amount in liquidated
damages, which is another $7.25 per hour worked, the worker
would recover a total of $14.50 per hour in back wages, meaning
she would still recover less than her full hourly wage. In
practical terms, that means it can be more cost effective for a
dishonest employer to fail to pay a worker her wages and get
caught then to actually pay a worker the wages she is owed.
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\26\29 U.S.C. Sec. 216(b).
\27\Daniel J. Galvin, Deterring Wage Theft: Alt-Labor, State
Politics, and the Policy Determinants of Minimum Wage Compliance, 14
Perspectives on Politics 324, 338 (2016).
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In his testimony at the May 11th Hearing, Mr. Swenson-Klatt
shared his own frustration as a business owner who realized
that the current penalties and damages for wage theft
violations do little to deter bad actors:
[L]arge corporate chains were willing to encourage
wage theft practices knowing that in nearly all states,
the restitution was limited to the federal minimum
wage. Because that wage is lower than most state
levels, they would come out ahead even when they were
caught and lost the battle.\28\
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\28\Statement of Daniel Swenson-Klatt, supra note 17 at 3.
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CURRENT FEDERAL LAW FAILS TO GUARANTEE WORKERS RIGHTS TO THEIR PAYSTUBS
AND ACCESS TO THEIR PAY RECORDS
Under current law, there is no requirement that employers
provide regular paystubs or earning statements to their
workers. As a result, employees can work for employers for
years and never fully understand their rate of pay, which
deductions are being made from their pay, or whether they are
being fully compensated for all their hours worked, including
overtime. Also, although current law requires employers to keep
payroll records, there is no provision for how many years such
records should be maintained or if employees can have access to
their records. Moreover, there are no civil monetary penalties
for violating this recordkeeping provision. In his testimony at
the May 11th Hearing, Mr. Swenson-Klatt shared that for honest
employers, providing regular and accurate pay records ``isn't a
burden, it's simply a necessary task. Your [congressional]
efforts to help define what that [records] should include is
helpful for both employee and employer, not harmful.''\29\
Unscrupulous employers, however, currently face no consequences
if they provide no records at all to an employee.
---------------------------------------------------------------------------
\29\Id. at 4.
---------------------------------------------------------------------------
Considering there are no penalties for recordkeeping
violations and no requirements to provide employees with pay
stubs, employers have little legal incentive to maintain
accurate records. Adequate records are essential to determine
whether employers are complying with the FLSA and if wages are
being illegally withheld.\30\ Without adequate records, workers
are unlikely to be able to prove wage theft claims in
court.\31\ Employers' recordkeeping violations can become their
own best defense to a wage theft claim.\32\
---------------------------------------------------------------------------
\30\Gao Report, supra note 25 at 12-13.
\31\Id. at 13, 17.
\32\Id. at 13, 17.
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MANDATORY ARBITRATION AND CLASS ACTION WAIVERS LIMIT WAGE THEFT
VICTIMS' ACCESS TO JUSTICE
Under current law, employment contracts can include
mandatory arbitration agreements and class action waivers as a
condition of employment. The FLSA does not bar these sorts of
waivers, which have a harmful impact on workers. For example,
in 2019, Quincy Reeves, a janitor in Connecticut, attempted to
bring a class action with his coworkers against his employer
for unpaid wages. However, Mr. Reeves discovered he had waived
his right to pursue a class action and had to utilize a closed-
door arbitration process. Mr. Reeves accumulated nearly $4,000
in arbitration fees, and when he disclosed he would be unable
to pay these fees, largely in part due to his monthly salary of
$1,800, the assigned arbitrator closed his case with no
resolution.\33\
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\33\Susan Antila, Forced Arbitration Is Making It Harder for Low-
Wage Workers to Seek Justice, Capital & Main, (May 2, 2022), https://
capitalandmain.com/how-forced-arbitration-is-
making-it-harder-for-low-wage-workers-to-seek-justice.
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As of 2019, nearly 18 million workers making less than $13
per hour had a mandatory arbitration clause in their employment
contract.\34\ Of these workers, it is estimated that more than
one-in-four were victims of wage theft--4.6 million workers--
and less than 2% were likely to bring a claim for
arbitration.\35\ If the 4.52 million workers who were unlikely
to bring a claim are owed an average of $2,050 in total unpaid
wages and damages, they will lose in aggregate an estimated
$9.27 billion in compensation each year.\36\
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\34\Hugh Baran & Elisabeth Campbell, Nat'l Emp. L. Project, Forced
Arbitration Helped Employers Who Committed Wage Theft Pocket $9.2
Billion in 2019 From Workers In Low-Paid Jobs 1 (2021), https://
s27147.pcdn.co/wp-content/uploads/Data-Brief-Forced-
Arbitration-Wage-Theft-Losses-June-2021.pdf.
\35\Cynthia Estlund, The Black Hole of Mandatory Arbitration, 96
N.C. L. Rev. 679, 696-97 (2018).
\36\According to Fiscal Year 2019 estimates by the DOL, wage theft
victims were owed $1,025 in back wages, and under current law those
workers would also be eligible for $1,025 in liquidated damages,
together totaling $2,050 per worker. Baran & Campbell, supra note 34 at
5.
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FEDERAL LEGISLATIVE ACTION IS NECESSARY TO ADDRESS THE WAGE THEFT
CRISIS
Current federal law fails to fully protect the wages
workers are owed and dishonest businesses who steal workers'
wages are exploiting weaknesses in the law to gain an unfair
advantage in the market. Federal legislation strengthening
existing wage and hour protections and expanding every worker's
right to information about his or her pay is critical to ensure
every worker receives the pay he or she is owed and to hold bad
employers accountable.
To achieve these goals, the Wage Theft Prevention and Wage
Recovery Act of 2022 will:
require employers to provide periodic paper
copy or digital (per employees' consent) pay stubs. Pay
stubs will encompass the range of pay rate, period,
overtime, and deduction information required for
employees to accurately verify their net pay;
require employers to maintain pay stub
records for 5 years and provide such records to
employees within 21-days of an employee's request;
establish new penalties for employers who
violate recordkeeping requirements: $1,000 for an
initial violation and $5,000 for repeated or willful
violations;
establish a grant program at the DOL to
educate workers about their rights under wage and hour
laws, help employers comply with those laws, and
provide assistance to employees in filing claims for
wage and hour violations. This grant program is
authorized at $50 million per year for Fiscal Years
2023-2026;
include triple damages for wage and hour
violations and quadruple damages for employer
retaliation;
update maximum civil monetary penalties to
$22,030 for initial wage and hour violations, $110,150
for repeated or willful wage and hour violations,
$12,340 for tipped wage violations, and $100 per
employee per each occurrence of the employer's failure
to provide the employee proper pay stubs or
disclosures;
revise the FLSA so that workers are entitled
to recover all wages promised to them in their
employment contracts in a successful action against
employers for back wages, rather than only back wages
at the federal minimum wage rate;
prohibit class action waivers and mandatory
arbitration for wage theft claims;
codify the rebuttable presumption
established in common law that if employers are unable
to produce payroll records, the employees' proffered
payroll records are deemed accurate; and
increase statute of limitation periods for
FLSA claims from two years to four years for common
violations and three years to five years for willful
violations.
CONCLUSION
Wage theft is a rampant and insidious problem that costs
workers billions of dollars a year and puts honest businesses
at a competitive disadvantage as dishonest employers can boost
profits by paying workers less than they are owed. The Wage
Theft Act is a responsible solution that will help workers
reclaim every dollar they are owed, more effectively deter bad
actors from violating the law, and level the playing field for
high-road employers. In the words of Mr. Esparza at the May
11th Hearing:
Congress must act so that Wage Theft Prevention and
Wage Recovery Act is made law. Your actions to
strengthening penalties on violators, improving workers
ability to pursue wage theft claims, expand outreach to
workers and businesses on the issues, and facilitate
the collection of evidence to assist in enforcement can
help a worker gain the wages they deserve and hopefully
help deter these crimes in the future. Businesses that
play by the rules will also benefit because the
cheaters underbid them. Good employers should not be
punished for following the law[.] Too many times fines
are imposed and bad actors in the industry see them as,
``just the price of doing business''. Without stronger
enforcement, higher penalties, and education to workers
we will never stop these practices. Workers deserve
better in this country[.]\37\
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\37\Statement of Francisco Esparza, supra note 15 at 3.
For the foregoing reasons, Congress must act and pass the
Wage Theft Act.
Section-by-Section Analysis
Sec. 1. Short title
This section specifies that the title of the bill may be
cited as the Wage Theft Prevention and Wage Recovery Act of
2022.
TITLE I--AMENDMENTS TO THE FAIR LABOR STANDARDS ACT (FLSA) OF 1938
Sec. 101. Requirements to provide certain disclosures, regular
paystubs, and final payment
This section requires employers to provide initial
disclosures when employees are first hired and modification
disclosures when employees' job statuses change. Employers are
required to issue regular pay stubs detailing all information
relevant for an employee to independently verify that the
employee's pay is accurate. This information must include:
whether the employee is classified as exempt
from minimum wage and overtime requirements;
total gross and net wages paid;
the applicable pay period;
the rate of pay, hours, overtime hours, and
overtime rate applied;
any additional compensation or deductions
from pay; and
additional information the Secretary
reasonably requires.
This section requires the Secretary to prescribe model
paystubs and disclosures and make them publicly available to
employers.
This section also requires final payments be made to
terminated employees within 14 days of termination or employers
may owe additional compensation to the employees.
Sec. 102. Right to full compensation
This section establishes that employers will compensate
employees at the rate specified in the employment contract,
including the rate in collective bargaining agreements,
although that rate may be higher than minimum wage.
Sec. 103. Civil and criminal enforcement
This section strikes the word ``minimum'' from the FLSA's
damages provisions to allow employees who have been harmed by a
violation of the FLSA to seek the full amount of back wages
owed as damages rather than use the minimum wage as a limit.
This section increases liquidated damages on violations of
the FLSA's wage and hour provisions from double damages to
triple damages, and from triple to quadruple damages where
employers retaliate against employees for filing an FLSA claim.
This section specifies that the right to bring an action--
including a joint, class, or collective claim--cannot be waived
as a condition of employment or by a pre-dispute arbitration
agreement.
This section increases civil monetary penalties on repeated
and willful violations of wage and hour laws from $2,203 per
violation to $110,150 per affected employee and creates a
maximum penalty of $22,030 per employee for initial violations.
Additionally, this section provides that employers who
violate the FLSA's tipped wage provisions will be subject to a
civil monetary penalty of $12,340, an increase from $1,234.
This section also adds civil monetary penalties of $50
(initial) and $100 (repeated or willful) for each violation of
pay stub or disclosure requirements as well as $1,000 (initial)
and $5,000 (repeated or willful) for violating FLSA
recordkeeping provisions.
Finally, this section clarifies that criminal penalties are
to be assessed to the employer per employee harmed by the
employer's violation of the FLSA. The Secretary also shall be
allowed to refer an offending employer to the Department of
Justice (DOJ) for violations of the FLSA recordkeeping, wage
and hour, and/or retaliation provisions.
Sec. 104. Recordkeeping
This section establishes that employees have the right to
inspect an employer's wage records within 21 days after
employees make such a request. Employers are required to
maintain wage records for a period of five years.
This section also adopts the common law rebuttable
presumption established in Anderson v. Mt. Clemons Pottery
Co.\38\ Specifically, in a claim for back wages before a
tribunal, if an employer's records are inadequate for
establishing the amount or extent of work for which the
employee should be compensated, there is a rebuttable
presumption that the employee's own records and recollections
are accurate, unless the employer can establish the employee's
evidence is not reasonable.
---------------------------------------------------------------------------
\38\Anderson, et al. v. Mt. Clemens Pottery Co., 328 U.S. 680, 687-
88 (1946).
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TITLE II--AMENDMENTS TO THE PORTAL-TO-PORTAL ACT OF 1947
Sec. 201. Increasing and tolling statute of limitations
This section amends the Portal-to-Portal Act of 1947 to
increase the statute of limitations to bring a claim for wage
or hour violations from two years to four years as well as from
three years to five years where the employers' actions are
willful.
TITLE III--WAGE THEFT PREVENTION AND WAGE RECOVERY GRANT PROGRAM
Sec. 301. Definitions
This section provides several definitions, including wage
and hour, wage and hour violations, and terms used in the grant
program established in this title.
Sec. 302. Wage theft prevention and wage recovery grant program
This section establishes that the Secretary shall provide
grants to eligible entities to assist employees and employers.
Specifically, eligible entities shall support activities that
include disseminating information and conducting outreach to
educate employees about their rights under wage and hour laws,
training for employers about their obligations under wage and
hour laws, and aiding employees in filing claims for wage and
hour violations.
Sec. 303. Authorization of appropriations
This section authorizes $50,000,000 annually for Fiscal
Years 2023-2026 to carry out the grant program established in
section 302.
TITLE IV--RELATION TO OTHER LAWS, REGULATIONS, AND EFFECTIVE DATE
Sec. 401. Relation to other laws
This section specifies that the paystub and disclosure
requirements shall not preempt or supersede any requirements
under state or local law that are at least as comprehensive as
the requirements under this Act. The Secretary shall provide
assistance to employers operating in more than one state as may
be necessary to ensure compliance.
Sec. 402. Regulations
This section establishes that no later than 18 months after
the date of enactment, the Secretary shall promulgate
regulations necessary to carry out the Act and the amendments
made by the Act.
Sec. 403. Effective date
This section provides that the amendments made by the Act
will take effect either 6 months after final regulations are
promulgated by the Secretary under section 401 or 18 months
after enactment, whichever comes first.
Explanation of Amendments
The amendments, including the amendment in the nature of a
substitute, are explained in the descriptive portions of this
report.
Application of Law to the Legislative Branch
Pursuant to section 102(b)(3) of the Congressional
Accountability Act of 1995, Pub. L. No. 104-1, H.R. 7701, as
amended, applies to terms and conditions of employment within
the legislative branch because one of the laws amended by H.R.
7701 (Fair Labor Standards Act) is included within the list of
laws applicable to the legislative branch enumerated in section
102(a) of the Congressional Accountability Act of 1995.
Unfunded Mandate Statement
Pursuant to Section 423 of the Congressional Budget and
Impoundment Control Act of 1974, Pub. L. No. 93-344 (as amended
by Section 101(a)(2) of the Unfunded Mandates Reform Act of
1995, Pub. L. No. 104-4), the Committee traditionally adopts as
its own the cost estimate prepared by the Director of the
Congressional Budget Office (CBO) pursuant to section 402 of
the Congressional Budget and Impoundment Control Act of 1974.
The Committee reports that because this cost estimate was not
timely submitted to the Committee before the filing of this
report, the Committee is not in a position to make a cost
estimate for H.R. 7701, as amended.
Earmark Statement
In accordance with clause 9 of rule XXI of the Rules of the
House of Representatives, H.R. 7701 does not contain any
congressional earmarks, limited tax benefits, or limited tariff
benefits as described in clauses 9(e), 9(f), and 9(g) of rule
XXI.
Roll Call Votes
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
following roll call votes occurred during the Committee's
consideration of H.R. 7701:
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Statement of Performance Goals and Objectives
Pursuant to clause (3)(c) of rule XIII of the Rules of the
House of Representatives, the goals of H.R. 7701 are to
strengthen wage and hour protections for workers and law-
abiding businesses under the Fair Labor Standards Act and the
Portal-to-Portal Act.
Duplication of Federal Programs
Pursuant to clause 3(c)(5) of rule XIII of the Rules of the
House of Representatives, the Committee states that no
provision of H.R. 7701 is known to be duplicative of another
federal program, including any program that was included in a
report to Congress pursuant to section 21 of Pub. L. No. 111-
139 or the most recent Catalog of Federal Domestic Assistance.
Hearings
Pursuant to clause 3(c)(6) of rule XIII of the Rules of the
House of Representatives, the Committee on Education and
Labor's Subcommittee on Workforce Protections held a hearing on
May 11, 2022, entitled ``Standing Up for Workers: Preventing
Wage Theft and Recovering Stolen Wages,'' which was used to
consider H.R. 7701. The witnesses were: Ms. Karen Cacace, Labor
Bureau Chief, New York State Office of the Attorney General,
New York, NY; Mr. Francisco Esparza, Representative, United
Brotherhood of Carpenters, Upper Marlboro, MD; Ms. Tammy
McCutchen, Senior Affiliate, Resolution Economics, Washington,
DC; and Mr. Daniel Swenson-Klatt, Owner, Butter Bakery Cafe,
Minneapolis, MN. The Committee heard testimony on how stronger
state wage and hour law provisions could serve as examples to
improve the FLSA, the harmful impact the wage theft crisis is
having on workers, and how honest businesses are left at a
competitive disadvantage when unscrupulous employers do not pay
workers what they are owed.
Statement of Oversight Findings and Recommendations of the Committee
In compliance with clause 3(c)(1) of rule XIII and clause
2(b)(1) of rule X of the Rules of the House of Representatives,
the Committee's oversight findings and recommendations are
reflected in the descriptive portions of this report.
New Budget Authority and CBO Cost Estimate
Pursuant to clause 3(c)(2) of rule XIII of the Rules of the
House of Representatives and section 308(a) of the
Congressional Budget and Impoundment Control Act of 1974, and
pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives and section 402 of the Congressional
Budget and Impoundment Control Actof 1974, the Committee has
requested but not received a cost estimate for the bill from
the Director of the Congressional Budget Office.
Committee Cost Estimate
Clause 3(d)(1) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison of the
costs that would be incurred in carrying out H.R. 7701.
However, Clause 3(d)(2)(B) of that rule provides that this
requirement does not apply when the committee has included in
its report a timely submitted cost estimate of the bill
prepared by the Director of the Congressional Budget Office
under section 402 of the Congressional Budget and Impoundment
Control Act of 1974. The Committee reports that because this
cost estimate was not timely submitted to the Committee before
the filing of this report, the Committee is not in a position
to make a cost estimate for H.R. 7701, as amended.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, H.R. 7701, as reported, are shown as follows:
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, and existing law in which no
change is proposed is shown in roman):
FAIR LABOR STANDARDS ACT OF 1938
* * * * * * *
administration
Sec. 4. (a) There is hereby created in the Department of
Labor a Wage and Hour Division which shall be under the
direction of an Administrator, to be known as the Administrator
of the Wage and Hour Division (in this Act referred to as the
``Administrator''). The Administrator shall be appointed by the
President, by and with the advice and consent of the Senate,
and shall receive compensation at the rate of $20,000 a year.
(b) The Secretary of Labor may, subject to the civil service
laws, appoint such employees as he deems necessary to carry out
his functions and duties under this Act and shall fix their
compensation in accordance with the Classification Act of 1949,
as amended. The Secretary may establish and utilize such
regional, local, or other agencies, and utilize such voluntary
and uncompensated services, as may from time to time be needed.
Attorneys appointed under this section may appear for and
represent the Secretary in any litigation, but all such
litigation shall be subject to the direction and control of the
Attorney General. In the appointment, selection,
classification, and promotion of officers and employees of the
Secretary, no political test or qualification shall be
permitted or given consideration, but all such appointments and
promotions shall be given and made on the basis of merit and
efficiency.
(c) The principal office of the Secretary shall be in the
District of Columbia, but he or his duly authorized
representative may exercise any or all of his powers in any
place.
(d)(1) The Secretary shall submit biennially in January a
report to the Congress covering his activities for the
preceding two years and including such information, data, and
recommendations for further legislation in connection with the
matters covered by this Act as he may find advisable. Such
report shall contain an evaluation and appraisal by the
Secretary of the minimum wages and overtime coverage
established by this Act, together with his recommendations to
the Congress. In making such evaluation and appraisal, the
Secretary shall take into consideration any changes which may
have occurred in the cost of living and in productivity and the
level of wages in manufacturing, the ability of employers to
absorb wage increases, and such other factors as he may deem
pertinent. Such report shall also include a summary of the
special certificates issued under section 14(b).
(2) The Secretary shall conduct studies on the justification
or lack thereof for each of the special exemptions set forth in
section 13 of this Act, and the extent to which such exemptions
apply to employees of establishments described in subsection
(g) of such section and the economic effects of the application
of such exemptions to such employees. The Secretary shall
submit a report of his findings and recommendations to the
Congress with respect to the studies conducted under this
paragraph not later than January 1, 1976.
(3) The Secretary shall conduct a continuing study on means
to prevent curtailment of employment opportunities for manpower
groups which have had historically high incidences of
unemployment (such as disadvantaged minorities, youth, elderly,
and such other groups as the Secretary may designate). The
first report of the results of such study shall be transmitted
to the Congress not later than one year after the effective
date of the Fair Labor Standards Amendments of 1974. Subsequent
reports on such study shall be transmitted to the Congress at
two-year intervals after such effective date. Each such report
shall include suggestions respecting the Secretary's authority
under section 14 of this Act.
(e) Whenever the Secretary has reason to believe that in any
industry under this Act the competition of foreign producers in
United States markets or in markets abroad, or both, has
resulted, or is likely to result, in increased unemployment in
the United States, he shall undertake an investigation to gain
full information with respect to the matter. If he determines
such increased unemployment has in fact resulted, or is in fact
likely to result, from such competition, he shall make a full
and complete report of his findings and determinations to the
President and to the Congress: Provided, That he may also
include in such report information on the increased employment
resulting from additional exports in any industry under this
Act as he may determine to be pertinent to such report.
(f) The Secretary is authorized to enter into an agreement
with the Librarian of Congress with respect to individuals
employed in the Library of Congress to provide for the carrying
out of the Secretary's functions under this Act with respect to
such individuals. Notwithstanding any other provision of this
Act, or any other law, the Civil Service Commission is
authorized to administer the provisions of this Act with
respect to any individual employed by the United States (other
than an individual employed in the Library of Congress, United
States Postal Service, Postal Rate Commission, or the Tennessee
Valley Authority). Nothing in this subsection shall be
construed to affect the right of an employee to bring an action
[for unpaid minimum wages, or unpaid overtime compensation, and
liquidated damages] for unpaid wages, or unpaid overtime
compensation, as well as interest and liquidated damages, under
section 16(b) of this Act.
SEC. 5. REQUIREMENTS TO PROVIDE CERTAIN DISCLOSURES, REGULAR PAYSTUBS,
AND FINAL PAYMENTS.
(a) Disclosures.--
(1) Initial disclosures.--Not later than 15 days
after the date on which an employer hires an employee
who in any workweek is engaged in commerce or in the
production of goods for commerce, or is employed in an
enterprise engaged in commerce or in the production of
goods for commerce, the employer of such employee shall
provide such employee with an initial disclosure
containing the information described in paragraph (3).
Such initial disclosure shall be--
(A) provided as a written statement or, if
the employee so chooses, as a digital document
provided through electronic communication; and
(B) made available in the employee's primary
language.
(2) Modification disclosures.--Not later than the
earlier of 5 days after the date on which any of the
information described in paragraph (3) changes with
respect to an employee described in paragraph (1) or
the date of the next paystub following the date on
which such information changes, the employer of such
employee shall provide the employee with a modification
disclosure containing all the information described in
paragraph (3).
(3) Information.--The information described in this
paragraph shall include--
(A) the rate of pay and whether the employee
is paid by the hour, shift, day, week, or job,
or by salary, piece rate, commission, or other
form of compensation;
(B)(i) an indication of whether the employee
is being classified by the employer as an
employee subject to the minimum wage
requirements of section 6 or as an employee
that is exempt from (or otherwise not subject
to) such requirements as provided under section
3(m)(2), 6, 13, or 14, as well as the reason
for the exemption; and
(ii) in the case that such employee is not
classified as being an employee subject to such
minimum wage requirements, an identification of
the section described in clause (i) providing
for such classification;
(C)(i) an indication of whether the employee
is being classified by the employer as an
employee subject to the overtime compensation
requirements of section 7 or as an employee
exempt from such requirements as provided under
section 7 or 13; and
(ii) in the case that such employee is not
classified as being an employee subject to such
overtime compensation requirements, an
identification of the section described in
clause (i) providing for such classification;
(D) the name of the employer and any other
name used by the employer to conduct business;
and
(E) the physical address of and telephone
number for the employer's main office or
principal place of business, and a mailing
address for such office or place of business if
the mailing address is different than the
physical address.
(b) Paystubs.--
(1) In general.--Every employer shall provide each
employee of such employer who in any workweek is
engaged in commerce or in the production of goods for
commerce, or is employed in an enterprise engaged in
commerce or in the production of goods for commerce, a
paystub that corresponds to work performed by the
employee during the applicable pay period and contains
the information required under paragraph (3) in any
form provided under paragraph (2).
(2) Forms.--A paystub required under this subsection
shall be a written statement and may be provided in any
of the following forms:
(A) As a separate document accompanying any
payment to an employee for work performed
during the applicable pay period.
(B) In the case of an employee who receives
paychecks from the employer, as a detachable
statement accompanying each paycheck.
(C) As a digital document provided through
electronic communication, subject to the
employee affirmatively consenting to receive
the paystubs in this form.
(3) Contents.--Each paystub shall contain all of the
following information:
(A) The name of the employee.
(B) Except in the case of an employee who is
exclusively paid a salary and is exempt from
the overtime requirements of section 7, the
total number of hours worked by the employee,
including the number of hours worked per
workweek, during the applicable pay period.
(C) The total gross and net wages paid, and,
except in the case of an employee who is
exclusively paid a salary and is exempt from
the overtime requirements of section 7, the
rate of pay for each hour worked during the
applicable pay period.
(D) In the case of an employee who is paid
any salary, the amount of any salary paid
during the applicable pay period.
(E) In the case of an employee employed at
piece rates, the number of piece rate units
earned, the applicable piece rates, and the
total amount paid to the employee per workweek
for the applicable pay period in accordance
with such piece rates.
(F) The rate of pay per workweek of the
employee during the applicable pay period and
an explanation of the basis for such rate.
(G) The number of overtime hours per workweek
worked by the employee during the applicable
pay period and the compensation required under
section 7 that is provided to the employee for
such hours.
(H) Any additional compensation provided to
the employee during the applicable pay period,
with an explanation of each type of
compensation, including any allowances or
reimbursements such as amounts related to
meals, clothing, lodging, or any other item.
(I) Itemized deductions from the gross income
of the employee during the applicable pay
period, and an explanation for each deduction.
(J) The date that is the beginning of the
applicable pay period and the date that is the
end of such applicable pay period.
(K) The name of the employer and any other
name used by the employer to conduct business.
(L) The name and phone number of a
representative of the employer for contact
purposes.
(M) Any additional information that the
Secretary reasonably requires to be included
through notice and comment rulemaking.
(c) Model Disclosures and Pay Stub.--The Secretary shall
prescribe model disclosures and a model pay stub that may be
used to satisfy the requirements of subsections (a) and (b),
respectively. The Secretary shall make the model disclosures
and the model pay stub publicly available to employers.
(d) Final Payments.--
(1) In general.--Not later than 14 days after an
individual described in paragraph (4) terminates
employment with an employer (by action of the employer
or the individual), or on the date on which such
employer pays other employees for the pay period during
which the individual so terminates such employment,
whichever date is earlier, the employer shall provide
the individual with a final payment, which includes all
compensation due to such individual for all time worked
and benefits incurred (including retirement, health,
leave, fringe, and other benefits) by the individual as
an employee for the employer.
(2) Continuing wages.--An employer who violates the
requirement under paragraph (1) shall, for each day,
not to exceed 30 days, of such violation provide the
individual described in paragraph (4) with compensation
at a rate that is equal to the regular rate of
compensation, as determined under this Act, to which
such individual was entitled when such individual was
an employee of such employer.
(3) Limitation.--Notwithstanding paragraphs (1) and
(2), an individual described in paragraph (4) shall not
be entitled to the compensation described under
paragraph (2) if the employer successfully demonstrates
that--
(A) the employer made a good-faith effort to
provide the final payment described in
paragraph (1); and
(B) the individual refused or otherwise
intentionally avoided receiving such final
payment.
(4) Individual.--An individual described in this
paragraph is an individual who was employed by the
employer, and through such employment, in any workweek,
was engaged in commerce or in the production of goods
for commerce, or was employed in an enterprise engaged
in commerce or in the production of goods for commerce.
* * * * * * *
minimum wages
Sec. 6. (a) Every employer shall pay to each of his employees
who in any workweek is engaged in commerce or in the production
of goods for commerce, or is employed in an enterprise engaged
in commerce or in the production of goods for commerce, wages
at the following rates:
(1) except as otherwise provided in this section, not
less than--
(A) $5.85 an hour, beginning on the 60th day
after the date of enactment of the Fair Minimum
Wage Act of 2007;
(B) $6.55 an hour, beginning 12 months after
that 60th day; and
(C) $7.25 an hour, beginning 24 months after
that 60th day;
(2) if such employee is a home worker in Puerto Rico
or the Virgin Islands, not less than the minimum piece
rate prescribed by regulation or order; or, if no such
minimum piece rate is in effect, any piece rate adopted
by such employer which shall yield, to the proportion
or class of employees prescribed by regulation or
order, not less than the applicable minimum hourly wage
rate. Such minimum piece rates or employer piece rates
shall be commensurate with, and shall be paid in lieu
of, the minimum hourly wage rate applicable under the
provisions of this section. The Secretary of Labor, or
his authorized representative, shall have power to make
such regulations or orders as are necessary or
appropriate to carry out any of the provisions of this
paragraph, including the power without limiting the
generality of the foregoing, to define any operation or
occupation which is performed by such home work
employees in Puerto Rico or the Virgin Islands; to
establish minimum piece rates for any operation or
occupation so defined; to prescribe the method and
procedure for ascertaining and promulgating minimum
piece rates; to prescribe standards for employer piece
rates, including the proportion or class of employees
who shall receive not less than the minimum hourly wage
rate; to define the term ``home worker''; and to
prescribe the conditions under which employers, agents,
contractors, and subcontractors shall cause goods to be
produced by home workers;
(3) if such employee is employed as a seaman on an
American vessel, not less than the rate which will
provide to the employee, for the period covered by the
wage payment, wages equal to compensation at the hourly
rate prescribed by paragraph (1) of this subsection for
all hours during such period when he was actually on
duty (including periods aboard ship when the employee
was on watch or was, at the direction of a superior
officer, performing work or standing by, but not
including off-duty periods which are provided pursuant
to the employment agreement); or
(4) if such employee is employed in agriculture, not
less than the minimum wage rate in effect under
paragraph (1) after December 31, 1977.
(b) Every employer shall pay to each of his employees (other
than an employee to whom subsection (a)(5) applies) who in any
workweek is engaged in commerce or in the production of goods
for commerce, or is employed in an enterprise engaged in
commerce or in the production of goods for commerce, and who in
such workweek is brought within the purview of this section by
the amendments made to this Act by the Fair Labor Standards
Amendments of 1966, title IX of the Education Amendments of
1972, or the Fair Labor Standards Amendments of 1974, wages at
the following rate: Effective after December 31, 1977, not less
than the minimum wage rate in effect under subsection (a)(1).
(d)(1) No employer having employees subject to any provisions
of this section shall discriminate, within any establishment in
which such employees are employed, between employees on the
basis of sex by paying wages to employees in such establishment
at a rate less than the rate at which he pays wages to
employees of the opposite sex in such establishment for equal
work on jobs the performance of which requires equal skill,
effort, and responsibility, and which are performed under
similar working conditions, except where such payment is made
pursuant to (i) a seniority system; (ii) a merit system; (iii)
a system which measures earnings by quantity or quality or
production; or (iv) a differential based on any other factor
other than sex: Provided, That an employer who is paying a wage
rate differential in violation of this subsection shall not, in
order to comply with the provisions of this subsection, reduce
the wage rate of any employee.
(2) No labor organization, or its agents, representing
employees of an employer having employees subject to any
provisions of this section shall cause or attempt to cause such
an employer to discriminate against an employee in violation of
paragraph (1) of this subsection.
(3) For purposes of administration and enforcement, any
amounts owing to any employees which have been withheld in
violation of this subsection shall be deemed to be unpaid
[minimum] wages or unpaid overtime-compensation under this Act.
(4) As used in this subsection, the term ``labor
organization'' means any organization of any kind, or any
agency or employee representation committee or plan, in which
employees participate and which exists for the purpose, in
whole or in part, of dealing with employers concerning
grievances, labor disputes, wages, rates of pay, hours of
employment, or conditions of work.
(e)(1) Notwithstanding the provisions of section 13 of this
Act (except subsections (a)(1) and (f) thereof), every employer
providing any contract services (other than linen supply
services) under a contract with the United States or any
subcontract thereunder shall pay to each of his employees whose
rate of pay is not governed by the Service Contract Act of 1965
(41 U.S.C. 351-357) or to whom subsection (a)(1) of this
section is not applicable, wages at rates not less than the
rates provided for in subsection (b) of this section.
(2) Notwithstanding the provisions of section 13 of this Act
(except subsections (a)(1) and (f) thereof) and the provisions
of the Service Contract Act of 1965, every employer in an
establishment providing linen supply services to the United
States under a contract with the United States or any
subcontract thereunder shall pay to each of his employees in
such establishment wages at rates not less than those
prescribed in subsection (b), except that if more than 50 per
centum of the gross annual dollar volume of sales made or
business done by such establishment is derived from providing
such linen supply services under any such contracts or
subcontracts, such employer shall pay to each of his employees
in such establishment wages at rates not less than those
prescribed in subsection (a)(1) of this section.
(f) Any employee--
(1) who in any workweek is employed in domestic
service in a household shall be paid wages at a rate
not less than the wage rate in effect under section
6(b) unless such employee's compensation for such
service would not because of section 209(a)(6) of the
Social Security Act constitute wages for the purpose of
title II of such Act, or
(2) who in any workweek--
(A) is employed in domestic service in one or
more households, and
(B) is so employed for more than 8 hours in
the aggregate,
shall be paid wages for such employment in such
workweek at a rate not less than the wage rate in
effect under section 6(b).
(g)(1) In lieu of the rate prescribed by subsection (a)(1),
any employer may pay any employee of such employer, during the
first 90 consecutive calendar days after such employee is
initially employed by such employer, a wage which is not less
than $4.25 an hour.
(2) In lieu of the rate prescribed by subsection (a)(1), the
Governor of Puerto Rico, subject to the approval of the
Financial Oversight and Management Board established pursuant
to section 101 of the Puerto Rico Oversight, Management, and
Economic Stability Act, may designate a time period not to
exceed four years during which employers in Puerto Rico may pay
employees who are initially employed after the date of
enactment of such Act a wage which is not less than the wage
described in paragraph (1). Notwithstanding the time period
designated, such wage shall not continue in effect after such
Board terminates in accordance with section 209 of such Act.
(3) No employer may take any action to displace employees
(including partial displacements such as reduction in hours,
wages, or employment benefits) for purposes of hiring
individuals at the wage authorized in paragraph (1) or (2).
(4) Any employer who violates this subsection shall be
considered to have violated section 15(a)(3) (29 U.S.C.
215(a)(3)).
(5) This subsection shall only apply to an employee who has
not attained the age of 20 years, except in the case of the
wage applicable in Puerto Rico, 25 years, until such time as
the Board described in paragraph (2) terminates in accordance
with section 209 of the Act described in such paragraph.
* * * * * * *
SEC. 8. RIGHT TO FULL COMPENSATION.
(a) In General.--In the case of an employment contract or
other employment agreement, including a collective bargaining
agreement, that specifies that an employer shall compensate an
employee (who is described in subsection (b)) at a rate that is
higher than the rate otherwise required under this Act, the
employer shall compensate such employee at the rate specified
in such contract or other employment agreement.
(b) Employee Engaged in Commerce.--The requirement under
subsection (a) shall apply with respect to any employee who in
any workweek is engaged in commerce or in the production of
goods for commerce, or is employed in an enterprise engaged in
commerce or in the production of goods for commerce.
* * * * * * *
[court review
[Sec. 10. (a) Any person aggrieved by an order of the
Secretary issued under section 8 may obtain a review of such
order in the United States Court of Appeals for any circuit
wherein such person resides or has his principal place of
business, or in the United States Court of Appeals for the
District of Columbia, by filing in such court, within 60 days
after the entry of such order a written petition praying that
the order of the Secretary be modified or set aside in whole or
in part. A copy of such petition shall forthwith be transmitted
by the clerk of the court to the Secretary, and thereupon the
Secretary shall file in the court of the record of the industry
committee upon which the order complained of was entered, as
provided in section 2112 of title 28, United States Code. Upon
the filing of such petition such court shall have exclusive
jurisdiction to affirm, modify (including provision for the
payment of an appropriate minimum wage rate), or set aside such
order in whole or in part so far as it is applicable to the
petitioner. The review by the court shall be limited to
questions of law, and findings of fact by such industry
committee when supported by substantial evidence shall be
conclusive. No objection to the order of the Secretary shall be
considered by the court unless such objective shall have been
urged before such industry committee or unless there were
reasonable grounds for failure so to do. If application is make
to the court for leave to adduce additional evidence, and it is
shown to the satifaction of the court that such additional
evidence may materially affect the result of the proceeding and
that there were reasonable grounds for failure to adduce such
evidence in the proceedings before such industry committee, the
court may order such additional evidence to be taken before an
industry committee and to be adduced upon the hearing in such
manner and upon such terms and conditions as to the court may
seem proper. Such industry committee may modify the initial
findings by reason of the additional evidence so taken, and
shall file with the court such modified or new findings which
if supported by substantial evidence shall be conclusive, and
shall also file its recommendation, if any, for the
modification or setting aside of the original order. The
judgment and decree of the court shall be final, subject to
review by the Supreme Court of the United States upon
certiorari or certification as provided in section 1254 of
title 28 of the United States Code.
[(b) The commencement of proceedings under subsection (a)
shall not, unless specifically ordered by the court, operate as
a stay of the Secretary's order. The Court shall not grant any
stay of the order unless the person complaining of such order
shall file in court an undertaking with a surety or sureties
satisfactory to the court of the payment to the employees
affected by the order, in the event such order is affirmed, of
the amount by which the compensation such employees are
entitled to receive under the order exceeds the compensation
they actually receive while such stay is in effect.]
investigations, inspections, records, and homework regulations
Sec. 11. (a) The Secretary of Labor or his designated
representatives may investigate and gather data regarding the
wages, hours, and other conditions and practices of employment
in any industry subject to this Act, and may enter and inspect
such places and such records (and make such transcriptions
thereof), question such employees, and investigate such facts,
conditions, practices, or matters as he may deem necessary or
appropriate to determine whether any person has violated any
provision of this Act, or which may aid in the enforcement of
the provisions of this Act. Except as provided in section 12
and in subsection (b) of this section, the Secretary shall
utilize the bureaus and divisions of the Department of Labor
for all the investigations and inspections necessary under this
section. Except as provided in section 12, the Secretary shall
bring all actions under section 17 to restrain violations of
this Act.
(b) With the consent and cooperation of State agencies
charged with the administration of State labor laws, the
Secretary of Labor may, for the purpose of carrying out his
functions and duties under this Act, utilize the services of
State and local agencies and their employees and,
notwithstanding any other provision of law, may reimburse such
State and local agencies and their employees for services
rendered for such purposes.
(c) Every employer subject to any provision of this Act or of
any order issued under this Act 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
period of time, and shall make such reports therefrom to the
Secretary as he shall prescribe by regulation or order as
necessary or appropriate for the enforcement of the provisions
of this Act or the regulations or orders thereunder. The
employer of an employee who performs substitute work described
in section 7(p)(3) may not be required under this subsection to
keep a record of the hours of the substitute work. In the event
that an employee requests an inspection of the records
described in this subsection that pertain to such employee from
the employer, orally or in writing, the employer shall provide
the employee with a copy of the records for a period of up to 5
years prior to such request being made. Not later than 21 days
after an employee requests such an inspection, the employer
shall comply with the request.
(d) The Secretary is authorized to make such regulations and
orders regulating, restricting, or prohibiting industrial
homework as are necessary or appropriate to prevent the
circumvention or evasion of and to safeguard the minimum wage
rate prescribed in this Act, and all existing regulations or
orders of the Administration relating to industrial homework
are hereby continued in full force and effect.
* * * * * * *
prohibited acts
Sec. 15. (a) After the expiration of one hundred and twenty
days from the date of enactment of this Act, it shall be
unlawful for any person--
(1) to transport, offer for transportation, ship,
deliver, or sell in commerce, or to ship, deliver, or
sell with knowledge that shipment or delivery or sale
thereof in commerce is intended, any goods in the
production of which any employee was employed in
violation of [section 6 or section 7] section 6, 7, or
8, or in violation of any regulation or order of the
Secretary of Labor issued under section 14; except that
no provision of this Act shall impose any liability
upon any common carrier for the transportation in
commerce in the regular course of its business of any
goods not produced by such common carrier, and no
provision of this Act shall excuse any common carrier
from its obligation to accept any goods for
transportation; and except that any such
transportation, offer, shipment, delivery, or sale of
such goods by a purchaser who acquired them in good
faith in reliance on written assurance from the
producer that the goods were produced in compliance
with the requirements of the Act, and who acquired such
goods for value without notice of any such violation,
shall not be deemed unlawful;
(2) to violate any of the provisions of [section 6 or
section 7] section 5, 6, 7, or 8, or any of the
provisions of any regulation or order of the Secretary
issued under section 14;
(3) 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 Act, or has
testified or is about to testify in any such
proceeding, or has served or is about to serve on an
industry committee;
(4) to violate any of the provisions of section 12;
(5) to violate any of the provisions of section 11(c)
or any regulation or order made or continued in effect
under the provisions of section 11(d), or to make any
statement, report, or record filed or kept pursuant to
the provisions of such section or of any regulation or
order thereunder, knowing such statement, report, or
record to be false in a material respect.
(b) For the purposes of subsection (a)(1) proof that any
employee was employed in any place of employment where goods
shipped or sold in commerce were produced, within ninety days
prior to the removal of the goods from such place of
employment, shall be prima facie evidence that such employee
was engaged in the production of such goods.
(c) In the event that an employer violates section 11(c) and
any regulations issued pursuant to such section, resulting in a
lack of a complete record of an employee's hours worked or
wages owed, the employee's production of credible evidence and
testimony regarding the amount or extent of the work for which
the employee was not compensated in compliance with the
requirements under this Act shall be sufficient to create a
rebuttable presumption that the employee's records are
accurate. Such presumption shall be rebutted only if the
employer produces evidence of the precise amount or extent of
work performed or evidence to show that the inference drawn
from the employee's evidence is not reasonable.
penalties
Sec. 16. (a) [Any person] (1) Any person who willfully
violates any of the provisions of section 15 shall upon
conviction thereof be subject to a fine of not more than
[$10,000] $10,000 per each employee affected, or to
imprisonment for not more than six months, or both. [No person]
Subject to paragraph (2), no person shall be imprisoned under
this subsection except for an offense committed after the
conviction of such person for a prior offense under this
subsection.
(2)(A) Notwithstanding any other provision of this Act, the
Secretary shall refer any case involving a covered offender
described in subparagraph (B) to the Department of Justice for
prosecution.
(B) A covered offender described in this subparagraph is a
person who willfully violates any of the following:
(i) Section 11(c) by falsifying any records described
in such section.
(ii) Section 6, 7, or 8, relating to wages.
(iii) Section 15(a)(3).
(b) Any employer who violates the provisions of [section 6 or
section 7] section 6, 7, or 8 of this Act shall be liable to
the employee or employees affected in the amount of their
unpaid [minimum] wages, or the unpaid overtime compensation, as
the case may be, [and in an additional equal amount as
liquidated damages] the amount of any interest on such unpaid
wages or unpaid overtime compensation accrued at the prevailing
rate, and an additional amount as liquidated damages that is
equal to (subject to the second sentence of this subsection) 2
times such amount of unpaid wages or unpaid overtime
compensation. Any employer who violates the provisions of
section 15(a)(3) of this Act shall be liable for such legal or
equitable relief as may be appropriate to effectuate the
purposes of section 15(a)(3), including without limitation
employment, reinstatement, promotion, and the payment of [wages
lost and an additional equal amount as liquidated damages]
wages lost, including any unpaid wages or any unpaid overtime
compensation, the amount of any interest on such wages lost
accrued at the prevailing rate, and an additional amount as
liquidated damages that is equal to 3 times the amount of such
wages lost. Any employer who violates section 3(m)(2)(B) shall
be liable to the employee or employees affected in the amount
of the sum of any tip credit taken by the employer and all such
tips unlawfully kept by the employer, and in an additional
equal amount as liquidated damages. An action to recover the
liability prescribed in the preceding sentences may be
maintained against any employer (including a public agency) in
any Federal or State court of competent jurisdiction by any one
or more employees for and in behalf of himself or themselves
and other employees similarly situated. [No employees shall be
a party plaintiff to any such action unless he gives his
consent in writing to become such a party and such consent is
filed in the court in which such action is brought.] The court
in such action shall, in addition to any judgment awarded to
the plaintiff or plaintiffs, allow a reasonable attorney's fee
to be paid by the defendant, and costs of the action. The right
provided by this subsection to bring an action by or on behalf
of any employee, and the right of any employee to become a
party plaintiff to any such action, shall terminate upon the
filing of a complaint by the Secretary of Labor in an action
under section 17 in which (1) restraint is sought of any
further delay in the payment of unpaid [minimum] wages, or the
amount of unpaid overtime compensation, as the case may be,
owing to such employee under [section 6 or section 7] section
6, 7, or 8 of this act by an employer liable therefor under the
provisions of this subsection or (2) legal or equitable relief
is sought as a result of alleged violations of section
15(a)(3). Notwithstanding chapter 1 of title 9, United States
Code (commonly known as the ``Federal Arbitration Act''), or
any other law, the right to bring an action, including a joint,
class, or collective claim, in court under this section cannot
be waived by an employee as a condition of employment or in a
pre-dispute arbitration agreement.
(c) The Secretary is authorized to supervise the payment of
the unpaid [minimum] wages or the unpaid overtime compensation
owing to any employee or employees under [section 6 or 7]
section 6, 7, or 8 of this Act, and the agreement of any
employee to accept such payment shall upon payment in full
constitute a waiver by such employee of any right he may have
under subsection (b) of this section to such unpaid [minimum]
wages or unpaid overtime compensation [and an additional equal
amount as liquidated damages], any interest on such unpaid
wages or unpaid overtime compensation accrued at the prevailing
rate, and an additional amount as liquidated damages that is
equal to (subject to the third sentence of this subsection) 2
times such amount of unpaid wages or unpaid overtime
compensation. The Secretary may bring an action in any court of
competent jurisdiction to recover the amount of the unpaid
[minimum] wages or overtime compensation [and an equal amount
as liquidated damages.], any interest on such unpaid wages or
unpaid overtime compensation accrued at the prevailing rate,
and an additional amount as liquidated damages that is equal to
(subject to the third sentence of this subsection) 2 times such
amount of unpaid wages or unpaid overtime compensation. In the
event that the employer violates section 15(a)(3), the
Secretary may bring an action in any court of competent
jurisdiction to recover the amount of any wages lost, including
any unpaid wages or any unpaid overtime compensation, any
interest on such wages lost accrued at the prevailing rate, an
additional amount as liquidated damages that is equal to 3
times the amount of such wages lost, and any such legal or
equitable relief as may be appropriate. The right provided by
subsection (b) to bring an action by or on behalf of any
employee to recover the liability specified in the first
sentence of such subsection and of any employee to become a
party plaintiff to any such action shall terminate upon the
filing of a complaint by the Secretary in an action under this
subsection in which a recovery is sought of unpaid [minimum]
wages or unpaid overtime compensation under [sections 6 and 7]
section 6, 7, or 8 or liquidated or other damages provided by
this subsection owing to such employee by an employer liable
under the provisions of subsection (b), unless such action is
dismissed without prejudice on motion of the Secretary. Any
sums thus recovered by the Secretary on behalf of an employee
pursuant to this subsection shall be held in a special deposit
account and shall be paid, on order of the Secretary, directly
to the employee or employees affected. Any such sums not paid
to an employee because of inability to do so within a period of
three years shall be covered into the Treasury of the United
States as miscellaneous receipts. In determining when an action
is commenced by the Secretary under this subsection for the
purposes of the statutes of limitations provided in section
6(a) of the Portal-to-Portal Act of 1947, it shall be
considered to be commenced in the case of any individual
claimant on the date when the complaint is filed if he is
specifically named as a party plaintiff in the complaint, or if
his name did not so appear, on the subsequent date on which his
name is added as a party plantiff in such action. The authority
and requirements described in this subsection shall apply with
respect to a violation of section 3(m)(2)(B), as appropriate,
and the employer shall be liable for the amount of the sum of
any tip credit taken by the employer and all such tips
unlawfully kept by the employer, and an additional equal amount
as liquidated damages.
(d) In any action or proceeding commenced prior to, on, or
after the date of enactment of this subsection, no employer
shall be subject to any liability or punishment under this Act
or the Portal-to-Portal Act of 1947 on account of his failure
to comply with any provision or provisions of such Acts (1)
with respect to work heretofore or hereafter performed in a
workplace to which the exemption in section 13(f) is
applicable, (2) with respect to work performed in Guam, the
Canal Zone, or Wake Island before the effective date of this
amendment of subsection (d), or (3) with respect to work
performed in a possession named in section 6(a)(3) at any time
prior to the establishment by the Secretary, as provided
therein, of a minimum wage rate applicable to such work.
(e)(1)(A) Any person who violates the provisions of sections
12 or 13(c), relating to child labor, or any regulation issued
pursuant to such sections, shall be subject to a civil penalty
not to exceed--
(i) $11,000 for each employee who was
the subject of such a violation; or
(ii) $50,000 with regard to each such
violation that causes the death or
serious injury of any employee under
the age of 18 years, which penalty may
be doubled where the violation is a
repeated or willful violation.
(B) For purposes of subparagraph (A), the term ``serious
injury'' means--
(i) permanent loss or substantial impairment of one
of the senses (sight, hearing, taste, smell, tactile
sensation);
(ii) permanent loss or substantial impairment of the
function of a bodily member, organ, or mental faculty,
including the loss of all or part of an arm, leg, foot,
hand or other body part; or
(iii) permanent paralysis or substantial impairment
that causes loss of movement or mobility of an arm,
leg, foot, hand or other body part.
[(2) Any person who repeatedly or willfully violates section
6 or 7, relating to wages, shall be subject to a civil penalty
not to exceed $1,100 for each such violation. Any person who
violates section 3(m)(2)(B) shall be subject to a civil penalty
not to exceed $1,100 for each such violation, as the Secretary
determines appropriate, in addition to being liable to the
employee or employees affected for all tips unlawfully kept,
and an additional equal amount as liquidated damages, as
described in subsection (b).]
(2)(A) Subject to subparagraph (B), any person who violates
section 6, 7, or 8, relating to wages, shall be subject to a
civil fine that is not to exceed $22,030 per each employee
affected for each initial violation of such section.
(B) Any person who repeatedly or willfully violates section
6, 7, or 8, relating to wages, shall be subject to a civil fine
that is not to exceed $110,150 per each employee affected for
each such violation.
(C) Any person who violates section 3(m)(2)(B) shall be
subject to a civil penalty not to exceed $12,340 for each such
violation, as the Secretary determines appropriate, in addition
to being liable to the employee or employees affected for all
tips unlawfully kept, any interest on wages lost accrued at the
prevailing rate, and an additional amount as liquidated damages
that is equal to 2 times the amount of wages lost, as described
in subsection (b).
(3) Any person who violates subsection (a) or (b) of section
5 shall--
(A) for the initial violation of such subsection, be
subject to a civil fine that is not to exceed $50 per
each employee affected; and
(B) for each repeated or willful violation of such
subsection, be subject to a civil fine that is not to
exceed $100 per each employee affected.
(4) Any person who violates section 11(c) shall--
(A) for the initial violation, be subject to a civil
fine that is not to exceed $1,000 per each employee
affected; and
(B) for each repeated or willful violation, be
subject to a civil fine that is not to exceed $5,000
per each employee affected.
[(3)] (5) In determining the amount of any penalty under this
subsection, the appropriateness of such penalty to the size of
the business of the person charged and the gravity of the
violation shall be considered. The amount of any penalty under
this subsection, when finally determined, may be--
(A) deducted from any sums owing by the United States
to the person charged;
(B) recovered in a civil action brought by the
Secretary in any court of competent jurisdiction, in
which litigation the Secretary shall be represented by
the Solicitor of Labor; or
(C) ordered by the court, in an action brought for a
violation of section 15(a)(4) or a repeated or willful
violation of section 15(a)(2), to be paid to the
Secretary.
[(4)] (6) Any administrative determination by the Secretary
of the amount of any penalty under this subsection shall be
final, unless within 15 days after receipt of notice thereof by
certified mail the person charged with the violation takes
exception to the determination that the violations for which
the penalty is imposed occurred, in which event final
determination of the penalty shall be made in an administrative
proceeding after opportunity for hearing in accordance with
section 554 of title 5, United States Code, and regulations to
be promulgated by the Secretary.
[(5)] (7) Except for civil penalties collected for violations
of section 12, sums collected as penalties pursuant to this
section shall be applied toward reimbursement of the costs of
determining the violations and assessing and collecting such
penalties, in accordance with the provision of section 2 of the
Act entitled ``An Act to authorize the Department of Labor to
make special statistical studies upon payment of the cost
thereof and for other purposes'' (29 U.S.C. 9a). Civil
penalties collected for violations of section 12 shall be
deposited in the general fund of the Treasury.
injunction proceedings
Sec. 17. The district courts, together with the United States
District Court for the District of the Canal Zone, the District
Court of the Virgin Islands, and the District Court of Guam
shall have jurisdiction, for cause shown, to restrain
violations of section 15, including in the case of violations
of section 15(a)(2) the restraint of any withholding of payment
of [minimum] wages or overtime compensation found by the court
to be due to employees under this Act (except sums which
employees are barred from recovering, at the time of the
commencement of the action to restrain the violations, by
virtue of the provisions of section 6 of the Portal-to-Portal
Act of 1947).
relation to other laws
Sec. 18. (a) No provision of this Act or of any order
thereunder shall excuse noncompliance with any Federal or State
law or municipal ordinance establishing a minimum wage higher
than the minimum wage established under this Act or a maximum
workweek lower than the maximum workweek established under this
Act, and no provision of this Act relating to the employment of
child labor shall justify noncompliance with any Federal or
State law or municipal ordinance establishing a higher standard
than the standard established under this Act. No provision of
this Act shall justify any employer in reducing a wage paid by
him which is in excess of the applicable minimum wage under
this Act, or justify any employer in increasing hours of
employment maintained by him which are shorter than the maximum
hours applicable under this Act. The requirements of section 5
shall not preempt or supercede any requirement under State or
local law that an employer disclose the rate, frequency, or
classification of pay at any time during an individual's
employ, or that an employer provide regular paystubs or
earnings statements to employees, so long as such requirement
is at least as comprehensive as the requirements described
under such section.
(b) Notwithstanding any other provision of this Act (other
than section 13(f)) or any other law--
(1) any Federal employee in the Canal Zone engaged in
employment of the kind described in section 5102(c)(7)
of title 5, United States Code, and
(2) any employee employed in a nonappropriated fund
instrumentality under the jurisdiction of the Armed
Forces,
shall have his basic compensation fixed or adjusted at a wage
rate that is not less than the appropriate wage rate provided
for in section 6(a)(1) of this Act (except that the wage rate
provided for in section 6(b) shall apply to any employee who
performed services during the workweek in a work place within
the Canal Zone), and shall have his overtime compensation set
at an hourly rate not less than the overtime rate provided for
in section 7(a)(1) of this Act.
* * * * * * *
----------
PORTAL-TO-PORTAL ACT OF 1947
* * * * * * *
PART IV--MISCELLANEOUS
* * * * * * *
Sec. 6. Statute of Limitations.--Any action commenced on or
after the date of the enactment of this Act to enforce any
cause of action for unpaid [minimum] wages, unpaid overtime
compensation, or liquidated damages, under the Fair Labor
Standards Act of 1938, as amended, the Walsh-Healey Act, or the
Bacon-Davis Act--
(a) if the cause of action accrues on or after the
date of the enactment of this Act--[may be commenced
within two years] may be commenced within 4 years after
the cause of action accrued, and every such action
shall be forever barred [unless commenced within two
years] unless commenced within 4 years after the cause
of action accrued, except that a cause of action
arising out of a willful violation [may be commenced
within three years] may be commenced within 5 years
after the cause of action accrued;
(b) if the cause of action accrued prior to the date
of the enactment of this Act--may be commenced within
whichever of the following periods is the shorter: (1)
two years after the cause of action accrued, or (2) the
period prescribed by the applicable State statute of
limitations; and, except as provided in paragraph (c),
every such action shall be forever barred unless
commenced within the shorter of such two periods;
(c) if the cause of action accrued prior to the date
of the enactment of this Act, the action shall not be
barred by paragraph (b) if it is commenced within one
hundred and twenty days after the date of the enactment
of this Act unless at the time commenced it is barred
by an applicable State statute of limitations;
(d) with respect to any cause of action brought under
section 16(b) of the Fair Labor Standards Act of 1938
against a State or a political subdivision of a State
in a district court of the United States on or before
April 18, 1973, the running of the statutory periods of
limitation shall be deemed suspended during the period
beginning with the commencement of any such action and
ending one hundred and eighty days after the effective
date of the Fair Labor Standards Amendments of 1974,
except that such suspension shall not be applicable if
in such action judgment has been entered for the
defendant on the grounds other than State immunity from
Federal jurisdiction[.]; and
(e) with respect to the running of any statutory
period of limitation described in this section, the
running of such statutory period shall be deemed
suspended during the period beginning on the date on
which the Secretary of Labor notifies an employer of an
initiation of an investigation or enforcement action
and ending on the date on which the Secretary notifies
the employer that the matter has been officially
resolved by the Secretary.
* * * * * * *
MINORITY VIEWS
INTRODUCTION
All workers should be paid in full for their work, and
Committee Republicans support enforcement of the Fair Labor
Standards Act of 1938 (FLSA or Act), which establishes minimum
wage, overtime pay, and recordkeeping requirements. There are
strong remedies in place for employers who pay workers less
than the amount to which they are entitled under the Act.
Employers who violate these standards, whether unintentionally
or willfully and repeatedly, are subject to remedies that may
include back pay, liquidated damages, and civil and criminal
penalties. Committee Republicans are committed to increasing
compliance with the Act and believe that clear and concise
standards, combined with compliance assistance, will benefit
both workers and employers.
Unfortunately, rather than treating employers as good-faith
partners, Committee Democrats repeatedly greet job creators
with open hostility and contempt. The FLSA is a complicated
law, and even employers who are diligent in their efforts to
ensure compliance with wage-and-hour standards can
unintentionally violate the Act. Employers want to do right by
their employees, who are their greatest asset. Despite this,
Committee Democrats assume the worst of all employers and
insist on advocating for one-size-fits-all mandates,
inappropriately inserting the federal government into
employers' day-to-day operations.
Against this backdrop, Committee Republicans reject H.R.
7701, the so-called Wage Theft Prevention and Wage Recovery
Act. Simply put, the bill does little to protect the paychecks
of American workers and will be detrimental to both employees
and employers. H.R. 7701 will have a chilling impact on efforts
to promote greater workplace flexibility and will severely
limit the economic opportunities offered to individuals through
independent contracting and the franchise model. This
legislation will impede the Department of Labor (DOL) Wage and
Hour Division's (WHD) ability to administer and enforce the
FLSA, thereby delaying efforts to recover wages on behalf of
workers. It will also bankrupt small businesses for
unintentional or technical errors, create burdensome and
duplicative mandates of questionable utility, and line the
pockets of trial lawyers.
Congress should review and clarify requirements related to
wage-and-hour laws to promote clear and simple rules that make
it easier to comply with the FLSA, not more difficult. H.R.
7701 misses the mark completely in this respect. For these
reasons, and as set forth more fully below, Committee
Republicans are united in their strong opposition to H.R. 7701.
Punitive and Excessive Penalties
Punitive and excessive penalties in H.R. 7701 completely
disregard the serious compliance challenges the FLSA poses to
employers, particularly small businesses. The bill's civil
monetary penalties are excessive and disproportionate with
technical or unintentional FLSA violations. For example, under
H.R. 7701, an employer with no prior FLSA minimum wage or
overtime violations is subject to a civil monetary penalty not
to exceed $22,030 per each employee affected, as compared to no
civil monetary penalty under current law. Repeat and willful
violations of these provisions are subject to a civil monetary
penalty not to exceed $110,150 per each employee affected for
each violation, as compared to $2,203 per violation under
current law.\1\ This punitive approach to FLSA enforcement,
which fails to consider whether an employer has acted in good
faith, is misguided.
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\1\29 CFR Sec. 578.3.
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This legislation also fails to provide protections for
small businesses lacking large employers' legal and human
resource infrastructures. H.R. 7701's increased penalties could
bankrupt a small business for a mere technical error, even for
a first FLSA violation. The National Federation of Independent
Business sent a letter to the Committee explaining how the
bill's increased penalties represent an existential threat to
small businesses:
[C]onsider a small business that employs four people
who work 42 hours a week at a wage rate of $20 an hour.
That employer, who does the payroll by hand, forgets to
pay overtime one week. Under current law, the employer
must pay back wages, which would total $80, and up to
$10,000 in criminal penalties for a maximum liability
of $10,080. If H.R. 7701 were enacted, the employer
would owe $160 in back wages, a $22,030 fine per
employee, and $10,000 criminal penalty per employee
totaling $128,280. These penalty amounts will
undoubtedly put some small employers out of
business.\2\
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\2\Letter from Kevin Kuhlman, Vice President, Nat. Fed. of Indep.
Bus., to Reps. Bobby Scott (D-VA) & Virginia Foxx (R-NC) (May 17, 2022)
(on file).
In addition to expanding unjustly civil and criminal
penalties that could bankrupt small businesses, larger fines
are unlikely to speed up the recovery of wages. In the hearing
on H.R. 7701, Tammy McCutchen, former DOL Wage and Hour
Administrator, explained how the bill could delay remedies owed
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to workers:
The increases proposed are very significant, even
ridiculous, and I fear will be counter-productive of
the goals of this bill. FLSA liquidated damages would
increase from an amount equal to back wages to two or
three times back wages. Penalties would increase by 900
to 4,900 percent or even higher--as the bill would
require payment of penalties per employee rather than
per violation. The bill would also extend the statute
of limitations from two to four years for all
violations and from three to five years for willful
violations--longer than any state except for New York.
If found in violation of the FLSA, employers faced with
such massive damages and penalties, in addition to more
years of back wages, will have only one way to react:
litigate, litigate, litigate and litigate some more.
Payment of back wages would be delayed for years. The
plaintiffs' bar will collect more fees, but transitory
low-wage workers may see nothing at all.\3\
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\3\Standing Up for Workers: Preventing Wage Theft and Recovering
Stolen Wages: Hearing Before the Subcomm. on Workforce Protections of
the H. Comm. on Educ. & Lab., 117th Cong. (2022) (statement of Tammy
McCutchen, Resolution Econ., at 2).
Committee Democrats justify imposing such excessive
penalties on employers by claiming it is cheaper to violate the
law than to pay employees what they are owed.\4\ This is a
blatant misrepresentation of the remedies available to workers
under the FLSA and state laws. Under the FLSA, employers who
violate minimum wage or overtime requirements are liable for
unpaid wages and an additional equal amount in liquidated
damages unless the employer can prove to the court the action
was in good faith and there were reasonable grounds to believe
it was not a violation of the FLSA.\5\ Depending on the
violation, employers can incur even greater costs. Employers
who repeatedly or willfully violate minimum wage and overtime
provisions of the Act can be assessed civil fines of $2,203 per
violation. DOL can assess a civil monetary penalty of $1,100 to
employers who keep employees' tips.\6\ Attorneys' fees and
court costs can also be awarded to employees.\7\
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\4\Id. (statement of Rep. Alma Adams (D-NC)).
\5\29 U.S.C. Sec. Sec. 216(b), 260.
\6\Consolidated Appropriations Act, 2018, Pub. L. No. 115-141, tit.
XII, 132 Stat. 348 (2018).
\7\29 U.S.C. Sec. 216(c).
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Ultimately, H.R. 7701's increased penalties will primarily
harm good-faith employers who try to comply with confusing and
complex FLSA regulations and it will not help workers. Finally,
it is worth noting that it is not workers who collect payments
from these civil and criminal penalties: it is the Department
of Labor.\8\ This reality suggests that these punitive fines
will incentivize the Labor Department to seek the highest
penalties possible in every case, even for questionable
violations.
---------------------------------------------------------------------------
\8\29 U.S.C. Sec. 216(e)5.
---------------------------------------------------------------------------
Significant and Unwarranted Mandates
H.R. 7701 burdens employers with new onerous recordkeeping
and informational mandates, resulting in unnecessary red tape
and conflicting federal and state requirements. These burdens
add to already costly and complex DOL regulations. To date, the
Biden DOL's overall net regulatory costs totaled more than $4
billion and added over 100 million hours of paperwork
burden.\9\
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\9\Am. Action Forum, Regulation Rodeo, https://regrodeo.com/
?year%5B0%5D=&year%5B1
%5D=2022&year%5B2%5D=2021&agency%5B0%5D=Labor.
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H.R. 7701's pay stub and informational mandates are
reminiscent of extreme requirements implemented by the states
of New York and California and would be inappropriate for
nationwide implementation. These mandates impose significant
compliance burdens that increase costs to employers. Ms.
McCutchen described the bill's pay stub and informational
mandates as duplicative and likely to add confusion for
employers, resulting in the plaintiffs' bar collecting more
fees:
Every state has its own paystub disclosure
requirements, ensuring employees already receive an
earning statement that includes hours worked, pay rate,
gross and net wages, deductions and more. An additional
layer of regulation would not add to the worker
protections already there under state and federal law.
Plaintiffs' attorneys have made a lot of money from
California class actions for minor violations of that
state's paystub disclosure violations (for example,
listing regular hours and overtime hours, but not
adding them together to show the total hours). Perhaps
the goal here is to make a federal case out of such
minor violations, allowing the plaintiffs' bar to
export California litigation to the rest of the
country.
State laws also govern the frequency and timing of
pay, including final pay: Some shorter than the 14-day
standard proposed in the bill, and some longer. Having
both federal and state laws on this topic would only
lead to more complexity and confusion when employers
try to figure out which law is more protective, the new
FLSA provisions or the existing state law
provisions.\10\
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\10\McCutchen statement, supra note 3, at 3-4.
Not only are these mandates duplicative and burdensome, but
they will result in fining employers who pay their employees in
full but err in filling out bureaucratic forms. For example, an
employer could face fines for technical errors on wage
statements such as a mistake in an employer's name or address
or wrong dates of the payroll period, even if all employees are
paid correctly and no employee suffered any harm.
Workers and businesses would benefit from easy-to-
understand wage-and-hours rules, not from impossible compliance
burdens and red tape. Instead of simplifying the FLSA or
assisting with compliance, H.R. 7701's onerous mandates will
punish good-faith employers and provide plaintiffs' lawyers
fertile ground to file frivolous lawsuits.
Chilling Workplace Flexibility
H.R. 7701's compliance burdens, monetary penalties, and
litigation risks on job creators would have a chilling impact
on independent contracting and business-to-business
relationships like the franchise model. The risk of litigation
and monetary penalties under H.R. 7701 for potential technical
or disputed FLSA violations would cause companies to avoid
these alternative business models.
Modern workers seek opportunities as independent
contractors which allow them entrepreneurial freedom and
flexibility. Companies also seek out independent contractors to
fill workforce needs and find the right talent at the right
time. Franchising creates a proven path for entrepreneurs to
become their own boss. Undermining independent work and
franchising opportunities would kill jobs that millions of
hardworking Americans enjoy. A comprehensive study on the U.S.
independent workforce found that 59 million Americans performed
freelance work in 2021, representing more than one-third of the
U.S. workforce. Not only do independent workers represent a
large share of the workforce, but they contributed $1.3
trillion in annual earnings to the U.S. economy.\11\
Additionally, in 2021, the total output generated by franchise
establishments was $787.7 billion. Despite economic headwinds,
franchising added a net 660,300 jobs in 2021.\12\
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\11\Press Release, Upwork Study Finds 59 Million Americans
Freelancing Amid Turbulent Labor Market (Dec. 8, 2021), https://
investors.upwork.com/news-releases/news-release-details/upwork-study-
finds-59-million-americans-freelancing-amid.
\12\Int'l Franchise Ass'n, 2022 Franchising Economic Outlook,
https://www.franchise.org/sites/default/files/2022-02/
2022%20Franchising%20Economic%20Outlook.pdf.
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Reducing independent contractor opportunities would also
take away individuals' right to earn a living as they see fit.
A survey conducted by MBO Partners highlights why so many
workers want to engage in independent contract work: two out of
3 full-time independent workers believe they are more secure
than traditional workers; 87 percent say they happier working
independently; and 78 percent say they are healthier working
independently.\13\
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\13\MBO Partners, 11th Annual State of Independence: The Great
Realization, https://www.mbopartners.com/state-of-independence/.
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H.R. 7701 threatens the livelihoods of millions of
Americans who are independent contractors or work in the
franchise industry through fear of failing to comply with
burdensome mandates and excessive fines. This would be a sad
reality for independent workers who say they are happier and
healthier as independent contractors and entrepreneurs who
found success through the franchise business model.
Private Enforcement of the FLSA
Section 302 of H.R. 7701 provides federal grants to certain
private entities to police businesses on behalf of DOL. These
grants are intended to assist in the enforcement of the FLSA,
reduce violations, and assist employees in wage recovery.
However, it is improper for Congress to deputize private
organizations to perform enforcement activities traditionally
conducted by DOL. It is also highly inappropriate to delegate
enforcement authority to private entities such as labor unions
and employee advocacy organizations whose interests are
antagonistic to the interests of those they are regulating.
Enforcing the FLSA should be a government function conducted by
disinterested state officials, not adversarial private entities
with potential ulterior motives.
Another concern with Section 302 is that it could delay WHD
investigations and the recovery of wages for workers. The U.S.
Chamber of Commerce explained in a letter:
The bill's Grant Program would deputize advocates to
help conduct investigations. This would eradicate the
long tradition of employers voluntarily cooperating
with agency investigations, producing documents, and
welcoming investigators into their worksites. If the
Department of Labor brings along unions and advocates,
employers would likely stop cooperating and insist on
search warrants and document subpoenas, in accordance
with the Fourth Amendment. Again, more complexity,
longer investigations, and more litigation will harm
low-wage workers by delaying payment of wages.\14\
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\14\Letter from Neil Bradley, Exec. Vice President, U.S. Chamber of
Com., to Reps. Bobby Scott (D-VA) & Virginia Foxx (R-NC) (May 18, 2022)
(on file).
Further, the grant program could provide union organizers
access to employers and industries they seek to unionize. As
grant recipients, labor unions could be given authority to
visit workplaces, conduct orientations with employees, and
assist in the enforcement of the FLSA. This new policy would
undoubtedly encourage labor unions to get involved in wage-and-
hour enforcement in non-unionized facilities as a means of
gaining access to employees, where the union normally would not
have access. The grant program could become a taxpayer-funded
union organizing tool.
Republican Amendments
During consideration of H.R. 7701, Committee Republicans
offered several amendments that would have improved the bill.
Unfortunately, the amendments were rejected by Committee
Democrats on party-line votes.
Rep. Fred Keller (R-PA) offered an amendment to clarify,
for the purposes of the new mandates in the bill, that the core
factors in determining a worker's classification as an employee
or independent contractor are the nature and degree of an
individual's control over his or her work and the opportunity
to earn profits or incur losses based on individual initiative.
This amendment would have ensured that red tape would not
interfere with the ability of workers and companies to enter
into flexible work arrangements.
Rep. Bob Good (R-VA) offered an amendment that would exempt
employers with fewer than 10 employees or annual gross volume
of business under $1,000,000 from the provisions in the bill
increasing certain civil penalties. Many small business owners
process their own payroll and do not have access to a team of
lawyers to interpret the complex provisions in the FLSA.
Unfortunately, Committee Democrats chose not to protect these
small businesses owners from outrageously inflated civil
monetary penalties and rejected the amendment.
Rep. James Comer (R-KY) offered an amendment to codify a
joint employer standard that ensures employers who lack direct
and immediate control over an individual's essential terms and
conditions of employment are not subject to the disclosure and
compensatory requirements in the bill. Rep. Comer's amendment
would have codified a clear and reliable joint employer
standard that protects the franchise business model and small
business owners.
Rep. Mariannette Miller-Meeks (R-IA) offered an amendment
to strike the underlying legislation and replace it with H.R.
5743, the Ensuring Workers Get PAID Act. This amendment would
have reinstated and made permanent the Trump administration's
Payroll Audit Independent Determination (PAID) program. The
PAID program assisted job creators with FLSA compliance and
ensured workers receive back wages in a timelier manner than
traditional investigations. Unfortunately, Committee Democrats
rejected this effort to make sure workers quickly recover back
wages.
CONCLUSION
Changes in the American workforce expose the rigid and
outdated nature of the FLSA. It is long-past time for reform.
However, H.R. 7701 would compound the problems that exist in
the current law rather than improve it. Instead of assisting
employers with compliance and reducing outdated red tape, this
legislation threatens to bankrupt small businesses for minor,
technical, or unintentional FLSA violations; this is a
troubling prospect, since small businesses have accounted for
66 percent of employment growth over the last 25 years.\15\
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\15\Daniel Wilmoth, U.S. Small Bus. Admin Off. of Advoc., Small
Business Job Creation (Apr. 2022), https://cdn.advocacy.sba.gov/wp-
content/uploads/2022/04/22141927/Small-Business-Job-Creation-Fact-
Sheet-Apr2022.pdf.
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H.R. 7701 is not a win for workers, job creators, or the
American economy. This Democrat bill makes it more difficult to
operate a business and reduces opportunities for entrepreneurs
and workers. Instead of imposing outrageous fines and mandates
on employers, Congress should simplify the FLSA to ensure good-
faith employers can easily operate within the law and pay
workers in full and on time. The bill does nothing to meet the
needs of workers, employers, or the 21st century economy. For
these reasons, and those set forth above, we strongly oppose
enactment of H.R. 7701 as reported by the Committee on
Education and Labor.
Virginia Foxx,
Ranking Member.
Joe Wilson.
Glenn ``GT'' Thompson.
Tim Walberg.
Glenn Grothman.
Elise M. Stefanik.
Rick W. Allen.
Jim Banks.
James Comer.
Russ Fulcher.
Fred Keller.
Mariannette Miller Meeks, M.D.
Burgess Owens.
Bob Good.
Lisa C. McClain.
Diana Harshbarger.
Mary E. Miller.
Scott Fitzgerald.
Madison Cawthorn.
Chris Jacobs.
[all]