[House Hearing, 108 Congress] [From the U.S. Government Publishing Office] ASSESSING THE IMPACT OF THE LABOR DEPARTMENT'S FINAL OVERTIME REGULATIONS ON WORKERS AND EMPLOYERS ======================================================================= HEARING before the COMMITTEE ON EDUCATION AND THE WORKFORCE U.S. HOUSE OF REPRESENTATIVES ONE HUNDRED EIGHTH CONGRESS SECOND SESSION __________ April 28, 2004 __________ Serial No. 108-54 __________ Printed for the use of the Committee on Education and the Workforce Available via the World Wide Web: http://www.access.gpo.gov/congress/ house or Committee address: http://edworkforce.house.gov ______ U.S. GOVERNMENT PRINTING OFFICE 93-385 WASHINGTON : 2004 ____________________________________________________________________________ For Sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512�091800 Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001 COMMITTEE ON EDUCATION AND THE WORKFORCE JOHN A. BOEHNER, Ohio, Chairman Thomas E. Petri, Wisconsin, Vice George Miller, California Chairman Dale E. Kildee, Michigan Cass Ballenger, North Carolina Major R. Owens, New York Peter Hoekstra, Michigan Donald M. Payne, New Jersey Howard P. ``Buck'' McKeon, Robert E. Andrews, New Jersey California Lynn C. Woolsey, California Michael N. Castle, Delaware Ruben Hinojosa, Texas Sam Johnson, Texas Carolyn McCarthy, New York James C. Greenwood, Pennsylvania John F. Tierney, Massachusetts Charlie Norwood, Georgia Ron Kind, Wisconsin Fred Upton, Michigan Dennis J. Kucinich, Ohio Vernon J. Ehlers, Michigan David Wu, Oregon Jim DeMint, South Carolina Rush D. Holt, New Jersey Johnny Isakson, Georgia Susan A. Davis, California Judy Biggert, Illinois Betty McCollum, Minnesota Todd Russell Platts, Pennsylvania Danny K. Davis, Illinois Patrick J. Tiberi, Ohio Ed Case, Hawaii Ric Keller, Florida Raul M. Grijalva, Arizona Tom Osborne, Nebraska Denise L. Majette, Georgia Joe Wilson, South Carolina Chris Van Hollen, Maryland Tom Cole, Oklahoma Tim Ryan, Ohio Jon C. Porter, Nevada Timothy H. Bishop, New York John Kline, Minnesota John R. Carter, Texas Marilyn N. Musgrave, Colorado Marsha Blackburn, Tennessee Phil Gingrey, Georgia Max Burns, Georgia Paula Nowakowski, Staff Director John Lawrence, Minority Staff Director ------ C O N T E N T S ---------- Page Hearing held on April 28, 2004................................... 1 Statement of Members: Boehner, Hon. John A., Chairman, Committee on Education and the Workforce.............................................. 2 Prepared statement of.................................... 4 Miller, Hon. George, Ranking Member, Committee on Education and the Workforce.......................................... 4 Norwood, Hon. Charlie, a Representative in Congress from the State of Georgia, prepared statement of.................... 36 Owens, Hon. Major R., a Representative in Congress from the State of New York, prepared statement of................... 25 Statement of Witnesses: Bird, Ronald E., Chief Economist, Employment Policy Foundation, Washington, DC................................. 41 Prepared statement of.................................... 44 Chao, Hon. Elaine L., Secretary, U.S. Department of Labor, Washington, DC............................................. 7 Prepared statement of.................................... 9 Fortney, David S. Fortney, Esq., Partner, Fortney & Scott, LLC, Washington, DC........................................ 52 Prepared statement of.................................... 55 Smith, Karen Dulaney, Wage and Hour Consultant, Austin, TX... 47 Prepared statement of.................................... 50 Additional materials supplied: AFL-CIO, Working Families e-Activist Network, TV Ad and e- mail, ``Help Stop Bush's Overtime Pay Take-Away with Ads'', April 13, 2004............................................. 65 American Bankers Association (ABA), News Release, ``ABA Statement on Labor Department Final Overtime Rule'', April 20, 2004................................................... 100 American Insurance Association (AIA), Press Release, ``AIA Praises New Labor Regulations'', April 20, 2004............ 109 Americans for Tax Reform (ATR), News, ``Labor Department Announces New Rule to Clarify 50-Year Old Regulations and Increase Overtime Pay for Millions of Workers'', April 20, 2004....................................................... 113 The American Legion, Letter to Secretary Chao, April 26, 2004 28 Associated Builders and Contractors, Inc., (ABC), News Release, ``ABC Applauds Labor Department Effort to Revise Outdated Rules Under Fair Labor Standards Act'', April 20, 2004....................................................... 102 Disabled American Veterans, Letter to Secretary Chao, April 26, 2004................................................... 29 Food Marketing Institute (FMI), Press Release, ``Food Retailers and Wholesalers Applaud DOL for Rewriting Overtime Rules for the 21st Century Economy'' April 20, 2004....................................................... 107 Fraternal Order of Police, Letter and Press Release, ``Final DOL Regulations Protect and Expand Overtime for America's First Responders'', April 20, 2004......................... 21 Heritage Foundation, WebMemo 485,''The New Overtime Regulations: Clearer Rules, Fewer Conflicts'', April 20, 2004....................................................... 106 Johnson, Cheryl, RN, President, United American Nurses, AFL- CIO (UAN), April 28, 2004.................................. 116 Mortgage Bankers Association (MBA), Statement by Kurt Pfotenhauer, Senior Vice President of Government Affairs, ``MBA Applauds Department of Labor for Modernizing the Fair Labor Standards Act'', April 20, 2004...................... 110 National Association of Convenience Stores (NACS), Press Release, ``Convenience Store Industry Commends Labor Department's Efforts on `Fair Pay' Overtime Initiative Under FLSA'', April 20, 2004............................... 114 National Association of Manufacturers (NAM), Press Release, ``NAM Welcomes Labor Dept. Announcement of Update of Nation's Antiquated Overtime Regulations'', April 20, 2004. 112 National Association of Mortgage Brokers, Press Release, ``Mortgage Brokers Applaud DOL Overtime Regulations'', April 22, 2004............................................. 99 National Council of Chain Restaurants, of the National Retail Federation, News Release, ``NCCR Welcomes Updated Overtime Rules'', April 20, 2004.................................... 98 National Federation of Independent Business (NFIB), News, ``NFIB: DOL Overtime Rule Offers Clarity for Small Business'', April 20, 2004................................. 108 National Restaurant Association, Press Release, ``National Restaurant Association Recognizes Labor Department's Modernization of Overtime Regulations'', April 20, 2004.... 111 National Retail Federation (NRF), News Release, ``Retailers Welcome New Overtime Regulations'', April 20, 2004......... 115 Retail Industry Leaders Association (RILA), RILA News, ``Retail Industry Leaders Association Applauds Release of New Overtime Regulations'', April 20, 2004................. 101 Society for Human Resource Management (SHRM), PR Newswire, ``New White-Collar Exemption Rules Expected to Bring Clarity to Workplace'', April 20, 2004..................... 103 U.S. Chamber of Commerce, Letter to Chairman John Boehner, April 28, 2004............................................. 87 U.S. Chamber of Commerce, Press Release, ``Chamber Welcomes White-Collar Overtime Reform'', April 20, 2004............. 97 U.S. Department of Labor, Fair Pay Facts, Overtime Security for the 21st Century Workforce, ``AFL-CIO Distortions Harm Workers''.................................................. 81 Veterans of Foreign Wars of the United States, Letter to Secretary Chao, April 22, 2004............................. 30 ASSESSING THE IMPACT OF THE LABOR DEPARTMENT'S FINAL OVERTIME REGULATIONS ON WORKERS AND EMPLOYERS ---------- Wednesday, April 28, 2004 U.S. House of Representatives Committee on Education and the Workforce Washington, DC ---------- The Committee met, pursuant to notice, at 10:35 a.m., in room 2175, Rayburn House Office Building, Hon. John Boehner (Chairman of the Committee) presiding. Present: Representatives Boehner, Petri, Ballenger, Hoekstra, McKeon, Castle, Johnson, Norwood, Isakson, Biggert, Platts, Tiberi, Keller, Wilson, Cole, Porter, Kline, Carter, Blackburn, Gingrey, Burns, Miller, Kildee, Owens, Payne, Andrews, Woolsey, Hinojosa, McCarthy, Tierney, Kind, Kucinich, Wu, Holt, Davis of California, McCollum, Grijalva, Majette, Van Hollen, Ryan, and Bishop. Staff present: Kevin Frank, Professional Staff Member; Ed Gilroy, Ed, Director of Workforce Policy; Donald McIntosh, Staff Assistant; Jim Paretti, Professional Staff Member; Molly Salmi, Deputy Director of Workforce Policy; Kevin Smith, Communications Counselor, and Jo-Marie St. Margin, General Counsel; Jody Calemine, Minority Counsel Employer-Employee Relations; Margo Hennigan, Minority Legislative Assistant/ Labor; Tom Kiley, Minority Press Secretary; John Lawrence, Minority Staff Director; Marsha Renwanz, Minority Legislative Associate/Labor; Amy Rosenbaum, Minority Special Assistant for Policy; Peter Rutledge, Minority Senior Legislative Associate/ Labor; Michele Varnhagen, Minority Labor Counsel/Coordinator; and Mark Zuckerman, Minority General Counsel. Chairman Boehner. A quorum being present, the Committee on Education and the Workforce will come to order. We are meeting today to hear testimony on assessing the impact of the Labor Department's final overtime regulations on workers and employers overtime regulations. For those who are standing and who would prefer to sit, the Committee has made available 2257 directly upstairs as an overflow room where you'll be able to hear and see the testimony that the Committee will receive today. Opening statements are limited to the Chairman and the Ranking Member. If other Members have statements, they can be submitted for the record. And with that, I ask unanimous consent for the hearing record to remain open for 14 days to allow Member statements and any other extraneous material referenced during the hearing to be submitted for the official hearing record, and without objection, so ordered. STATEMENT OF HON. JOHN BOEHNER, CHAIRMAN, COMMITTEE ON EDUCATION AND THE WORKFORCE Chairman Boehner. Good morning, Madam Secretary and all of our guests today. Thanks for coming. Today our focus will be on evaluating the Labor Department's final regulations on overtime pay, its impact on workers and employers, and how these rules will work in practice. There's been a lot of information and misinformation about this proposal, and this is why we're here today, to hear directly from the Secretary of Labor and other distinguished witnesses. For years we've known that the Fair Labor Standards Act regulations governing overtime are complex, confusing and often incite needless litigation. As a result, these outdated rules make it next to impossible for workers to know whether they are entitled to overtime, for employers to know how to pay their employees, and for the Labor Department to enforce these workforce protections. Moreover, millions of low wage workers who should be earning overtime pay currently are not. Modernizing these decades-old regulations has been on the agenda of every administration, Republican and Democrat, for the last 20 years. In March of 2003, the Department began this difficult effort by offering a draft proposal to update these outdated rules, which have not been substantially changed in 54 years. Unfortunately, the American people were subjected to a campaign of misinformation based on fear, distortions and untruths. Some attempted to paint this draft proposal as an attack on workers, falsely claiming it would eliminate overtime pay for millions, which is simply not true. After reviewing more than 75,000 public comments on the draft proposal, both positive and negative, the Department published its final rule last week, and I'm pleased that Secretary Chao is here with us today to tell us more about the facts. As Joe Friday said, ``just the facts, ma'am.'' It's important that we come into this hearing I think with an open mind and ready to listen. It's troubling that some seem to have reached conclusions about the final rule even before it was issued last week. It appears that the Labor Department has worked very hard to address legitimate concerns raised by both workers and employers, but I want to hear directly from the Secretary and other witnesses, and this is why we're holding this meeting today. Numerous changes were made to the final rule issued last week. For example, the final regulation ensures that workers making less than $23,600 annually will automatically be entitled to overtime pay. It's unacceptable that today's outdated regulations would allow someone earning as little as $8,060 to qualify as a white collar employee and therefore prevented from receiving overtime. According to the Department's analysis, the final regulation will extend new overtime rights to an estimated 1.3 million American workers and strengthen existing overtime protections for 5.4 million working Americans. The Department's economic analysis of its final overtime rule indicates few, if any, workers making less than $100,000 per year will be adversely affected by the final regulation. The Department estimates the only workers who will likely be affected are those making more than $100,000 annually whose white collar job responsibilities qualify them as exempt from overtime. According to the Department, no more than 107,000 workers nationwide fall into this highly compensated category. And finally, and I think most importantly, the Department's final rule protects the overtime rights of blue collar workers, union workers, nurses, veterans, firefighters, policemen and similar public safety workers and responds to concerns raised with the earlier draft regulations during the comment period by ensuring the overtime rights of these workers are not affected under the final rule. Our focus here today should be putting more money into the pockets of working Americans, not trial lawyers. Because of confusion over these outdated rules, class action overtime lawsuits are now the fastest growing category of employment litigation. I had dinner on Saturday night with a labor attorney who basically represents employers, and he told me, he said, ``If it weren't for the job that I have, I'd be a plaintiff's attorney out filing these litigation suits, class action suits on FMLA, because they are so outdated, there's so much confusion, and I could make a whole lot of money.'' I said, ``Well, thank you for not doing it.'' Doing nothing would be a victory for the trial lawyers who have lined their own pockets with gotcha class action lawsuits. Clearer rules will reduce the cost of litigation, encourage employers to hire more workers, and strengthen current law overtime protections for American workers. This is especially important for the millions of low wage workers who will receive new overtime pay protections under the final rule. I want to commend the Department for its willingness to make adjustments in the final regulation and urge everyone to listen to the facts and put election year politics aside. I think the Department has taken great steps and exhibited great courage in doing something that administrations for 20 years have attempted to do but never gotten very far. This is good for American workers. It's good for American employers, and good for the American economy. And I'll now yield to my friend and colleague, Mr. Miller. [The prepared statement of Chairman Boehner follows:] Statement of Hon. John A. Boehner, Chairman, Committee on Education and the Workforce [GRAPHIC] [TIFF OMITTED] T3385.001 ------ STATEMENT OF HON. GEORGE MILLER, RANKING MEMBER, COMMITTEE ON EDUCATION AND THE WORKFORCE Mr. Miller. Thank you, Mr. Chairman. Thank you for holding this hearing, and Madam Secretary, thank you for being here. History very often is in the eye of the beholder. I would tell a different history of these regulations. I would tell a history of regulations that were published and said that they were going to strengthen overtime protections for workers and extend them to millions of low income workers, and then upon analysis of those regulations by many, many parties, it became very clear that not only would these regulations extend overtime protections to millions of low income workers, it would threaten the overtime protections to millions of other workers. That history is validated by the fact that on a bipartisan basis, both the House and the Senate rejected the idea of these regulations, and the most dramatic retreat from those original regulations by the Department of Labor as they submit these final regulations for our consideration. I would suggest to you that in the time available to read and analyze the 530 pages of these artfully crafted new regulations, it's clear to me and I think to many others who have undertaken the beginnings of the analysis that the policy continues, and that is to cut the overtime protection for millions of workers, in this instance those workers between the base salary of $23,660 and the ceiling of $100,000. That when you look at the number of workers who can be adversely affected in these new regulations, you start to see the potential of millions of employees who are in that situation; employees working in financial services, chefs, computer programmers, route drivers, assistant retail managers, preschool teachers, team leaders, working foremen and many other categories that are created in these regulations either in reactions to lawsuits or the interests of specific industries within the country that have been seeking these changes for a number of years. And I think that we'll see that your dinner guest will find himself well compensated by continuing to go to court by the flood of litigation that will be created by the definitions within these new regulations. So he will continue to do very well. Later today we will hear from a witness, Karen Smith, who served as a Department of Labor Wage and Hour investigator in the Reagan, Bush and Clinton administrations and a management consultant for employers for the last several years, and will explain some of the nuances and the definitional context of these regulations that threaten the overtime protection of millions of workers, as have other analysts who have had a chance to look at these regulations. What I don't understand is why we continue to see this assault on middle class working Americans by the Bush Administration. We all applauded the effort to raise the income ceiling on those who would be eligible for overtime protections. There was no disagreement on either side of the aisle about that effort. What we don't understand why then that good deed has to be extracted by putting other people who have overtime rights today at risk. Middle class Americans face so many problems today-- shrinking real pay, higher cost of basic benefits, greater competition for employment, downsizing, outsourcing, higher costs of higher education and all that goes on with maintaining your economic status in this country and the ability to provide for your family. But one problem they don't have is too much money from overtime. And to suggest now that these regulations are going to start curtailing the access to overtime for millions of America's families who need that. We all understand the overtime in the workplace is a love-hate relationship. We love it at the end of the year when it's in our W-2 form, but we had it on a Friday night when we're asked to work it, and we hate it when we're asked to work overtime when we know we now have to adjust the time of our daycare arrangements, the time of dinner for our family, whether we're going to have a vacation, whether we're going to be able to go to the movies or we're going to be able to take care of other needs of the family. But we work it, and we get a premium pay for that reason. Under these regulations for millions of workers in the categories that I have named, and we'll go into detail later, they're going to find out that they're going to work the overtime; they're just not going to get the pay. But that's what these regulations were designed to do in a whole range of industries. So, again, I would go back to the original plea that many of us made when the initial regulations were put forth, those that have now been withdrawn. I would hope that we would go back to holding harmless those individuals that currently have overtime. Why are we taking away the overtime of these individuals when for so many of them, it means whether or not they qualify for the mortgage on their house, whether or not they're going to be able to afford their car or finance their kids' education. That's what overtime means to millions of Americans. We wouldn't understand that in the Congress of the United States, because we only work a 3-day week or a 2-day week, so we never get up against those 40-hour weeks here in Washington. But for millions of Americans, they bump up against that 40 hours all the time, and they then have to restructure their life in order to keep their job, and they should be compensated for that activity. So I look forward to a discussion of these regulations, but I must say, I must say that I am deeply disturbed that millions of Americans will have the threat to what they now have the right to, and that is overtime compensation for overtime worked put at risk because of these regulations. Thank you, Mr. Chairman. Chairman Boehner. It's now my pleasure to introduce our first panel today. The Honorable Elaine Chao is the nation's 24th Secretary of Labor, nominated by President Bush and confirmed by the U.S. Senate in January of 2002. Secretary Chao's previous government career included serving as Deputy Secretary of the U.S. Department of Transportation, Chairman of the Federal Maritime Commission, and Deputy Maritime Administrator in the U.S. Department of Transportation. She brings a wealth of business experience to the post of labor secretary, having worked as vice president of syndications at Bank of America Capital Markets Group, and as a banker with Citigroup. Secretary Chao has also served as director of the Peace Corps and as president and CEO of the United Way of America. She has received her MBA from the Harvard Business School and her undergraduate degree in economics from Mount Holyoke College. Secretary Chao is accompanied this morning by Ms. Tammy McCutchen, the Administrator of the Wage and Hour Division of the Department of Labor, which has principal oversight over the nation's Federal wage and hour laws. And with that, Madam Secretary, we're glad that you're here and we're anxious to hear from you. STATEMENT OF THE HONORABLE ELAINE L. CHAO, SECRETARY, U.S. DEPARTMENT OF LABOR, ACCOMPANIED BY TAMMY D. McCUTCHEN, ADMINISTRATOR, WAGE AND HOUR DIVISION, U.S. DEPARTMENT OF LABOR, WASHINGTON, DC Secretary Chao. Thank you, Mr. Chairman, and Members of this Committee, for the opportunity to discuss the Department of Labor's new overtime security rules, which are a tremendous step forward for America's workers. The new rules published in the Federal Register as of April 23rd strengthen and guarantee overtime pay protection for an unprecedented 6.7 million additional workers. They modernize and clarify what's often called white collar regulations that have not been substantially updated since 1949. As the world of work changes, these regulations remain frozen in time. They're difficult and sometimes nearly impossible to interpret or enforce in the modern workplace. They list positions which no longer exist like leg man, gang leader, straw boss, keypunch operators. This rule has been on the regulatory reform agenda of the Department of Labor since 1977 when President Jimmy Carter was in office. Because of the ambiguity and the outdated nature of these rules, a lot of workers are forced to resort to lengthy court battles and hire--spend money and hire lawyers to find out whether they're eligible for overtime. In fact, overtime complaints now generate more Federal class action lawsuits than employment discrimination class action lawsuits. There has to be a better way for workers to get the overtime that they've earned, and that's why the Department has developed stronger, clearer overtime rules to help working families. The final rules dramatically increase the number of workers who will be guaranteed overtime because the salary threshold has nearly tripled. Under the current regulations, workers earning more than $8,060 annually can be classified as executives and denied overtime protection. Under the new rules, workers earning up to $23,660 annually are guaranteed overtime regardless of their job title or responsibilities. Changing the salary threshold alone ensures overall protection--overtime protection for 6.7 million workers. That's 1.3 million workers who had no right to overtime at all, and another 5.4 million workers whose overtime rights were ambiguous at best. The first draft of this rule did generate a great deal of interest and discussion. Members of Congress expressed their views, and we received about 75,000 comments from the public. I want to say that we have listened very carefully to all these comments and concerns, and we have produced a final rule that puts workers' overtime protections first and it strengthens and clarifies their overtime protection. That's why, for example, we took the extra step of spelling out in the new white collar rules who is not impacted by them. For the first time in history, the overtime rights of police, firefighters, paramedics, emergency medical technicians, other public safety employees, licensed practical nurses, are explicitly protected in the Department's white collar overtime rules. And for the first time ever, the overtime rights of blue collar workers such as construction workers, longshoremen, factory workers, are spelled out plainly in these rules. The final regulations preserve overtime protections for veterans, cooks. They were never, never taken away. But again, to clarify that these overtime rules strengthen overtime protection, we have put in those occupations and those categories as well. We have also included union members and made sure that the final regulations preserve overtime protections for union members whose overtime pay is secured under a collective bargaining agreement. The new rules are very clear. One. Everyone who is paid by the hour is entitled to overtime. Two. All blue collar and manual laborers are entitled to overtime. All salaried workers earning less than $23,660 a year are entitled to overtime, period, regardless of job title or duties. Salaried workers. Salaried workers earning more than $23,660 annually must be paid overtime unless they perform executive, administrative or professional duties. Now, unfortunately, a great deal of misinformation and distortions harmful to workers have been spread about the impact of these rules. These rules have been attacked for taking away overtime rights when the exact opposite is true. The new rules either preserve existing definitions of executive, professional and administrative duties or make them stronger and clearer to protect workers based on current Federal case law or statutes passed by the Congress. With these new rules, workers will clearly know their rights to overtime pay, employers will know what their legal obligations are, and this Administration, which has set new records for aggressive wage and hour enforcement, will have updated and strengthened new standards with which to vigorously enforce the rules to protect workers' pay. In fact, just yesterday I announced a new wage and hour overtime security enforcement task force to ensure that workers' expanded overtime rights are secured. I met with our wage and hour district directors and charged them to help workers and employers know the facts about these new rules and not be misled by misinformation that is being spread. The final rule gives our Department investigators the tools with which to ensure overtime security for millions of workers. I have to say this to the Committee. I am deeply concerned about the campaign of misinformation about these new rules. The confusion it is designed to create will only harm workers by denying them good information about their overtime pay rights. To prevent that from happening, we have put a tremendous amount of effort into compliance assistance and maximizing our enforcement presence. Our goal is to ensure that workers get the overtime pay that they've earned, and that's why the Department has issued updated overtime rules that will strengthen and guarantee overtime protections for more workers than ever before. Mr. Chairman, thank you for inviting me to be here today, and I'll be more than happy to answer any questions that the Committee may have. [The prepared statement of Secretary Chao follows:] Statement of Hon. Elaine L. Chao, Secretary, U.S. Department of Labor, Washington, DC [GRAPHIC] [TIFF OMITTED] T3385.002 [GRAPHIC] [TIFF OMITTED] T3385.003 [GRAPHIC] [TIFF OMITTED] T3385.004 ------ Chairman Boehner. Madam Secretary, we appreciate the fact that you're here and again say how proud I am of you and your team at the Department for the job that you're doing in the face of what else happens in this town. Now we all know there's two things that happen in Washington. We do public policy, and unfortunately, we do it in a political setting. And the political battle on this issue has already begun, and I for one am disappointed that right out of the box, opponents of the Department's effort and the administration have sought to sling political mud rather than to discuss the substance of the new regulations themselves. For an example, the AFL-CIO has already mischaracterized these regulations as a ``pay cut'' quote/unquote. In fact, I believe that you would estimate that these rules will result in more overtime pay going into employees' pockets. And I'd like for you to expand on that. And as a follow-up, I think many of us would be interested to know that if this is really going to cost employers more money, why are so many employers wholeheartedly embracing these reforms? Secretary Chao. I would say that there's bipartisan support for reform of these rules. As I mentioned, these reforms have been on the regulatory agenda for well over 25 years. It's been there since 1977 when President Jimmy Carter was in office. I think what most people want is clarity. We need clarity in these much outdated rules so that workers know their overtime rights and so that employers can know what their legal obligations are and so the Department can again more fully vigorously enforce the law as well. So clarity is a very important part of why this updated rule is so much needed. Chairman Boehner. Somebody was whispering in my ear the other day that the AFL-CIO a week and a half before this regulation was issued were filming commercials attacking the proposed rule that they hadn't even seen yet. Do you know anything about this? Secretary Chao. The overtime rules were released on--they were announced on April 22nd. They were posted in the Federal Register on April 23rd, and the rules were not released in advance. Chairman Boehner. A number of us over the period between the draft regulation and the final regulation heard from nurses, both registered nurses and licensed practical nurses, about threats to their overtime. Can you explain to the Committee exactly how the final regulations treat registered nurses and licensed practical nurses, and about nurses whose overtime is guaranteed under a collective bargaining agreement? Secretary Chao. The new overtime rules actually strengthen overtime for licensed practical nurses. For the very first time, LPNs are specifically listed as being guaranteed overtime. Registered nurses' status remains unchanged. It is what the current rule says. Furthermore, registered nurses who are receiving overtime under collective bargaining agreements will continue to receive overtime, and if registered nurses are continuing to receive, they will continue to receive overtime. So these rules will be clarified. And, again, they are strengthened for LPNs, and the current rule on registered nurses will still remain the same. Chairman Boehner. Well, Madam Secretary, it's an honor for us to have you here once again before our Committee. You've been here many times. You have a distinguished career in public service. And I can't say it often enough how impressed I am that the Department would do something that needed to be done. Fifty-four years since any substantive changes to this law took place, and the confusion that exists in many workplaces is undeniable, both by employees and employers. And by bringing clarity to this and by doing your duty to look at the 75,000 comments that were made on the draft regulations, I think what we have before us is a set of regulations that are fair, that are understandable and will guarantee the overtime rights for millions and millions of American works. With that, I'll yield to Mr. Miller. Mr. Miller. Thank you. I'm not sure about your campaign of disinformation. I'm still not clear what you're talking about, but let's go to the specifics. First of all, in the previous proposed regulations, obviously various organizations across the country, myself included and many Members of the House and the Senate, talked about people who were going to lose their overtime under those regulations. Many of those people now have been explicitly exempted. So obviously there was some ambiguity. There was some concern about that, and those were changed. I don't think that was about misinformation. That was about the facts of people who under those regulations their right to overtime was placed at risk. Those have now been changed. The Secretary enumerated those. So let's just stick with that part of it. My concern is that under these regulations, there's still significant job classifications, Madam Secretary, that are in that zone between $23,660 and $100,000 that with the new regulations will find themselves certainly open to question as to whether or not they have a right to overtime. The suggestion has been that registered nurses' rights are absolutely protected. And yet the regulation has changed and the regulation appears to read that as long as they are given-- before you start shaking your head, let me finish reading it-- as long as they're guarantee the $455 per week that as long as that guarantee is there, then they're not necessarily guaranteed overtime as long as that base salary is guaranteed, and even with the insertion of the hourly wage in the discussion of that base salary. Journalists, you may have seen a number of commentaries in the paper, the question of whether they're included or not included is a determination of whether or not they're creative or not. If they're just gathering facts and information, if they're doing it on a big fire, they're out working long hours on whatever it is, they may or may not be exempt under that discussion. Chefs, we say that those chefs that have 4-year degrees are exempt, and we describe the duties that will make the exempt. And yet we know there are hundreds of thousands of chefs in this country that have 2-year degrees that do those exact same--those exact same duties in terms of creativity and the production of food for restaurants. Working supervisors. A concern has been raised there by a number of employee organizations. The question if you're designated a supervisor, and another time the separation had to be that you had to spend a lot of time supervising and not doing your regular work. You're working in a cannery, you're dumping tomatoes in the cannery, you're in the dumping bay, you have three or four other bays, and you're the supervisor, but all night long in your night shift you're still dumping tomatoes off of the truck, are you exempt or aren't you exempt? You're now a working supervisor. In the old days, because most of your duties was dumping tomatoes and supervising the bay to make sure that they got to the conveyor belt, that they got to the sorting belt, then they got--but now you're a working supervisor. Assistant retail managers I think provides the mechanism by which many retail employees will find themselves designated in managerial task. Again, they don't have to perform any great supervisory talents, and they can certainly perform the same work as those that they are supervising. A distinction that used to provide for your right to overtime or not has now been stripped from those regulations. I think it continues to go on, and you can make this argument even with respect to nursery school teachers under the new definitions because of the changes that have been made there. Computer employees. As you know, there were exemptions and distinctions were drawn among computer employees for those who were--in the previous regulation, those who achieved a level of proficiency in theoretical and practical applications that really set them apart from other employees. But now we see that really entry level computer employees also is open to question in these regulations, serious question I believe, as to whether or not they in fact will be protected for overtime as they are today because those distinctions are stripped from the regulations as they currently exist. And so what I think you're seeing here is that these regulations were written with a purpose, and they're written with an understanding of those distinctions that protected people's rights to overtime within those industries, because obviously, as you and the Chairman have stated, these regulations have not changed for a number of years, and so there's a body of law that has been built up. There's interpretations of your wage and hours inspections, and those people have their rights protected. Those now are thrown into jeopardy. Finally, on another one in the name of modernizing these rules in the new multi-task world, if you did inside sales at a previous time, you were provided overtime. But as I read the definition of employees in financial services generally meet their duty requirements for the administrative exemption if their duties include work such as collecting, analyzing information regarding the customer's income, assets, investments or debts, determining which financial products are best to meet the customer's needs, the financial circumstances, advising the customer regarding the advantages and disadvantages of different financial products, marketing, servicing and promoting the employer's financial products. Individuals who do all those and which you find out now in the modern world if you call a Citicorp or you call a Wells Fargo, you find out that there's one person on the other end of the line that does all of those things. They help you determine whether your mortgage payments are in line or not, but they also then start asking you if you want additional products, would you like a home equity loan, would you like a credit card, can they help you with a student loan. But the regulation says in a little however, if the employee whose primary duty is selling financial products, he does not qualify for this administrative exemption. But the multi-task employee who is selling the financial products would be exempt from overtime. So there's a little flag at the end that says make sure you don't designate these people as primarily selling the products. So there's a whole class of people who had rights to overtime before who now under that definition in the new multi- task world will find out that they in fact do not have the availability of that overtime to them. And the classifications, job classifications, there are numerous other ones where these situations continue to exist in terms of mobile technicians, in terms of route drivers, all of which are brought into question by these regulations. I do not think that's misinformation. I think those are very legitimate questions given the language used in the new regulations, the body of law that existed, both administrative law and judicial law that existed prior to the changes to these regulations and those people who are impacted by them. Thank you, Mr. Chairman. Secretary Chao. Is there a question? Chairman Boehner. The Secretary may respond if she chooses. [Laughter.] Secretary Chao. Well, I'm very glad, Mr. Miller, that you brought these concerns up. Because once again, the extent of your litany of occupations reflect the tremendous confusion that surrounds the current rule. Our new rules are built upon the current rule and also current case law. And rather than have people have to do a great deal of research, we have clarified these rules, encompassing once again current rule and case law. Some of the jobs that you've mentioned didn't exist 40 years ago, which is why it is very important that this rule be updated to reflect the occupations and the positions which currently exist. Overtime rights are expressly guaranteed, for example, for manual and blue collar workers in what are white collar regulations. Because there has been disinformation going on and a lot of workers have been scared, we went the extra length of including in the final rule expressly overtime protection rights for workers who would not have normally been affected by this rule. We wanted to ensure that they get overtime, which is why in order to fight the misinformation, we made sure that their overtime guarantee rights were explicitly included. As I've said in my testimony, the new rules do not expand the category of workers who do not receive overtime. They are as equal or more protective than current law. And if I can, I would like to ask Tammy McCutchen, Administrator of Wage and Hour, to address your particular occupations. Ms. McCutchen. My notes, I think you mentioned eight--nine occupations, and I'd like to start with the last ones first. First, on technicians, in particular engineering technicians. In the preamble we cited to and agreed with the comments that were filed by the engineering technicians who work at Boeing, and we agreed with them in our preamble that they are entitled to overtime pay. On financial services, the section on financial services reflects the current sections at 201(a)(2), 205(c)(5), 205(d) and also adopts the current case law, Reich v. John Alden in '97 in the First Circuit, Hogan v. Allstate from the 11th Circuit in 2004, and Wilson v. Allstate decided by the Middle District of Georgia in 2002. What we did was we took that current case law, we read what it said and we adopted it and put it in the regulations so that employees and employers don't have to hire a lawyer to go find the case law that's not reflected in the current regulations, because, as the Secretary said, 50 years of Federal court case law is not reflected in the current litigation. On computer employees, what we did on the computer employees is adopt virtually word for word the 1990 and 1996 statutory amendments passed by Congress regarding computer employees. It also reflects the current sections at 205(c)(7) and 207(c)(7). On nursery school teachers, this is one I'm particularly puzzled about, and I want to read to you the current regulations at 541.301(g)(2), which regards the exemption for teachers. And what section says is that teaching--exempt teachers include, quote, ``teachers of kindergarten or nursery school pupils.'' That is in current Section 541.301(g)(2). And we took the language from the exiting regulation and repeated it in the final. So since it's the exact same words as the current regulation, it cannot be a change in the law or less protective than the current regulations. On assistant managers and working supervisors, we adopted a series of case law, Burger King and Dairy Queen cases. There are about six Federal cases cited in our preamble which discusses when an assistant manager is exempt and when he is not exempt. And in particular, we retained in the final regulation language that specifically states--and this is from--excuse me. This is from existing--it's in the final regulation at 106(c), which specifically states that working supervisors and relief supervisors are entitled to overtime pay. We used two examples: a relief supervisor working on a production line, and an electrician who is directing the work at a constructionsite. On chefs, the rule that we adopted says that only chefs who have advanced 4-year college degrees in the culinary arts can be denied overtime pay, and we clarified that ordinary cooks and any other type of cook or chef who does not have a 4-year post-high school degree cannot be denied overtime pay. On journalists, our preamble discusses a series of about six cases that have been decided over the last 10 years defining who--which journalists are entitled to overtime pay and which are exempt. And again, what we did in our final rule is discuss the cases in the preamble, read the cases, determine what the Federal courts said and write that into the regulation. Finally, the section that you referred to on nurses about minimum guarantee plus extra, that section has been in our field operations handbook for decades. And what we did is we took a section that has been a long-standing position of the Department of Labor available to employees and employers only by filing a FOIA request and getting a copy of the field operations handbook, and we put that in the final regulation instead so that employers and employees can have easy access to a policy that's been in place at the Department for years. I think I covered it all. Mr. Miller. I appreciate that. And that's your story, and stick to it. But again, I think if you read the language on the primary duties of chefs, you will see that you create a definition there of people who don't have a 4-year degree who carry out those duties. And the same is true on financial services. Chairman Boehner. The gentleman's time has expired. The Chair recognizes the gentleman from North Carolina, Mr. Ballenger. Mr. Ballenger. As a member of this Committee for 20 years, and I'd like to say right to start with that I've employed people in my business back home since 1948, 25 at that time and 300 now, and if they think the rules are so simple right now, they've got to have their heads examined because supervisors have always been exempt as long as somebody can make up a story about what a supervisor is. And you all have firmly come out with an answer of what supervisor responsibilities are. But I'd like to--he mentioned in his opening thing about computers. And as I remember, we were here I think, the senior member and myself were both here at the time that we passed a regulation. Let me just ask the question. The regulations include slightly different exemption rules for computer employees, and those rules were mandated by us here in Congress back in 1990. Can you tell us briefly what those rules are and how the final regulation before us today affects computer employees? Secretary Chao. I'd be more than glad to. As I mentioned, on the issue of computer technicians, we basically followed the will of Congress. And so there was a legislative act in 1996, and we basically incorporated what that legislative rule, or what that legislation basically said. If I can, I'll ask Tammy to cite it in greater detail. Ms. McCutchen. The regulation that was passed in 1996 exempted only certain high level computer employees who were involved in design and programming. And our rule adopts that almost word for word. One of the things that was in the regulations before Congress acted and which I have heard people talk about incorrectly is that the Congressional action did not include a requirement that computer employees who are exempt need to exercise discretion and independent judgment. Our regulation prior to 1996 had included that additional requirement, but the Congress took it out in 1996, and therefore we had to take it out, we believe, in order to follow the will of Congress, that additional requirement. Everything in the computer exemption is the same as the Congressional action in 1996. Mr. Ballenger. Thank you, ma'am. And, Madam Secretary, during the debate on the proposed regulation, we heard a lot of numbers thrown around, in particular a study done by an organization called the Employee Policy Institute, or EPI, which garnered a lot of media attention. And I think it's important to note for the record that while EPI may call itself an objective think tank, its board of directors reads like a Who's Who of organized labor, including as chairman of the EPI board the president of AFSCME, and as a board member, the secretary and treasurer of the AFL-CIO and current presidents in half a dozen of the country's largest unions. Now these may be good and honorable people, but I wouldn't exactly call them objective or nonpartisan. And the fact that all of these unions and more are listed prominently as financial donors and supporters of the EPI gives me some pause in accepting EPI's analysis as fair and unbiased. But putting that aside, Madam Secretary, and addressing the EPI study on its merits, did the Department examine EPI's report and the conclusions reached in its study? Which is--what is the Department's response to EPI's claims? Secretary Chao. I think you also did not mention that they're housed at the AFL-CIO as well. Nevertheless, the claims are false. Their assertions demonstrate that they do not understand the current rule. And I would like again Tammy, who has analyzed this study, to elaborate a bit more on that. Ms. McCutchen. There's actually a very thorough response to the EPI study that is included in the economic report that was published with the final rule, and it's available on the Department's web page. In general, their report included broad classifications of employees who are entitled to overtime and will not see any change under this rule. For example, they included in their figures every cook in America. And I think that we have clarified in the final rule that ordinary cooks are not exempt. They also included a large number of employees who work only part time and thus by definition do not--you know, work 20 or 30 hours a week and never get close to 40 hours a week. And so these types of mistakes that they've made about the current law continue to add up and makes their number far larger than it could possibly be when you look at the current case law. A good example is the computer employee example we discussed. How can employees be losing overtime when all we've done is adopted the will of Congress in the 1996 enactment? Mr. Ballenger. Well, I'd like to thank you, Madam Secretary. Having been on this Committee for almost 20 years, attempting to correct this law is a wonderful effort on your part. And the fact is, it's somewhat considered like we used to in politics used to talk about Social Security, touching the third rail and being electrocuted by the effort. I think you're doing an excellent job, and I'd just like to thank you profusely as an employer who has been trying for 40 years to figure out how we can work out overtime, how you do figure overtime, how you don't figure overtime, and it's very difficult. It really is. I mean, it's so nebulous that the description that we have a law that everybody can understand is making a lot of trial lawyers very wealthy in efforts to prove that point. Secretary Chao. Thank you. Our intent as always is to strengthen and guarantee overtime protection to millions more Americans. Mr. Ballenger. Thank you. Secretary Chao. Thank you. Chairman Boehner. Mr. Kildee. Mr. Kildee. Thank you, Mr. Chairman, Madam Secretary. I go home every weekend and generally after mass I go to a few union halls and talk to union people and they certainly were very alarmed when your first proposed regulations and had a $60,000 figure, and then it was changed--well, proposed, and then changed to $100,000. But they're still very skeptical. What assurances can I give them that the $100,000 figure will not be unilaterally rolled back, since this is within the purview of the executive branch of government, unilaterally rolled back to $60,000 or some lesser figure, or that the classifications that you have moved around a bit will not be changed? Secretary Chao. First of all, union members covered by collective bargaining agreements are not impacted at all by this rule. Because of the misinformation that was being circulated, we went out of our way to put in the final rule express overtime guarantees for union members who have overtime protection under the collective bargaining agreement. So that's the first point, if I could. Secondly, we have gone beyond what was expected, because we wanted to combat some of this misinformation, we expressly put overtime guarantees for union members who are under collective bargaining agreements. Because union members under collective bargaining agreements will abide by the collective bargaining agreement, and when they get overtime, that will of course remain the same. The salary level. This is a regulation. Once it goes final, it cannot be unilaterally rolled back. It's not like an executive order. So the $100,000, first of all--I want to clarify several things, but the $100,000 salary threshold, that will be there because it's part of the regulation. It will not be rolled back. And let me also clarify, this $100,000 does not apply to hourly workers. It does not apply to blue collar workers. It's only for white collar workers who are in supervisory or managerial positions. Mr. Kildee. First of all, I want to make it clear that labor unions, their interest goes beyond their own membership. They are concerned beyond just their own members. But let me ask you this question also. New Section 541(4) says that nothing in the regulation relieves employers from their contractual obligations under collective bargaining agreements. If the union contracts simply refers to applicable law for overtime eligibility, a union worker will be directly and immediately affected by these regulations when they take effect. Isn't that true? Secretary Chao. I'm sorry. I didn't hear the question. If you could repeat that, please. Mr. Kildee. If union contracts simply refers to applicable law for overtime eligibility, a union worker will be directly and immediately affected by the applicable law then? In other words, if the-- Secretary Chao. No. If a worker is under a collective bargaining agreement, they're covered by the collective bargaining agreement, and it is not impacted by these white collar regulations. Mr. Kildee. But if the contract refers only to the Wage and Hour Act, it says the overtime shall be in accordance with the Wage and Hour Act, then they would be affected by your changes in the Wage and Hour Act. Secretary Chao. Well, I don't think so. And I will give you another example. Just because-- Mr. Kildee. Well, they would be. Secretary Chao. A collective bargaining agreement when it expires, for example, wages don't go back to minimum wage. They're $5.15. So there's no impact for union members under collective bargaining agreements. Mr. Kildee. All right. Secretary Chao. And if I can ask Tammy perhaps she can clarify that a little bit further. Mr. Kildee. Let me say, if the contract were to say that the overtime would be in conformity with the Wage and Hour Act, then that would affect the results of the contract. Now, if they say they have to get their own language in rather than the Wage and Hour Act, that puts more things on the negotiating table and creates a greater onus for the bargaining unit then if that's part of the collective bargaining; whereas if they could refer to a reasonable Wage and Hour Act, they could feel better protected. But if they have to go beyond the Wage and Hour Act because they feel it no longer is protective enough, then that becomes part of the negotiations, which puts a greater onus. There's only so much you can put on that table for negotiating. Secretary Chao. As I mentioned, union members under collective bargaining agreements are not impacted. But let me ask Tammy McCutchen perhaps to clarify it even further. Ms. McCutchen. Thank you, Madam Secretary. First of all, a union member, if you're paid by the hour you're entitled to overtime. It doesn't matter what's in--that's what these rules say. And so if you're a union member who is paid by the hour, you're entitled to overtime. If you perform blue collar or manual labor, 541.3 clearly states you're entitled to overtime. So these rules strengthen protections for union workers no matter what's in their collective bargaining agreements. Mr. Kildee. You still haven't answered my question. If-- Mr. Hoekstra. [presiding] The gentleman's time has expired. We're going to keep moving. I think the Secretary has limited time, and we obviously have a lot of member interest, so we're going to try to stick to the clock a little closer. Mr. McKeon? Mr. McKeon. Thank you, Mr. Chairman. Madam Secretary, I too want to thank you and your staff for the courage and the leadership that you're showing in trying to protect the workforce of America. In the public debate on the proposed rules issued last March, we all heard significant concern that the proposed regulations would have taken overtime pay away from policemen, firefighters, EMTs and other first responders. In that light, I was especially pleased to see that the final rule issued by the Department was endorsed by the Fraternal Order of Police, who noted, and I quote, ``These final regulations show that this Administration and the Department of Labor are responsive to the concerns of rank and file first responders.'' End quote. I would first ask that the statement of the Fraternal Order of Police be inserted in the record of today's hearing. I would also ask that the record include a letter from the President of the Fraternal Order of Police to the Committee setting forth the FOP's views on these final regulations. Mr. Hoekstra. Without objection, so ordered. [The provided material follows:] Fraternal Order of Police, Letter and Press Release, ``Final DOL Regulations Protect and Expand Overtime for America's First Responders'', April 20, 2004 [GRAPHIC] [TIFF OMITTED] T3385.005 [GRAPHIC] [TIFF OMITTED] T3385.006 [GRAPHIC] [TIFF OMITTED] T3385.007 ------ Mr. McKeon. Thank you, Mr. Chairman. That done, Madam Secretary, perhaps you could explain to us exactly how the final rule treats policemen, firefighters, EMTs and other first responders. Secretary Chao. The final rule strengthens overtime protection for these workers. And the Fraternal Order of Police supported the rule because it provides clearer, stronger overtime protection than ever before. As I mentioned, the final rule includes--expressly states the overtime protection for police, firefighters, first responders and other public health safety workers as well. And maybe, Tammy, you can elaborate on that as well. Ms. McCutchen. We inserted a brand new section, which appears at 541.3(b), and what that does is it first of all states that, you know, police officers and firefighters who are doing the day by day work of the public agency, who are investigating crimes and who are fighting fires, who are interviewing witnesses and collecting evidence are entitled to overtime pay. And in fact, we go further. In final regulation 541.3(b)(2), (3) and (4), we set forth why police officers generally do not qualify as exempt executive, administrative and professional employees. Secretary Chao. Thereby strengthening their overtime. Mr. McKeon. Thank you, Madam Secretary. I think in your testimony you explained clearly that any worker, no matter what his job or her job or job title, who makes $23,660 or less is automatically entitled to overtime. And I understand that there's a slightly different test for salaried employees who make more than $100,000 a year. It seems to me that there are a lot of workers right in the middle of that range, people making between $23,660 and $100,000. What is the Department's estimate of the impact of these final regulations on these workers? Secretary Chao. These final rules will help to strengthen overtime for these workers as well, because the erosion in our rule--the erosion in overtime protection comes about through the ambiguity of our rules. The best way we have to protect workers is to ensure that these outdated rules are brought up to date, that they no longer include positions which no longer exist, and that they fit a modern workplace. And so for the Department's estimates of these final impacts, again, we're going to get about--we're going to increase overtime protection for about 6.7 million workers because of the increase in salary thresholds. And then of the workers above that, we expect, again, strengthened overtime protection as well. Tammy, anything? [No response.] Mr. McKeon. Thank you very much. Secretary Chao. Thank you. Mr. Hoekstra. Mr. Owens? Mr. Owens. Thank you, Mr. Chairman. I'd like unanimous consent to submit a statement for the record. Mr. Hoekstra. Without objection. Which statement is that? Oh, your statement? Mr. Owens. To submit a statement in addition to what I'm going to say orally. Mr. Hoekstra. Without objection, so ordered. [The prepared statement of Mr. Owens follows:] Statement of Hon. Major R. Owens, a Representative in Congress from the State of New York [GRAPHIC] [TIFF OMITTED] T3385.008 ------ Mr. Owens. I also would like to make a correction of the Secretary's testimony. There are 2.4 million cooks employed in America. You stated that the EPI study said all 2.4 million would be exempt. EPI did not say that. EPI said about 400,000 would be exempt, and I think the record ought to be corrected in that respect. Secretary Chao. I didn't criticize EPI on that point. Mr. Owens. The question of compensatory time versus cash for overtime has been on the agenda for the last four or 5 years. As the Ranking Democrat on the Workforce Protection Committee, I've had to deal with that repeatedly. You did not deal with that in these regulations. Secretary Chao. Right. Mr. Owens. Compensatory time versus cash. Can we assume that's off the table and that's no longer going to be a matter of concern to the Labor Department, that we won't have to deal with that? These regulations will make it clear that we're talking about cash now and forever? Secretary Chao. This regulation has nothing to do with comp time. Mr. Owens. Yeah, but you're rewriting the rules. So since you left that out, we can assume that-- Secretary Chao. No. These rules have never had anything to do with the comp time. Mr. Owens. Well, an amendment, we proposed to amend the rules. Secretary Chao. No. Mr. Owens. We proposed to amend the rules to make compensatory time-- Secretary Chao. These are two separate issues. We never--we never anticipated including-- Mr. Owens. What law would we be amending if we dealt with compensatory time versus cash for overtime? Overtime is only one law. Ms. McCutchen. In order for there to be comp time, it has to be a statutory amendment. It is the Fair Labor Standards Act, and that talks about when you're entitled-- Mr. Owens. It has to be an amendment, right, to the Wage and Hour Act? Secretary Chao. But it is not part 541 of this rule. It's something completely different. Ms. McCutchen. It has not been amended, and the Department has never suggested that it be amended. Comp time has to do--it only applies to employees who are entitled to overtime. These are about white collar workers, and so it's a totally separate issue. We don't have any authority at the Department of Labor to make the statutory changes that would be necessary for anything like comp time. Mr. Owens. I'm talking about broader policy question. The Secretary is involved with policymaking. Chairman Boehner. [Presiding] If the gentleman will yield. No employee in the private sector is entitled to comp time in lieu of overtime pay. Only Federal workers, state workers and local government employees are entitled to comp time. Mr. Owens. Yes. Let's--and I was asking, Mr. Chairman-- Chairman Boehner. And that's under the law, not under regulations. It's under the law. Mr. Owens. Mr. Chairman, do we have your word that this is off the table and we won't have any discussion of it in the future? Chairman Boehner. Well, there's going to be a lot of discussion about it, because if it's good enough for Federal workers, state workers and local government workers, it ought to be good enough for our constituents who'd like to have compensatory time off in lieu of overtime pay. Mr. Owens. Thank you. I have one last point I want to clarify. The $100,000 ceiling. Do we have a ceiling right now of any kind? Secretary Chao. Yes. It's about $13,000. Mr. Owens. That's the ceiling now? Secretary Chao. Yes. That's why it needs to be--this rule needs to be updated. The ceiling is currently $13,000 for highly compensated executives. This is another example why this rule needs to be updated. Mr. Owens. A hundred thousand dollar ceiling means that that's a little less than $53 an hour if you are working an hourly rate. If an electrician working by himself, and there may be other people on the job, but he basically is not supervising anybody, and he works in a situation where the work is seasonal or there are gaps between one job and another so that during the course of the year he makes only $50,000 or $60,000, is his hourly pay such that he will not be eligible for overtime because he makes $53 an hour, $60 an hour? Secretary Chao. An electrician is not what's called under the terms a white collar worker. So, therefore, he would not be impacted at all by that $100,000 rule anyway. The $100,000-- Mr. Owens. Section 541.601(a)(3) says that seasonal and project workers who are paid pro rata at a rate that would push them higher than the $100,000 ceiling, even though they won't reach that mark because they only work eight or 9 months, will lose their rights to overtime pay. Maybe you can get that clarified and let us know in writing what-- Secretary Chao. I think it's pretty clear. The $100,000 is not definitive. It is only an upper salary threshold. It does not apply to blue collar workers. It does not apply to hourly workers. And it possibly may apply to a worker who is making $100,000 with job responsibilities that are more of a managerial or supervisory nature. Chairman Boehner. The gentleman's time has expired. The Chair recognizes the gentleman from Texas, the Chairman of the Employee-Employer Relations Subcommittee, Mr. Johnson. Mr. Johnson. Thank you, Mr. Chairman. Madam Secretary, you've already stated that you're authorized to make these changes, and I think the law does say that by regulation as the Secretary of Labor you can change these rules, and you've already stated that Republicans and Democrats alike over the years have attempted to make these changes. And one of the changes that you made in your proposal was removing the phrase ``training in the armed forces.'' That's so that anybody with military background, like mine, can obtain overtime pay under your regulations. As a matter of fact, Mr. Chairman, I've got three letters here from the American Legion, the Veterans of Foreign Wars, and the Disabled American Veterans all supporting this regulation. I would ask permission to put these into the record. Chairman Boehner. Without objection, so ordered. [The provided material follows:] The American Legion, Letter to Secretary Chao, April 26, 2004 [GRAPHIC] [TIFF OMITTED] T3385.009 ------ Disabled American Veterans, Letter to Secretary Chao, April 26, 2004 [GRAPHIC] [TIFF OMITTED] T3385.010 ------ Veterans of Foreign Wars of the United States, Letter to Secretary Chao, April 22, 2004 [GRAPHIC] [TIFF OMITTED] T3385.011 ------ Mr. Johnson. Thank you, sir. These are prominent veterans groups, and each one is thanking the Department for its work on the final rule, and each is appalled at the assertions that the proposed changes target veterans. Having fought in two wars myself, I was particularly angered over the undue anxiety that was placed on those proud veterans who have successfully transitioned into the civilian workforce. It's obvious to me that certain opponents of these regulations had scripted their opposition before even seeing the final regulation, as you indicated, Mr. Chairman. And I would ask that these letters be considered. And, Madam Secretary, do you care to explain what changes or clarifications were made with regards to overtime eligibility for our veterans? Secretary Chao. I do. And let me first of all say that the statute does say that the Secretary has the responsibility from time to time to define and delimit these overtime regulations. In fact, in the preamble it says allowing more time to pass without updating the regulations contravenes the Department's statutory duty to define and delimit the Sections 13(a)(1) from time to time. So in fact, we have a responsibility to keep these regulations up to date. Secondly, on the point of veterans-- Mr. Johnson. Well, you're doing a good job of that too, let me say. Secretary Chao. Thank you. Second, on the point of veterans, I was particularly concerned of the misinformation that's been spread about the veterans' status. So in the final rule, as I've mentioned, we've listened. We wanted to make sure that we got everything right. We went the extra step of making sure that this particular issue is addressed as well. And if I can ask Tammy to elaborate. Ms. McCutchen. The concern about veterans was raised under the professional exemption with questions about our intent on the educational requirements that are necessary in order to be exempt professionals. We state very clearly in the preamble, and we've restructured the professional exemption to clarify that we do not intend any changes to the education requirements to the professional exemption, and that's where we took out that language regarding training in the armed forces, attending a technical school and attending a community college from the final 541.301(d). We also addressed veteran status, particularly in two places in the preamble, making it very clear that veteran status has nothing to do with whether or not you're entitled to overtime. And I'd like to give you those pages. It's at 69 Federal Register 22149 and 69 Federal Register 22150. Mr. Johnson. Thank you, ma'am. I appreciate you taking care of our great veterans. Secretary Chao. Thank you. Mr. Johnson. And I know you do consider them in every place. Let me ask you another, or make a statement. I understand that more than 340,000 workers received a record of $212.5 million in back wages as a result of the Wage and Hour Division investigations last year, up from roughly 263,000 workers. That's another 100,000 plus who received $175 million in back pay in 2002. And I just want to congratulate you on a significant improvement, something I think we would all agree is an excellent result and ask you what is the Department's intent going forward with respect to enforcement of the new regulations. Secretary Chao. Thank you for asking that. As mentioned, I met with the Department's Wage and Hour district directors who are in charge of the investigators within the Department. We indeed have a very good record in terms of enforcement. We have recovered more back pay for workers than any other year or administration. And in fact, it's an 11-year high. So it is an enforcement record that we are justly proud of. I met with the Wage and Hour district directors yesterday to charge them with helping to inform employers and workers of the new overtime security rules. As I mentioned, there's been a great deal of misinformation and confusion about the current rule and about what is needed--about the final rule as well. So I spoke with them, and I asked that they make clarification, communication and enforcement of these new rules a top priority. These new rules are part of our enforcement effort, because the ambiguity in these rules are eroding workers' rights to overtime security. Mr. Johnson. Thank you for your concern. Thank you, Mr. Chairman. Chairman Boehner. The gentleman's time has expired. And if it weren't for the great Wage and Hour Division at the Department of Labor, I wouldn't have gotten the back pay, overtime pay that I was entitled to 32 years ago. With that, the Chair recognizes the gentleman from New Jersey, Mr. Payne. Mr. Payne. Thank you, Mr. Chairman. I just wondered if you might be able to give me the definition of team leader. Secretary Chao. Sure. Mr. Payne. It's a new category. I'm interested in what a team leader is. Secretary Chao. Sure. Mr. Payne, I think she-- Mr. Johnson. Can he turn his mic on, Mr. Chairman? Secretary Chao. Turn your microphone on. Anyway, I'll be more than glad to answer the issue about team leaders, because that is also an area of confusion. In fact our final rule strengthens overtime protection for workers, because we tighten up on the language and we clarify the language and narrowed its scope. And, Tammy, can I ask you to answer that? Ms. McCutchen. Certainly. What I'd like to do is read you the current law on this section. The current law appears at 541.205(c), and it states that employees who can be classified as administrative exempt employees who aren't entitled to overtime includes a, quote, ``wide variety of persons who carry out major assignments.'' So the current regulation says ``a wide variety of persons who carry out major assignments.'' What we've done in the final rule, which is 541.203(c), is we've stated that an employee who leads a team of other employees assigned to complete major projects for the employer, such as purchasing, selling or closing all or part of a business, negotiating a real estate transaction or collective bargaining agreement, or designing and implementing productivity improvements. That language strengthens overtime protections for employees in two ways. First, we say that only the leaders of these major project teams can be exempt rather than the current regulation, which says ``a wide variety of employees'' who work on major projects can be exempt. Secondly, we've defined what it means to carry out a major assignment and limited it to only those very significant assignments that happen in a corporation. We're not talking about people who lead teams to buy office supplies. We're talking about an employee who leads the team to purchase a business. So it's very much tightened and more protective than the current regulatory language. Thank you. Mr. Payne. Well, let me just say that, you know, there seems to be subjectivity. When you use terms--first of all, we create this new category, but then when we take terms like and we say this is clarifying 50 years of legislation that needs changing, but we use things like ``significantly'' or ``significantly change'' something, you know, what is significant to one person may not be significant to someone else. And so you're, you know, I think now we're getting into subjectivity. And the more that we tend to make new categories which tend to not be very clearly, you could have five typists and someone's got to maybe answer the phone and type and so that could be a team leader and therefore exempt. So I just think that although I looked at the web site and it's called the fair pay overtime initiative, sounds great, I've listened to titles for the last three or 4 years, and anytime--the better the title, the worse it was for the worker--before your time, Ms. Secretary. I mean, you know, flexible family friendly something what's meant, well, you don't get overtime. You can work 40, 50, 60 hours without overtime, and then when it gets slow, the employer can say you have tomorrow off, not when you want it, but when they want it. And so we just get concerned that this tremendous new thrust to assist workers when we've been attempting to increase the minimum wage from $5.15 it's so--gets you a little skeptical when we find that all of a sudden the Department of Labor is so friendly to workers that we want to enhance and improve them when we can't even get an increase in the $5.15 minimum wage. And so it tends to make some of us I guess who have been for a while a little skeptical and leery. And so when we see new terms and this sort of making it better, it just seems to me to be contrary to just a simple basic thing as why can't we increase the minimum wage in America from $5.15 an hour. So I'll yield back. Thank you. Chairman Boehner. The Chair recognizes the gentleman from Georgia, Mr. Norwood, the Chairman of the Workforce Protection Subcommittee. Mr. Norwood. Thank you very much, Mr. Chairman. And, Madam Secretary, we are all delighted you're here. I want to state for the record that I'm very grateful for what you're doing in these regulations, and I'd like to thank you for the 98 percent of the workers in my district in Georgia that aren't union members. I'd like to thank you for the employers in our district who hopefully will spend less time in court. And at the end of the day when the truth comes out and the facts are really known, I think probably I can come back and say I'm very grateful on behalf of the 2 percent of the union membership in my district. Now you've pointed out a number of things to me that I find interesting. The collective bargaining agreement, as you said, overrules these regulations. So in effect, this rule doesn't affect the 10 percent of the members in this country that are unionized. It affects the 90 percent that aren't, because they can fix their problems with a collective bargaining agreement. Isn't that what you said to me, or said to us? Secretary Chao. Yes. Mr. Norwood. I thought I heard it that way. There is, unhappily, during an election year, a campaign of distortion going on. My friend, Mr. Miller, doesn't believe it, but it is. And my concern about that is that when you put out misinformation, you scare people. I don't know if anybody's trying to scare people or not, but the workers of the country and in fact our colleagues have a reason to be concerned when they look to just one think tank to get their information. I am absolutely amazed--and everybody knows how it happens in this town--that when in doubt, hire a think tank, pay them, put them in your own office building and tell them how to think and ask them to do an analysis that suits you. And I think EPI, Economic Policy Institute, has done just that. Their board, as you pointed out, is made up mostly of AFL-CIO members. They're housed in that building. I don't understand how anybody can use that as analysis, because it is going to distort the information during an election year. Further, I am amazed that the solicitation and the storyboards in the AFL-CIO commercial claiming that these regulations would take away overtime for millions of Americans. Well, of course that would scare people if it were true. And what amazes me is all of this was prepared a week or two before the final, final, final regulations was made public to anyone. Did the Labor Department send these folks an updated or advanced copy of these new rules? How did they know to go out and start having a commercial to oppose regulations if you didn't send them an advance copy of the regulations? Secretary Chao. No. The Department did not send an advance copy. Mr. Norwood. Well, why would anybody want to have a negative commercial airing to scare people about regulations that they didn't know what the final regulation was? What is the point to that? Secretary Chao. One can only ask. Mr. Norwood. Well, the political battle is on. This is what this is all about. You've done a great job helping workers. But the problem is, we're in an election year. I'm very disappointed that right out of the box, opponents of your efforts and the Department's efforts and the Administration have sought to sling political mud rather than discuss the substance of these regulations themselves, for which I hope we're having a good conversation today. The AFL-CIO has already mischaracterized these regulations as a pay cut. Now my understanding is--maybe my think tank is telling me what I want to hear, too--but my understanding is that's not the case. In fact, I believe you estimated that these rules will result in more--underline ``more,'' please, ma'am--overtime pay going into the pockets of the employees. I want you to expand on that just a little bit for me. And as a follow-up, I think many of us would be very interested, Madam Secretary, to hear why if this really will cost more money, why in the world have so many employers wholeheartedly embraced these reforms? What are they thinking about? It's going to cost the employers of America a lot of money for you, Madam Secretary, to put these regs into place. Why are they supporting you on this? Secretary Chao. Well, workers are going to see an increase of approximately $375 million in overtime pay. That's what these new rules will accomplish. It will mean real money for workers. Mr. Norwood. You estimate that employers are going to pay $375 million more dollars than they pay today-- Secretary Chao. Every year. Every year. Mr. Norwood.--to employees. Why in the world are they for that? Chairman Boehner. The gentleman's time-- Mr. Norwood. Can the Secretary finish answering, Mr. Chairman? Chairman Boehner. The Secretary may respond. Secretary Chao. I think part of it, you will have to ask-- part of the answer, as we have seen submitted in some of the comments, which again, we have reviewed very carefully, is the desire for certainty and for predictability. And also, when the rules are unclear, workers are not protected either. [The prepared statement of Mr. Norwood follows:] Statement of Hon. Charlie Norwood, a Representative in Congress from the State of Georgia [GRAPHIC] [TIFF OMITTED] T3385.012 ------ Chairman Boehner. As everyone--all the members know--the bells have rung. There are two votes on the House floor. We will proceed quickly, I hope, with Mr. Andrews and Ms. Biggert, because by the time we get back, the Secretary will have run out of time. And so when we resume at approximately 12:30, we will resume with our second panel. Mr. Andrews. Mr. Andrews. Thank you, Mr. Chairman. I'd like to thank the Secretary and welcome her back to the Committee. It's always a pleasure to have her here. The good news is that I fixed the microphone. [Laughter.] Mr. Andrews. The bad news is that that makes me a learned professional so I can't get overtime anymore and I'm very upset about that. [Laughter.] Chairman Boehner. The gentleman was not entitled to overtime before he learned how to turn on his microphone. [Laughter.] Mr. Andrews. That's because I was presumptively creative, Mr. Chairman. The first question I have, Madam Secretary, is about nursery school teachers. Assume that we have a nursery school teacher who makes $25,000 a year, who presently receives overtime if she has to teach before eight o'clock in the morning or after four o'clock in the afternoon and she has a bachelor's degree in elementary and preschool education. Under this new rule, could her overtime be taken away? Secretary Chao. Tammy, can I ask you to answer that? Ms. McCutchen. Sure. The current rules list nursery school teachers. The current regulations list nursery school teachers as exempt teachers under current Section 541.205(c). But I think that's partly because nursery school teachers--nursery school doesn't mean today what it meant back in 1949. Long-standing wage and hour policy which we've adopted in the preamble in the final rule states that you're an exempt teacher if you're actually teaching. The key distinction is, are you involved in child care or are you actually imparting knowledge? Mr. Andrews. Let's say that what happens is the parents drop the children off at 7:30, and for that half hour, she's responsible for starting the day, telling the children what day it is, whether it's raining or sunny, and between three and four o'clock she reviews the lessons that were done during the day. I assume that's teaching. So that means she's now exempt and she would lose her overtime? Ms. McCutchen. It's hard to give a clear answer without more facts, but I think on the facts-- Mr. Andrews. What more facts would you like? Ms. McCutchen.--she would be entitled to overtime because her primary duty would not be teaching. Her primary duty would be child care. Mr. Andrews. So the difference between eight o'clock and three o'clock is child care and not teaching? Who's going to make that determination? Ms. McCutchen. Wage and Hour investigators with years and years of experience. Mr. Andrews. If she files a complaint. If she files a complaint. But if she just says-- Secretary Chao. That's why these rules are very important. Mr. Andrews. Right. Secretary Chao. Because we want workers to know their rights. Because when they know their rights, they can file these complaints. Mr. Andrews. One thing I do want to make clear, though, she doesn't make anything near $100,000 a year, but she may lose her overtime if the facts go the wrong way, right? This $100,000 a year-- Secretary Chao. Well, right now, right now it is so confusing that we can't even help her. She has to go to the courts and to hire a lawyer and wait a very long time before-- Mr. Andrews. But the fact of the matter is, if there's a determination that she's teaching between 7:30 and 8 and between 3 and 4 in the afternoon, then she loses her overtime, right? Secretary Chao. No. I'm sorry. No. I think under those facts, she would be entitled to overtime under existing long- standing wage and hour enforcement policy, and I want to emphasize again-- Mr. Andrews. But doesn't this rule--this rule changes that policy, doesn't it? Secretary Chao. No. It is not a change. That policy has been in the field operations handbook for decades. It is a long-standing policy. We are not changing the current law. I guess I'd like-- Mr. Andrews. Well, let me ask a question, then. Senator Harkin has a piece of legislation that says that people who presently are protected by the overtime law will be grandfathered, or grandmothered in this case, and still protected. I assume that you would support that legislation since it simply reiterates what you just told me? Secretary Chao. No, I do not, because Senator Harkin's amendment will add even more confusion to an already very confused area. And let me give you a reason. Mr. Andrews. Well, now-- Secretary Chao. Let me explain why. Mr. Andrews. Yeah, but, if I may, Madam Secretary, I want to come back to the point that your colleague made. She said that under my facts, the person right now is entitled to overtime and this doesn't change that. Well, if that's the case, why don't we just reiterate that in the statute and say that she's protected and it can't lose it under these new rules? Secretary Chao. Because the Harkin amendment would attach overtime guarantees to a person. So let's use Dick Grasso as an example. Dick Grasso started out at the New York Stock Exchange as a stock boy. He received overtime. Under the Harkin amendment, he would be guaranteed overtime for the duration of his career, even as he receives $148 million in additional pay. Mr. Andrews. I assume you're concerned about his other compensation he's been guaranteed as well. Let me ask you about chefs, because you made a comment about chefs. If you have a chef that's in the learned--excuse me, that's in the creative professional category, and the chef has less than this 5 years of education, can the chef lose his or her overtime? Ms. McCutchen. What we did is we adopted in--we discussed in the preamble an existing wage and hour opinion letter from some years back about florists and when florists are creative. Mr. Andrews. Right. Ms. McCutchen. And we applied that to creative professional exemption in discussing the creative professional exemption for chefs. Mr. Andrews. But there are chefs that have less than this minimum academic standard who could lose their overtime under the new rule, correct? Ms. McCutchen. Only if they're creating unique new dishes, like they're creating recipes themselves. Mr. Andrews. Every chef claims that he or she does that, right? Chairman Boehner. The gentleman's time-- Mr. Andrews. Thank you very much. Chairman Boehner. The gentleman's time has expired. The Chair recognizes the gentlelady from Illinois, Ms. Biggert. Mrs. Biggert. Thank you, Mr. Chairman. And first of all, let me associate my remarks with the Chairman's remarks on compensatory time. That is a statutory issue which is very near and dear to my heart. Madam Secretary, thank you very much for being here. As you know, we've heard in detail about a lot of misinformation spread around about these regulations. One concern that I've heard from my constituents is that these regulations somehow remove the concept of the 40-hour work week or that workers who are eligible for overtime in a week where they work more than 40 hours will now have their work schedule spread over 2 weeks or 80 hours before they are eligible for overtime. Is that true? Secretary Chao. These news rules will strengthen the 40- hour work week. The erosions in these rules in terms of accountability and relevance is hurting workers. So we need to have these--as we have seen already in today's meeting, there seems to be a great deal of ambiguity and confusion about the current rule. These rules are very prescriptive, and therefore, it is necessary from time to time that they be updated. So in fact these rules by being updated will help workers with the 40-hour work week. It will strengthen the 40-hour work week. Mrs. Biggert. Thank you for that clarity. And one other quick question. Although these regulations are broadly written and cover employees in a wide range of industries, I know the final regulations addressed with specificity a number of industries and occupations, including the financial services industry. And again, opponents claim that all these workers will lose overtime pay. Can you specifically tell me how the final rules apply to workers in the financial services industry? I think the insurance adjusters and funeral directors. Secretary Chao. I want to make sure that we have the exact answers, so let me ask Tammy McCutchen to address those as well. Ms. McCutchen. What we did in all of these categories-- financial services, insurance claims adjusters and funeral directors--is to adopt the existing Federal court case law. And we did not just list their title. We took the case law and we said, for example, financial services employees who collect and analyze financial information, who provide advice and consulting to a customer about which financial products are appropriate, are entitled to overtime consistent with the Federal regulation. For funeral directors, there are two Federal court cases that addressed funeral directors. And what they found is that a funeral director who has 4 years, three or 4 years of education beyond high school are exempt professionals, and we adopt those two cases. One of those cases was a 7th Circuit case, and another one is a 6th Circuit case. And what our rule says is not all funeral directors are exempt, but only those who have 4 years of college-level courses and are licensed by a state that requires that. The same is true for insurance claims adjusters. We adopted four Federal cases that address the exempt status of insurance claims adjusters. Mrs. Biggert. And then, quickly, why did the Department specify these segments in particular? Ms. McCutchen. Because these were segments in particular that in recent years have generated a lot of confusion and a lot of litigation. And in order to find out if you're in these industries, you can't go to the regulations and find out whether you're entitled to overtime or not. You have to basically get a lawyer who can do legal research for you. And we felt it was important because there's been so much confusion, so much litigation, that we put it in the rule itself so that an employee can read the rule and find out whether they're entitled to overtime pay. Mrs. Biggert. Thank you very much. I yield back. Chairman Boehner. I want to thank you, Madam Secretary, and thank you, Ms. McCutchen, for your excellent testimony. As I said earlier, just the facts. And I think both of you have presented an awful lot of facts to help clarify what the new rules and regulations regarding overtime are. Ms. Woolsey. Mr. Chairman? Chairman Boehner. The Committee-- Ms. Woolsey. Is there any chance being that so many members still want to ask questions that we could have another hearing with the Secretary so we could follow up-- Chairman Boehner. We could consider that. But under the Secretary's agreement-- Ms. Woolsey. No, I understand today, but maybe even in the very near future? Chairman Boehner. Well, we can work with the Secretary to see if that's possible. Ms. Woolsey. Thank you. Chairman Boehner. The Committee will stand in recess for approximately 30 minutes, and when we resume, we will resume with the second panel. Secretary Chao. Thank you. [Recess.] Chairman Boehner. The Committee will come to order. We've completed the testimony from the Secretary, and we will now turn to the second panel. It's my pleasure to introduce them and thank them for coming today. The first witness in the second panel will be Dr. Bird, who is the Chief Economist for the Employment Policy Foundation. Dr. Bird has extensive experience in labor economics research, forecasting survey design, data management and public policy analysis. He's the author of more than 70 papers, peer-reviewed articles and reports on topics such as public policy economics, economic theory and analysis, the economics of education, energy economics and regional economic issues. Prior to joining the Employment Policy Foundation, Mr. Bird served as the department chair and professor of Wesleyan College's Department of Economics and Finance and was an associate professor at North Carolina State University and the University of Alabama. Dr. Bird earned his PhD in economics from the University of North Carolina. We will then hear from Ms. Karen Dulaney Smith, a Wage and Hour Consultant. Ms. Smith offers consultation on wage and hour pay issues to employers, employees, attorneys and associations. Prior to entering private practice, Ms. Dulaney was an investigator with the Wage and Hour Division of the United States Department of Labor for more than 12 years, and she's a frequent lecturer on these topics. And then last, we will hear from Mr. David Fortney, a partner of the firm Fortney & Scott, LLC. Mr. Fortney has practiced law for 23 years, and his practice focuses on workplace-related matters. Mr. Fortney provides broad-based experience and expertise in labor and employment, government relations and litigation matters. Mr. Fortney served as the acting solicitor of labor and has held other senior policy positions in the U.S. Department of Labor during the first Bush administration. And more recently, Mr. Fortney served as a member of the Presidential Task Force on 21st Century Workplace. And with that, I'd like to ask Mr. Bird to begin. STATEMENT OF RONALD E. BIRD, CHIEF ECONOMIST, EMPLOYMENT POLICY FOUNDATION, WASHINGTON, DC Mr. Bird. Thank you, Mr. Chairman and Members of the Committee. My name is Ronald Bird. I am an economist, and I have spent much of the last 30 years studying the conditions and trends affecting the American workplace. I think lost in the debate over the Department of Labor's proposed revision of the rules concerning who is exempt and not exempt under the Fair Labor Standards Act is the question of why amending the regulations is necessary in the first place. I think before considering the impact of any particular change, it is important to consider why reform of FLSA white collar regulations has been on the Department of Labor's regulatory calendar for over 25 years in both Democratic and Republican administrations. The Fair Labor Standards Act was engaged in 1938, and the regulatory structure of definitions and categories of duties implementing its pay classifications have remained essentially unchanged since 1954. The minimum salary thresholds for possible exempt status were last changed in 1975. The law has changed little, while the workplace it governs has changed enormously. The FLSA was enacted when America was still in the midst of the Great Depression. Nearly one in five Americans who wanted a job could not find one. The labor supply exceeded demand, and the bargaining position of the typical worker was weak. The Fair Labor Standards Act was envisioned in part as a way to redress the perceived imbalance between employers and employees in free market bargaining about wages, hours and working conditions. Today the fundamental competitive conditions of the labor market are very different. In March 2004, the unemployment rate was 5.7 percent, dramatically lower than the 19.1 percent in 1938. The peak unemployment rate following the 2001 recession was the lowest of any recession of the past 30 years and second lowest in 50 years. An ironic indicator--an ironic indicator of the sweep of change in labor market conditions since the passage of FLSA in 1938 is the fact that many of us consider today's 5.7 percent unemployment rate too high because recently we have enjoyed the benefits of it being even lower. As an employee, I like low unemployment rates. These low unemployment rates have become the norm over the past 20 years and will likely remain the norm in the future as an aging population pressures the economy to produce more goods and services with a relatively smaller proportion of the population active in the workforce. As an employee, I like the trend of lower unemployment rates not just because I am less likely to be unemployed, but because the relative scarcity of potential replacements gives me power to make demands about wages, hours and working conditions that my grandfather in 1938 would never have dared. Before World War II, nearly one in three workers were employed in manufacturing. In contrast today, one in seven works in the manufacturing sector. The industries that have experienced relative job growth are characterized by workplace organizations in which job duties are not as narrowly defined as they were in manufacturing in the 1940's. The number of jobs where duties do not clearly fit the categories defined by the old FLSA rules has increased considerably. Managerial and professional jobs have increased more than any other category. In 1940, only about one in six workers were employed in managerial or professional occupations. Today, nearly one in three employees work in such jobs. The 50-year-old regulations make the process of determining FLSA status for workers in management and professional jobs the most complex and time consuming. It is important, too, to recognize that everyone who is eligible by duties for exempt status is not automatically paid on a salaried basis. Qualifying for exemption does mean that pay status or pay amount will change. For example, I used to work for a government contractor firm. My job duties and education qualified me for exemption as a professional, and my weekly earnings were in excess of the minimum thresholds. Nevertheless, my employer and I agreed to an hourly pay arrangement. My earnings fluctuated from week to week, and I was paid an overtime premium when I worked over 40 hours. Needless to say, I frequently wanted to work over 40 hours a week, but the boss was less frequently willing to let me work that many hours as I would have liked. The point is that I was an hourly worker and technically nonexempt because of the pay status only. My employer could have converted me to salary and exempt status based on my duties. That did not happen because it was in both of our interests to keep things on an hourly basis. The complexity and ambiguity of the existing rule is also evidenced by the amount of disagreement and litigation that it generates. For the past 3 years, FLSA issues, mostly related to the exempt/not exempt status question, have been the leading employment related civil action in Federal courts. Revision of FLSA regulations has been on the regulatory agenda for 25 years. This revision is long overdue. Thank you. [The prepared statement of Mr. Bird follows:] Statement of Ronald E. Bird, Chief Economist, Employment Policy Foundation, Washington, DC [GRAPHIC] [TIFF OMITTED] T3385.013 [GRAPHIC] [TIFF OMITTED] T3385.014 [GRAPHIC] [TIFF OMITTED] T3385.015 ------ Chairman Boehner. Thank you. Ms. Smith. STATEMENT OF KAREN DULANEY SMITH, WAGE AND HOUR CONSULTANT, AUSTIN, TEXAS Ms. Smith. Mr. Chairman and distinguished Members of the Committee, my name is Karen Dulaney Smith. I'm a former United States Department of Labor Wage and Hour Investigator. I began my career in 1987 during the Reagan Administration, continued through the Bush Administration and into the Clinton Administration and left shortly before the birth of my second child in 1999. What I want you to know is that most of the flaws in this regulation are going to negatively affect workers who earn between $23,660 and $100,000 a year. Many of these employees work in businesses that the Department has identified as low- wage industries, such as the restaurant industry and the child care industry. Some of them are nursery school teachers, nurses, chefs, team leaders, outside salespeople and financial service employees. Ladies and gentlemen, this regulation is going to decrease the rights of workers and very little if anything to decrease the litigation that employers are currently experiencing. I cannot give you an estimate of the overall impact of this regulation, nor can I speak to every issue. Even if I were prepared to do so, you would find this extremely tedious. Some of the wording in the final rule, I am disappointed to say, artfully weakens the current regulation in very subtle but significant ways that will surprise employers and employees when businesses begin the implementation process. When I worked for the Labor Department, I represented the Secretary. I did not represent employees or employers. I realize the importance of having learned that. Public servants have a difficult obligation to balance public interest when making policy. I served proudly for over 12 years investigating businesses of all types under the laws enforced by the Division and performing other assignments, even working in Wage and Hour's National Office for a short time. I was recognized on many occasions for outstanding performance. I maintain friendly working relationships with the Department, and I am sad that I feel obligated to challenge a document that I know required many hours of hard work on the part of intelligent and dedicated people. I have to do that, though. Since leaving the Wage and Hour Division, I have worked as a consultant, primarily for employers and their attorneys, though I have taken plaintiff's work as well. My clients are corporate America, small businesses and public agencies. Their business concerns are varied: manufacturing, retail, technology and others. I serve as a consulting expert and expert witness for attorneys who are labor law specialists. They hire me to help them understand the regulations and Wage and Hour's enforcement policies and procedures, and to assist their clients in achieving compliant business practices. I have chosen a variety of occupations to elucidate some of the more technical points of the current rule and the juxtaposition of the final rule. Last year I spent the entire comment period looking at this regulation. Obviously, I haven't had that kind of time. I would like to talk about nursery school teachers. I saw in the testimony that raised significant questions. That will take me more than the time allotted right now. If a member would like to ask a question, I would be more than happy to go into that, and it may take me longer than 5 minutes to explain it. It is extremely complicated, but I think it's very important, because it is going to affect mostly women who are working in a low-wage industry. There is some conversation in my testimony on registered nurses. Those employees were exempt under the old law as far as their duties were concerned. They are exempt now as far as their duties are concerned. Under a specific provision section in this newly promulgated rule that will go into effect right before Labor Day, there is an addition of the word ``hourly'' to a provision, and it has not been there before. Employers in the past could pay on a daily or shift basis to their salaried employees as long as they guaranteed a salary. Now they will be able to pay on an hourly basis. That has some very strong and frightening implications for employees who are accustomed to being paid hourly, or even who have been paid salary. Their pay levels may change. I'd like to discuss the matter of chefs. I'm very concerned about that. The restaurant industry is one of those industries that the Department of Labor has identified as a low-wage industry. I believe that there are people who are cooks, who may very well be creative, they may have a couple of years experience. But I believe they're going to lose their overtime wages, and it's very common in this industry to work 50 and 60 hours a week. I know, because I participated in targeted industry investigations. I have investigated hundreds of restaurants of every conceivable description. I want to make clear to you with regard to team leaders. That word is not in the current regulation. We don't know what that's going to mean. Team leaders would have been non-exempt when I was an investigator unless they had supervisory duties and management responsibilities. The examples that the Secretary has given are not exhaustive, and they are not conclusive. Those are not the only people who could be exempt by the addition of these new words. Also, I'd like to talk about working foremen, assistant managers and working supervisors. The way that this regulation is constructed makes it less obvious to me that those employees will be exempt employees. Outside sales employees. You know, I initially thought that removing that 20 percent tolerance test for outside sales employees might not be so harmful to outside sales employees. The Secretary said that she wanted to align the primary duty test as it is for executive, administrative and professional folks. The salary test is not aligned. We don't have to pay outside sales folks anything. I want to talk about computer employees. There is a significant deletion in there that I think will make an impact in the computer industry. That's the new production industry of the 21st century. And finally, I would like to discuss financial service employees. I believe that this and other provisions like it are loopholed for inside sales. Congress specifically said outside sales. The Secretary and the Administrator said that they couldn't change that, but I believe that there is a loophole where the employers can take advantage of that if they choose to do so. And I believe my time is out. I'll be glad to answer questions you have. Thank you so much. [The prepared statement of Ms. Smith follows:] Statement of Karen Dulaney Smith, Wage and Hour Consultant, Austin, TX [GRAPHIC] [TIFF OMITTED] T3385.016 [GRAPHIC] [TIFF OMITTED] T3385.017 [GRAPHIC] [TIFF OMITTED] T3385.018 ------ Chairman Boehner. Thank you, Ms. Smith. Mr. Fortney. STATEMENT OF DAVID S. FORTNEY, ESQ., PARTNER, FORTNEY & SCOTT, LLC, WASHINGTON, DC Mr. Fortney. Good afternoon, Mr. Chairman and Members of the Committee. I would like to offer my comments that reflect both my current practice, which is representing predominately employers on compliance matters with the FLSA, and also takes into account my prior service as one that was charged with responsibilities for enforcing the FLSA when I was the Acting Solicitor of Labor. In a nutshell, the problem that all stakeholders face today under the current regulations, including employers, employees, and candidly, the Labor Department, is trying to apply these outdated regulations to the workplace. As a result, the outdated regulations create uncertainty and frustration. The salary requirements, of which there are significant improvements in the final regulations, currently frankly are a technical morass, resulting in hundreds if not millions of dollars in liability in what is nothing short of a frenzied litigation lottery to enforce the FLSA. That is not a good way to run these regulations or determine these very fundamental issues. The second area which deals with duties also is unfortunately under the current regs very gray. The result is that there are a host of typically unintended liabilities. In order to avoid that, employers are faced with the prospect of having to pay counsel, which respectfully to myself and others in the practice, isn't cheap, but I think should be an unnecessary cost of doing business. I would challenge any business person to read the current regulations and understand what he or she is supposed to do. And it shouldn't be that way, and it doesn't need to be that way. And frankly, when you talk to the Labor Department, some of the folks there aren't clear on what the current regulations are either. So I think this exercise is going to be extremely helpful in pulling that together and developing some clarification and focus. Now in large part--and it sounds like Ms. Smith and I may have some respectful disagreements over and maybe with other Members of the Committee what the effect of these changes are. But in large part, the predominant--the story of these new regulations is, they are clarifying and codifying the law that's on the books. The problem is, it's buried in Labor Department manuals, it's buried in court cases, it's buried in a lot of different places. And unless you're a real expert, it's very hard to find. There are several areas, though, where the regulations actually further narrow the grounds on which people can be exempt, meaning not get paid overtime. And probably the easiest example to look at is with respect to executives. The new executive exemption adds an additional requirement of hiring and firing authority. Today there are many individuals who do not get overtime. They're salaried. They do not get overtime who do not have hire/fire authority. Starting August 23 when these regulations go into effect, those folks stand to lose that exempt status, and they will have to be paid overtime. Now with respect to other issues, as far as the administrative exemption, where I think there's been a lot of focus and discussion, the fact is that although the Department proposed a different standard, that I think many people criticized, and the Department in fairness responded to that, that is what is supposed to happen in a rulemaking. It is an interactive process. The story line on the administrative is the Department responded and has retained the same standard that governs today. And ``administrative'' is the term that encompasses these financial advisors and a whole host of the occupations that are being discussed in the hearing today. Also, as Administrator McCutchen referenced in her earlier testimony, the regulation does a very good job of codifying or writing down in the four corners of the regulations the rules that are out there in the court decisions, again saving people having to pay lawyers to go look that up and understand what the rules are. There are similar changes with respect to the professional categories and so forth. Another point that I think is very important that these regs change is with respect to salary, and what happens if you don't meet these technical requirements on paying people the correct salary. Today the answer is, you potentially stand to lose the ability to pay people on a salary for a whole wide range of employees. This is why these cases result in sometimes tens of millions of dollars in damages to people who are paid who got their salary, who were paid correctly. Now they're just receiving this windfall. What the Department does is create a system now where the employers are encouraged to publish policies, to put complaint procedures in place so that people know about it, and then to take corrective action. It's very similar to what has worked very successfully to deal with workplace harassment and the rules that changed there. In large part, that model has now been extended. It doesn't benefit anyone to have to wait 5 years down the road, go through litigation to find out whether people were paid correctly or not. This is a very positive step forward in that regard. I know there are lots of specific questions on areas, and I think during the question and answer period I'd be happy to answer those. Thank you. [The prepared statement of Mr. Fortney follows:] Statement of David S. Fortney, Esq., Partner, Fortney & Scott, LLC, Washington, DC [GRAPHIC] [TIFF OMITTED] T3385.019 [GRAPHIC] [TIFF OMITTED] T3385.020 [GRAPHIC] [TIFF OMITTED] T3385.021 [GRAPHIC] [TIFF OMITTED] T3385.022 [GRAPHIC] [TIFF OMITTED] T3385.023 [GRAPHIC] [TIFF OMITTED] T3385.024 [GRAPHIC] [TIFF OMITTED] T3385.025 [GRAPHIC] [TIFF OMITTED] T3385.026 ------ Chairman Boehner. I want to thank all of our witnesses for your excellent testimony. And some of our members didn't have an opportunity to question the Secretary on the first panel, and so what I'd like to do is begin with those members who didn't have a chance. And so the Chair would recognize the gentleman from Florida, Mr. Keller. Mr. Keller. Thank you, Mr. Chairman. I have sat patiently this morning listening to the examination of Secretary Chao by those colleagues of mine on the other side of the aisle. And after doing that, I am now in a position to get the bottom line on this. I can now sum up the Democrats' entire platform in one word: Boo. They want to scare workers into thinking that they are going to get a pay cut with overtime regs. They're trying to scare seniors about prescription drugs and Medicare. They're trying to scare young people by pretending that we're going to bring back the draft. All of these things are simply untrue. All of these things are shameless, bogus scare tactics that are specifically-- Chairman Boehner. If the gentleman could suspend, we've had a practice in the Committee of allowing members to disagree, but not being disagreeable. So I would just caution my good friend from Florida, we don't want to be disagreeable in our Committee. Mr. Keller. Well, I respect that comment, but I would like to be very specific, Mr. Chairman. I think it's my job to represent my constituents as well as it's your job to represent yours. On April 13th, the AFL-CIO sent out this e-mail to Working Families e-Activists. It says in this e-mail to click onto a link onto their web site. If you click onto the link on their web site, it shows a TV ad, and at the top of this page, it shows a police officer with a police car saying this comes down to protecting the 40-hour work week. The Bush Administration has proposed to take away overtime pay for millions of Americans who work more than 40 hours a week. This is 10 days before the regulations were even issued. Ten days later, on April 23, the regulations come out, and they specifically provide that police officers and firefighters shall be entitled to overtime pay; a specific misrepresentation. Now 5 days later, here we are at this hearing. And a few minutes ago, I go check the web site, and it's still there, still the claim, that police officers are going to have their overtime pay taken away. Now why? Why would someone say that? Well, we don't have to guess. The goal, according to the e- mail, is we need to raise money. We need to spread the word. We need to stop the overtime pay. We need to stop Bush overtime pay take away to raise awareness, even if it means making stuff up. So let's talk about what the regs really do, and let me start with you, Mr. Fortney. Let's take the example of an assistant manager at the local Foot Locker retail store who makes $18,000 a year in salary. Under these new regs, would he be entitled to get overtime pay? Mr. Fortney. No he would not, because he makes less than the floor amount of $23,660. He will get overtime pay. Mr. Keller. That's what I'm saying. He will be entitled-- Mr. Fortney. He will receive overtime pay. Mr. Keller. OK. And before these regs came out, there's a possibility he would not get overtime pay. Mr. Fortney. I would suggest to you a distinct possibility he would not get overtime pay. Mr. Keller. OK. So he would be one of the 6.7 working Americans who would actually get strengthened under this reg? Mr. Fortney. That would be my understanding, yes. Mr. Keller. Let me ask you about litigation here. My question goes to the need for these regulations, particularly because of the issue of wage and hour class action litigation. I understand that class action lawsuits under the Fair Labor Standards Act have more than tripled since 1997, and since 2001, they have outnumbered employment discrimination lawsuits. Tell us, if you would, how you believe these regs will clarify the situation to hopefully minimize these class action lawsuits. Do you have any examples? Mr. Fortney. Sure. I'd be happy to. One of the areas in which there has been a tremendous amount of litigation involves--in the financial industry--involves the application of what is called the administrative exemption, so it deals with people that are involved in marketing that support, provide response to customers, whether they be in banking, the securities industry. And there's been extensive litigation in those fields, as well as in the insurance industry. The regulations have listed as examples under the administrative exemption those occupations, not just by title, but describing what the job duties are. And what that does effectively and very succinctly is, it puts down within the four corners of the regulation what people are now spending tens of millions of dollars to litigate about in the courts. And it effectively has what I'd call codify or written down the court rulings within the four corners. What that means is, when someone comes and first of all looks at the regulations, they can understand who is and is not exempt. That clarification is very, very important. If they want to secure an opinion from counsel, frankly, counsel can give an opinion with a high level of certainty, which does not happen today. Mr. Keller. Thank you. And let me ask you to follow up on something Ms. Smith was talking about in terms of chefs. She testified that chefs will lose overtime. It's my understanding that under current law, chefs who have a 4-year specialized academic degree from a culinary arts program are already exempt as learned professionals. And furthermore, that the new rule explicitly states that cooks who perform predominately routine mental, manual, mechanical or physical work are entitled to overtime, does it not? Mr. Fortney. That's exactly right. Mr. Keller. Doesn't that seem to be actually more protective of these employees? Mr. Fortney. I think it certainly at a minimum doesn't change it. It doesn't make it so that more people are going to lose overtime. And the Department has said that it intends to codify what the current rules are, and it appears that it has done just that. Mr. Keller. OK. Thank you, Mr. Chairman. I yield back the balance of my time. [The provided material follows:] AFL-CIO, Working Families e-Activist Network, TV Ad and e-mail, ``Help Stop Bush's Overtime Pay Take-Away with Ads'', April 13, 2004 [GRAPHIC] [TIFF OMITTED] T3385.027 [GRAPHIC] [TIFF OMITTED] T3385.028 ------ Chairman Boehner. The Chair recognizes the gentlelady from California, Ms. Woolsey. Ms. Woolsey. Thank you, Mr. Chairman. I believe that what the Republicans, what the Department of Labor is taking credit for is rules that were already in place that have not been supported over the last few years. So that's codifying--they're taking credit for the goodness of making what should have been happening already, making it happen. Now I want to say something about misinformation and about scare tactics. Anybody in this chambers that watched Harry and Louise during the health care debate knows what misinformation and scare tactics is about. I was a human resources professional for 20 years in manufacturing, and then 10 years I had my own company, and I advised high tech companies on their human resources policies and practices. So I'm going to tell you what a team leader is. First of all, a team leader is not a professional that's negotiating, has a whole group of realtors working under a team negotiating for some grand project in some community, because that person is a professional, period, not a person paid on an hourly rate or a nonexempt person. All right. A team leader is a senior employee who has the background and the experience to probably earn the top of their pay rate. Right then, they've earned it. They've been around. They've got experience, and they're at the top of their pay scale. And because they've been around, because they know something, they've been asked to show more junior workers how to do the work, and to give them confidence and to give them guidance. But they're doing the work right alongside of them. This person today earns overtime. Without that overtime, that leader is probably going to earn less than the person that they're working and guiding, because the person they will be guiding will be getting overtime for the same hours. So what are we talking about? We're talking about people at the top of their pay grade getting less because they happen to be at a high pay grade. And I just don't see how anybody here in this room can expect any of us to believe that any new rules that impact workers like these do, rules such as the publishers standing up and cheering Secretary Chao--newspaper publishers-- when she announced how this would affect reporters. Because they knew they were going to save money, tons of money. Well, a rule that works for a handful of people and against most of the newspaper writers and reporters can't be the rule that works for the people of this country. And we know that. So another rule, the rule--and Ms. Smith, I'm going to ask you to respond to this one. You brought up nursery school teachers. We have here at this dais talked about Head Start teachers having a 4-year degree and how important that is, how important these little kids are. So now under these rules, we're going to--have encouraged Head Start teachers to get a 4-year degree, that under these rules we're going to take away their overtime. Now what in the world are we doing here? This is not the way we're going to help the workers that need the help the most. And those are not earning $100,000 a year. Somebody earning $23,660 is not earning a living that they can raise a family on. They should have overtime. So would you, Ms. Smith, talk to me about what your views are about how these new rules have affected nursery school teachers? Ms. Smith. Perhaps the Department of Labor didn't intend in its construction to handle this the way they did, but here's what the result is. A teacher who, for example, has an elementary or secondary certificate and is teaching in a public school, as Head Start teachers are, has been in the past considered exempt and will be in the future considered exempt. The real effect of this nursery school, the inclusion of a nursery school teacher in the way that it's included now--the words were there before--it's where they are in the regulation that is different. And in the interest of time, and I'll be as detailed as you'd like me to be, but in the interest of time, let me point you to 303 in the final rule, what's proposed here that would be passed, not the current law as it is today. It says exempt teachers include but are not limited to regular academic teachers, teachers of kindergarten or nursery school pupils. Specifically includes them in that section. That's like the law that we have now. That's not different. What's different is in Part D it says the requirements of 541.300 and subpart (g), the salary requirements of this part, do not apply to the teaching professions described in this section. So then you have--talk about a conundrum and a complication--then you need to go back to Section 300 and read what that is. And what Section 300 says, that does not apply nursery school teachers, they don't have to receive a salary. That's not different. They never had any salary guarantee. There was a salary exception for teachers, always has been. But they also-- they do not have to have primary duty requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction, or requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor. What this means is they can teach anything. And when I was an investigator, and I had a lot of experience with this, because preschools are automatically all covered under the Fair Labor Standards Act. Every employer has to comply with that unless they can exempt an employee. The only employees who were ever exempt when I made these investigations were executive directors and perhaps the teacher who had an early childhood, a masters in early childhood education, and they might have been teaching the pre-K or some schools do, some preschools do have kindergarten. Those teachers might be exempt. The others were considered to be lacking in independent discretion and judgment, or sufficient discretion and judgment, and a lot of times they didn't have degrees. Mr. Norwood. [presiding] The gentlelady's time has expired. Thank you, Ms. Smith. Mr. Kline, you're now recognized for 5 minutes. Mr. Kline. Thank you, Mr. Chairman, and thank all members of the panel for being here today. I guess I'd have to admit I'm getting a little confused with the testimony today. We seem to be hearing conflicting reports from the two panels and the different witnesses. And I just heard a definition of team leaders from one of my colleagues, and I was wondering if Mr. Fortney would like to comment on that. Mr. Fortney. I'd be happy to. I think the example that was given would not qualify as a team leader under the current reg. Let's start with what the team leader is defined as. A team leader requires that it be involved in major--an employee who leads a team of other employees assigned to complete major projects for the employer--major projects. So that working side-by-side, showing someone how to do something, that is not what team leader envisions in this reg. And with all due respect, I don't think that's what it means today under the current regs. Additionally, under the definition of concurrent duties, which is 541.106, it makes clear that although an exempt person may perform nonexempt work, but it parses out how you're to balance that. The example that was given is an example of people that may be loosely called team leaders in the nomenclature of the workplace but who would not be eligible to be salaried and not receive overtime. So I hope that answers. But it's a--it codifies what is the rule today. It is narrow. It's based on the duties, and it has to be a major project in order to be ineligible for overtime. Mr. Kline. Thank you. My wife spent over 30 years as a registered nurse, and so the issue of nurses has come up again and again. And I think it's important that we revisit that one more time. So let me go back again to you, Mr. Fortney, because Ms. Smith has expressed a concern about the effect of the new regulation on nurses. But it's been my understanding that the final rulemakes no change to regulation governing registered nurses, who have always generally been exempt as professionals, even though they are often paid overtime because of their collective bargaining agreements, which many are members, or because of the fact that we have a nursing shortage. And my family takes some blame for that, because my wife has now retired as a nurse, but my niece is entering the field. So we're trying to keep it even. And it's my understanding also that licensed practical nurses are explicitly exempt in this new regulations, and I read Ms. Smith's testimony and listened to what she had to say about hourly pay, and, quote, ``the minimum guarantee plus extras.'' And could you, Mr. Fortney, explain to us exactly what this means from your perspective, and is it a change from current regulations? Mr. Fortney. Sure. I'd be happy to address that. Nurses. We now have an explicit provision within the four corners of the regulations dealing with nurses. It's very short. Registered nurses who are registered by the appropriate state examining board generally meet the duties and requirements for the learned professional exemption. Licensed practical nurses, LPNs and other similar health care employees, however, generally do not qualify as exempt. In plain speaking, LPNs and others get overtime; RNs are not--can properly be salaried and not receive overtime. With respect to what does it mean to pay on salary, it means a number of things under the regulations. Again, it does today and it has for a long time. The regulations going back to the--the Labor Department has a series of manuals that are called field operation handbook, and it defines in great detail how people can be paid a salary. And salary--it can be computed on an hourly basis. It can be paid on an hourly basis. The rule in the current regulation defines salary. So even if people are paid hourly, as long as you meet the minimums and it's expressed ultimately in terms of a fixed amount, it is permissible. So I think that is the reason why there may be some confusion on this. And in the reality, I think many RNs, as you indicate in your question, although they can be exempt--that means salaried, not receive overtime--in the real world, many of them do receive a whole variety of additional premiums-- shift premiums, overtime, et cetera. So that's a marketplace factor as distinguished from what the law requirements. Mr. Kline. And there's not a change? Mr. Fortney. It is not a change. It is absolutely more-- continues what is there. Makes it clear, puts it within the four corners of the reg. Ms. Smith. Would the Chair recognize me to respond as well? Mr. Kline. I'd be happy to have you respond, Ms. Smith. Ms. Smith. Thank you. In this section-- Mr. Norwood. Ms. Smith, his time is almost up. Be as brief as you can. Ms. Smith. OK. The minimum guarantee plus extras adds the new word ``hourly.'' Registered nurses who are paid hourly, as long as they are guaranteed a minimum amount, which is supposed to bear a reasonable relationship to the salary for their usual hours--those are new words. We don't know exactly what that's going to mean yet--there is a possibility that registered nurses can be paid hourly and not receive overtime. And that's my concern. Mr. Norwood. As long as we have lawyers and write new laws and write new regulations, anything's a possibility. That's understood and a given. But sometimes you have to move forward hoping you understand what it means until some smart lawyer comes and tells you you don't understand what it means. And in fact, speaking of smart lawyers, Mr. Tierney, you have 5 minutes. Mr. Tierney. Thank you very much, Mr. Chairman. Mr. Chairman, I think it's a little bit unfortunate that this hearing has actually happened before most people have had an opportunity to really digest the complications that are in the new rule. And I hope that the Secretary will come back after people have had a chance to analyze that. But in the meantime, it's ambiguous to some of us and a little higher burden to ask about some of the detail. So I hope people will bear with us. And I regret some of the defensiveness that the Administration and the Secretary are going through, but they I hope understand that this is not an Administration that's been highly credible to working families and the American worker on a number of issues, whether it be the Secretary's statement at an earlier hearing where she said that the Administration wouldn't extend the unemployment benefits for people because she thought that would encourage them not to seek work, or whether it's because of their failure to fund No Child Left Behind, or attacks on worker safety, workers right to organize, or sleight of hand with the Medicare prescription drug bill and the history of this rule right on down the line. So there's reason for skepticism, and people don't mean to be attacking the witnesses. We mean to just fulfill our responsibility to try to find out exactly what this says. Ms. Smith, let me ask you a question about one particular section on this. It's now called concurrent duties. It's Section 541.106, and I think it used to be called the working foreman. It refers to the situation where employees have rank- and-file duties but also some level of managerial duties, usually supervisory or managerial in nature. The regulation essentially says an employee can be exempt as a supervisor even if the person also performs substantial nonexempt work, such as for a manager in a retail store, perhaps like the one Mr. Keller mentioned, or as a fast food establishment. The supervisor doesn't lose the exempt status even if he or she performs work stocking shelves or running the cash register. Am I right on that interpretation, Ms. Smith? Ms. Smith. That what? I didn't hear the last part. Mr. Tierney. That he or she would not lose their exempt status even if they perform some work stocking shelves or running the cash register or normal duties. Ms. Smith. Correct. Mr. Tierney. OK. Now the concurrent duties regulation isn't limited to any particular industry as I read it. Do you read it the same way? Ms. Smith. That it's not specific to particular industries? Mr. Tierney. Right. Ms. Smith. Right. They do give a couple of examples. But it will apply to all industries. Mr. Tierney. It used to be, as understand it, under the long duties test, that if a so-called manager spent more than 20 percent of time performing rank-and-file work, then that person would lose the exemption. But it appears that that's no longer true, because they've eliminated the long duties test, right? Ms. Smith. This is meant to mirror more or less the primary duties. They've added some. They've drawn some things from the long duties test into the primary duty, but not the specific criterion you're looking for. That's correct. Mr. Tierney. So it now it looks like the determination of whether it's a primary duty is going to be made on a case-by- case basis. There's no more bright line rule. And I guess it's just going to be whether it's a primary or a more important duty and somebody's subjective analysis. Would that be your interpretation? Ms. Smith. Primary duty is a subjective analysis, yes, because it doesn't have to be a specific amount of time. Mr. Tierney. So it seems to me at least that that goes against the claim that the previous law was ambiguous and this one is going to be so much better. But if one person or an employee spends 75 percent of the time performing routine functions and 25 percent of the time managing, then they must be nonexempt. But another person might conclude the other way. Ms. Smith. Because it depends on their primary duty. Mr. Tierney. So smart employer, as opposed to a smart lawyer, may just decide this is the way they're going to get around the law and then we're going to be in all sorts of litigation. It seems not only subjective but a bit ambiguous. If we get back to that and we take it out of the Foot Locker business that Mr. Keller was talking about, what if we're talking about a fire or police sergeant who performs regular police work but also does some supervisory work? He might be exempt despite the rank or the pay level. Am I right? Ms. Smith. I think that those examples are--those are blue collar examples, and I think the focus of the Administration right now is on exempting white collar workers from overtime. I don't think their focus is on exempting blue collar workers. I'm not saying it couldn't have that effect. I think that's possible. But I don't think that's where the Administration's focus is right now. White collar workers are, as Mr. Bird has testified, and he knows more than I do about this, but white collar workers are expanding tremendously, and there are less blue collar workers today. And so I think what the Administration is saying is, we need to figure out a way where not all--this huge amount of white collar workers, they're not all receiving overtime. Mr. Tierney. OK. I do think that whether this concurrent duty thing goes in, it's so subjective that it could apply to this particular area as well as to a retail area. Ms. Smith. Yes sir. Absolutely. They have removed the definition of working foreman. Mr. Tierney. And I guess my question is, if what the Secretary says is accurate, that they really did want to protect people who are now getting unemployment between $23,660 and $100,000, I don't know what the resistance would be of just having a provision that says that all of those people for that job responsibilities would be exempt, would continue to be exempt, grandfathered in. And this wouldn't make them for life no matter what they change for their job, but it would be their job as currently engaged in. Ms. Smith. Concurrent duties is a very vague and subjective thing that's going to be hard to deal with. The working foreman definition was much easier to deal with. We had much more examples, and it gave a 20 percent limitation which had nothing to do with long or short duties. That's not there any more. Mr. Tierney. So, Mr. Norwood's-- Mr. Norwood. Thank you very much. Mr. Tierney. Mr. Norwood's smart lawyers will be busier yet. Thank you. Mr. Norwood. Thank you, Mr. Tierney. I recognize myself for 5 minutes. Just a couple of thoughts. We've had enough time surely to look at this regulation. The AFL-CIO understood what was in it a week before it was issued, so surely we ought to know. Another thing, while my friend, Mr. Miller is here, and I wanted you to be here, I know you may work two or 3 days a week, and I congratulate you, but we should put in the record that most Members of Congress work six and 7 days a week, and I'm sorry that-- Mr. Miller. Not in Washington, D.C. they don't. Mr. Norwood. I'm sorry that the labor union wasn't here who enjoyed your comment. But the fact is, most Members of Congress--I don't know how you can get away with two or 3 days. But most Members of Congress work all week pretty hard. Mr. Miller. Through Tuesday night at 6:30-- Mr. Norwood. Now let me-- Mr. Miller.--3 o'clock in the afternoon-- Mr. Norwood. Mr. Miller, come on. Mr. Miller.--6:30. Mr. Norwood. You are really out of line. Mr. Miller. Well, you're out of line with the comment. We go in to work at 2:30 on a Tuesday-- Mr. Norwood. I congratulate you on working two to 3 days a week. That's what you said. Mr. Miller. I know what I said. Mr. Norwood. Mr. Fortney, would you care to comment on primary duty? Mr. Fortney. Sure. Primary duty-- Mr. Norwood. And I wish Mr. Tierney were here to hear the other side. Mr. Fortney. Be pleased to. Primary duty is a part that exists under what we call the long test, and those of us that have suffered through these proceedings long enough have recognized that those are a set of tests or standards that in large part are not followed today. That is this percentage requirement, point one. So the reference to 20 percent I think suggest something that respectfully isn't there, isn't being followed. No. 2, the determination of 20 percent or any percent suggests that you're to keep time records and do a host of other things that are directly inconsistent with having someone being exempt. And indeed, when there is a dispute, under the old rules, if I can call them that, the 20 percent, that's exactly how that gets resolved. You have people come in with time motion and clipboards and they're following what people are doing, following around. It's very burdensome, very expensive. With all due respect, Ms. Smith, I do not think it provides a level of certainty. It creates a false illusion of certainty that simply doesn't exist, and it doesn't work well. The primary duty codifies the rules that are there. It does so in a way that it creates a standard that is more easily applicable to the wide range of jobs and well understood in the wide range of jobs that we have in the workplace today. Mr. Norwood. The Economic Policy Institute, they put out a briefing paper, and it was their belief that eight million workers would lose overtime pay. Mr. Bird, do you agree with that? Mr. Bird. No. Mr. Norwood. Mr. Fortney, do you agree with that? Mr. Fortney. No. Mr. Norwood. Mr. Fortney, do you agree with that? Eight million workers? Mr. Fortney. That seemed very ambitious, and it's a little outside. I'm not going to go into the numbers in detail, but that seemed--I was frankly stunned by that number. I read the report, and I couldn't get the numbers to add up. Mr. Norwood. Ms. Smith, do you agree with that? Ms. Smith. I'm not an economist. I don't feel qualified to answer on economic questions about that kind of impact. Mr. Norwood. You were a footnote in that briefing paper as I recall. Ms. Smith. Yes sir. Mr. Norwood. So you had input into that? Ms. Smith. Yes. My part of that was to go through and look at the different job descriptions that were listed and say whether those job descriptions would have been exempt or nonexempt under the Fair Labor Standards Act at the time. Mr. Norwood. So you don't agree or you don't know if eight million workers--you don't know whether eight million workers would lose overtime pay, according to this briefing paper put out by EPI? Ms. Smith. Right. I did not do the economic analysis. That was not my part of that. Mr. Norwood. But you worked for EPI? Ms. Smith. No, I do not work for the EPI. Mr. Norwood. Are you a consultant to EPI? Ms. Smith. No. I was not a consultant. Mr. Norwood. They just called you up. Mr. Bird, you wanted to make further comment? Mr. Bird. Yes. Thank you, sir. I am an economist, and I'm not a lawyer. I'm used to dealing with data and dealing with empirical facts. And I too was shocked by that analysis. I looked at it very carefully. That analysis was--that number of eight million and some odd was put forth in the context of the proposed regulation a year ago, not this final regulation, and it's important to keep that in mind. It was wrong then. It is even more wrong now. It was based on jumping to conclusions about things for which there was no hard empirical fact. Mr. Norwood. Well, Mr. Bird, many people are using that briefing report as the Holy Bible. Mr. Bird. And I found that to be a very frustrating aspect of much of the debate and discussion about this issue. The reality is that, you know, first of all, there are three sorts of jumping to conclusions going on here, all of which come out with very misleading results. First of all, I hear jumping to conclusions about how changes of a word here or there will change the decision of whether or not numbers of people are exempt or nonexempt. And the fact of the matter is, we do not have sufficient hard data, actual descriptions of the texture of people's work, to be able to accurately and empirically say how a change in a phrase here or there will move millions of people one side or the other side of the line. Secondly, there's being--we're jumping to conclusions about whether or not becoming potentially qualified for an exemption will actually lead to a change in one's pay basis or not. As I said in my opening statement and talk about more in the written testimony, there are millions of people who are clearly qualified for exemption who are working on a salaried basis and therefore earning overtime, not because their employer has neglected to take something from them, but because they and their employer have arrived at a mutual decision. And then finally, there is the jumping to the conclusion that even if a person's status is changed from hourly to salaried, for whatever reason, that they will lose pay, when in fact the studies that we've seen looking carefully comparing people who do the same job and work the same hours, we find that regardless of whether you're paid on a salaried basis or an hourly basis, you wind up making the same amount per week and per year for doing the same job from the same qualifications and the same basis. Mr. Norwood. Thank you, Mr. Bird. My time is well expired. Mr. Miller, you're now recognized. Mr. Miller. Thank you, Mr. Chairman. I appreciate you were all amazed and alarmed and whatever with the figure by EPI. But I think when you look at what's transpired in the year since that came out, they're closer to the mark than the Secretary's 600,000 impacted because you look at the dramatic rewrite of these regulations, it would suggest that they had included far more people to lose their overtime in the previous regulations than they were willing to tell the public at that time, or the regulations were simply that sloppily drawn that you could draw that number that's a lot closer to EPI than it was to what the Secretary said. And as to the changing of a word, Mr. Bird, we all fight over the changing of a word because we know what it means to your clients and we know what it means to my constituents, and that's what legislation is about. And it's amazing. We pay people hundreds of thousands and millions of dollars in organizations to change a word here and change a word there. That's the legislative process, because we know exactly very often what that impact is. Ms. Smith, let me ask you a question, if you might expand on page 493 for the rest of you. I'm looking at the question of the financial services industry and those people who will meet the administrative exemption. And the question there, one of the questions being raised by a number of organizations is the impact on people today as I understand who would be--would not be exempt because they're engaged in sales, with this definition which picks up sales among other activities would, as it says there, provide for the administrative exemption. Ms. Smith. Yes sir. Let's say, as happened recently in our family, that I call a bank wanting to borrow money to remodel our home. I call the toll free number and speak with Ms. Jones and say I would like to apply for some type of loan. She asks some questions about my purpose and my financial situation, such as why I'm seeking the loan, how much I currently owe on my mortgage, what other outstanding debt I have, what savings I may have, et cetera. After completing the application, she tells me what products their company can offer and helps me decide such questions as whether I want to take a short-term loan or a long-term loan, perhaps convincing me that I should borrow more if the interest rate is favorable in order to pay off the car or student loan I mentioned in the initial questioning, and asked me if I would like to open a direct deposit account or credit card with the bank which could lower my percentage points. I have just described to you each aspect of what the Administrator has said is exempt. It says that work such as collecting and analyzing information regarding customer's income, assets, investments or debts. That would be what she did when she asked me about my financial situation. Determining what financial products meet my needs. Do I want a short term or a long term? Do I want a home equity or an unsecured loan? Advising the customer regarding the advantages and disadvantages. Well, if you do this, you know, it's a shorter term loan, but it's a higher interest. And marketing service and you're promoting, asking me if I want a credit card or to open a direct deposit account. I submit to you, Mr. Chairman and members, that what I've just described is the process of selling the company's product, and that's going to be exempt. In the very next sentence, it reads: However, an employee whose primary duty is selling financial products does not qualify for the administrative exemption. What is the process that I just described that the administrator would be exempt? It's a selling process. And at the very least, I think that those who oppose the idea that this is a bad thing for employees could agree with me that this would at least be of confusion to employers and could encourage more litigation. Mr. Miller. Well, I think again, earlier this morning I raised the point that when you now engage people in many aspects of the financial service industries, however you engage them, because of home mortgages or because of automobile loans or what have you, you very often now are engaging somebody who then has a series of questions for you. You can talk about whether or not your payment was received on time, and then they want to know, is there anything else can they do for you. Can they talk to you about, as I said, a home equity loan or this, that or the other thing. So the argument is that in the modern world, people are multi-tasking. These are the new jobs of the future. These are--somebody here said it. I think maybe it was you--said these are the production jobs of the future. In my district, huge numbers of people are engaged in this activity. Their primary worry right at the moment is that those jobs are going to be outsourced. But let's assume that they hold onto those jobs for the moment. Your argument is that you're marrying those tasks into a definition here that provides for the administrative exemption. Is that? Ms. Smith. Yes. Mr. Miller. I don't want to put words in your mouth, but, I mean. Ms. Smith. I think at least it would be accurate to say that we're going to have to that--well, investigators. I was one of those. Mr. Miller. I understand this is a gray area. Ms. Smith. Right. Mr. Miller. It's not a question whether I'm all right or you're all right or you're all wrong or what have you. Ms. Smith. Sure. Mr. Miller. But the question is, I'm just trying to figure out what, you know, people are asking what this means to them. It seems to me that one of the things that's happened here is you have aligned people within a definition. Some of those people weren't there before. The job was more segregated than previously. If you wanted to take advantage of this exemption, you obviously would train people to multi-task both sales products, services, what have you, whether they're on the road, off the road or, you know, because that's in theory that the new world of work requires that people be able to do this, but it also feeds into the administrative exemption. I don't know. I think Mr. Fortney would like to comment on that. Mr. Fortney. Could I just have maybe 20 seconds? Mr. Miller. Sure. Mr. Fortney. I think perhaps-- Mr. Miller. This isn't a black or white game. Mr. Fortney. OK. Thank you. I think perhaps there's some confusion as to, these points, the exchange that you've just had here I think is an interesting policy discussion. But going back to what the regs do and whether the regs are changing something. The answer is no, they are not. The regs--there are several court decisions that deal explicitly with where you draw this line, and those court decisions--I recognize you're a lawyer, a practicing lawyer, the John Alden case, the Allstate Insurance case, that's First Circuit, 11th Circuit, and a District Court case out of Georgia again involving Allstate Insurance. In those cases, the courts have recognized that employees can have a wide range of activities, exactly what Ms. Smith has described in her scenario, that properly can be deemed to be exempt. And the Labor Department has said, this is what we intend to do. We don't--we're not creating a new standard, we're trying to write down what's out there. Now there may be a different issue as to whether a different standard should be created, but I think the distinction is one that's important. It's not a take-away, it's not a change. There is a court decision that I think does a good job of illustrating what is out there. When is inside sales really inside sales? That's a case called Conseco, where it talks about your primary duty day to day being selling. But the courts have recognized, because they've had to struggle with these fairly vague rules the way they are, in these modern workplaces that you're describing, where people are doing different functions. There is a certain level of, if you will, bleeding over into sales function that does not prevent the people from being properly classified as exempt. So with that, I hope that's helpful. Mr. Miller. And if you'll be kind enough to give me 20 seconds, I would just say that as you're bleeding over, you probably would not want to create a position of primary duties of selling financial--you'd create a person that does more than that duty, who used to be recognized as inside sales. Ms. Smith? Ms. Smith. I do not believe, as Mr. Fortney has suggested, that this is an interesting policy discussion. I believe that a wage and hour investigator will have to look at this regulation and decide exemption and nonexemption, and I believe that they would have decided that employees were nonexempt when they were conducting inside sales activities, and now they're going to decide that those employees are exempt. I believe here we have a large group of employees who will lose exempt status. They will lose their overtime. This is not just an interesting policy discussion. And I do also think we're talking about clarity here. The Administration said repeatedly that they'd like to have a clearer law, one that lets employers know what their obligations are. This is not it. Chairman Boehner. [Presiding] The Chair recognizes the gentlelady from Illinois, Ms. Biggert. Mrs. Biggert. Thank you, Mr. Chairman. Mr. Fortney, following up on this, that Ms. Smith just claimed that an employee who calls, solicits information about a customer's financial status and sells a customer a loan product she thinks would be exempt. But doesn't the rule explicitly provide that an employee whose primary duty is sales is entitled to overtime? Or do you share Ms. Smith's-- Mr. Fortney. No, no, no. And this goes back. If the primary duty is sales, and we've talked earlier about you can do additional duty. If your primary duty is sales, you get overtime. That's the rule today. That's the rule under the final regulations that will be implemented. Mrs. Biggert. So do you agree that this is going to be something that is not clear now at the time, for somebody like inside sales? Mr. Fortney. No. Frankly, with all due respect, I think this is something that's much clearer now because in two or three fairly succinct sentences, I think the Labor Department has done a very fair job of summarizing the case law that's out there today. And as I mentioned earlier, that allows a business owner and an employee to go read the regulation, a couple or three sentences, get a sense as to what the rule is, as well as the Labor Department when it comes to enforcing it. Mrs. Biggert. OK. Thank you. Then your testimony suggests that changes to regulations governing computer employees and outside sales employees are largely administrative and do not make any substantive changes to the current law. I believe that Ms. Smith seems to suggest otherwise. Can you expand on your testimony on these points, and do you share Ms. Smith's assessment of these regulations? Mr. Fortney. Yes. With regard to computer employees, there's been some discussion of that. What the regulations do is codify in the regulations the language that was used in the 1996 amendment enacted by Congress. And I think that frankly, had the Labor Department steered away from that, I think that Congress would rightfully be upset and probably be all over them. So I'm not sure they had a whole lot of running room on that, and I think if you uphold the law, the statue enacted by Congress and you look at the reg, it's the same thing. So I don't think there is a change. I think that's what it's now in the reg clearly. With respect to the outside sales, there was a 20 percent rule. The Labor Department has adopted, and there's been some earlier discussion about the primary duty. And that's still the case. The Labor Department also has helped us understand what happens in the real world today with outside sales; that they're not just selling. They're doing a variety of other functions. And I do believe, although--is there room for improvement? I suppose, but it's a lot better than what we have, and the line is much easier to understand than the rather mechanical 20 percent. That suggests an artificial level of precision, and in the world, it just doesn't work like that. Mrs. Biggert. Thank you. And one last question. How do the final regulations affect employees who may actually own some share or hold an investment in their company? Mr. Fortney. Yes. I'm sorry. There is a specific provision that deals with the 20 percent ownership. And there was criticism in the proposal as to whether the standards were too loose. Essentially, what the final regs do, they tighten it and say that the person can be exempt; that is, not get overtime. But they still have to perform, you know, have a bona fide job there, be performing duties, exempt duties in a fashion. So it does permit that. Mrs. Biggert. So that means that let's say a telephone operator at IBM owns 50 shares of stock in the corporation, that she's not exempt from overtime? Mr. Fortney. We're not talking about, with all due respect to the operator that owns 50 shares of IBM, no. Because they would not meet the requirement, the ownership requirement. It's very high. What we're really talking about are typically fairly small businesses, often family run businesses, closely held businesses where people have that type of ownership. Mrs. Biggert. OK. And then what--how does that compare to current law? What's the current law right now on that? Is there a change? Mr. Fortney. There's not. Again, there is not--I sound perhaps like a broken record, but there is not a change. It's concise, it's precise, but it's not substantively different. Mrs. Biggert. Thank you. Thank you, Mr. Chairman. I yield back. Chairman Boehner. Let me thank our witnesses for your valuable time and your testimony. And for the benefit of our members, it should be obvious that, as this hearing comes to a close, that trying to determine exempt or nonexempt status is not an exact science. And having run a business, having traveled the country, there are every imaginable kind of business, every imaginable type of job, and the new rules I think will bring more clarity to the workplace for both employers and employees than what we've been working under over the last several decades. But the reason that we have investigators, such as Ms. Smith used to be, to go out and try to make these determinations and to have enough clarity in the regulation to give them the kind of background and basis for making a determination about a particular job. Is it going to be perfect? No. Is it a lot better than it was? Absolutely. And I think that both employers and employees will be very happy having more certainty about what to expect in these regulations. And with that, the hearing is adjourned. [Whereupon, at 1:45 p.m., the Committee was adjourned.] [Additional material submitted for the record follows:] U.S. Department of Labor, Fair Pay Facts, Overtime Security for the 21st Century Workforce, ``AFL-CIO Distortions Harm Workers'' [GRAPHIC] [TIFF OMITTED] T3385.029 [GRAPHIC] [TIFF OMITTED] T3385.030 [GRAPHIC] [TIFF OMITTED] T3385.031 [GRAPHIC] [TIFF OMITTED] T3385.032 [GRAPHIC] [TIFF OMITTED] T3385.033 [GRAPHIC] [TIFF OMITTED] T3385.034 ______ U.S. Chamber of Commerce, Letter to Chairman John Boehner, April 28, 2004 [GRAPHIC] [TIFF OMITTED] T3385.056 [GRAPHIC] [TIFF OMITTED] T3385.057 [GRAPHIC] [TIFF OMITTED] T3385.058 [GRAPHIC] [TIFF OMITTED] T3385.059 [GRAPHIC] [TIFF OMITTED] T3385.060 [GRAPHIC] [TIFF OMITTED] T3385.061 [GRAPHIC] [TIFF OMITTED] T3385.062 [GRAPHIC] [TIFF OMITTED] T3385.063 [GRAPHIC] [TIFF OMITTED] T3385.064 [GRAPHIC] [TIFF OMITTED] T3385.065 ______ U.S. Chamber of Commerce, Press Release, ``Chamber Welcomes White- Collar Overtime Reform'', April 20, 2004 [GRAPHIC] [TIFF OMITTED] T3385.035 ______ National Council of Chain Restaurants, of the National Retail Federation, News Release, ``NCCR Welcomes Updated Overtime Rules'', April 20, 2004 [GRAPHIC] [TIFF OMITTED] T3385.036 ______ National Association of Mortgage Brokers, Press Release, ``Mortgage Brokers Applaud DOL Overtime Regulations'', April 22, 2004 [GRAPHIC] [TIFF OMITTED] T3385.037 ______ American Bankers Association (ABA), News Release, ``ABA Statement on Labor Department Final Overtime Rule'', April 20, 2004 [GRAPHIC] [TIFF OMITTED] T3385.038 ______ Retail Industry Leaders Association (RILA), RILA News, ``Retail Industry Leaders Association Applauds Release of New Overtime Regulations'', April 20, 2004 [GRAPHIC] [TIFF OMITTED] T3385.039 ______ Associated Builders and Contractors, Inc., (ABC), News Release, ``ABC Applauds Labor Department Effort to Revise Outdated Rules Under Fair Labor Standards Act'', April 20, 2004 [GRAPHIC] [TIFF OMITTED] T3385.040 ______ Society for Human Resource Management (SHRM), PR Newswire, ``New White- Collar Exemption Rules Expected to Bring Clarity to Workplace'', April 20, 2004 [GRAPHIC] [TIFF OMITTED] T3385.041 [GRAPHIC] [TIFF OMITTED] T3385.042 [GRAPHIC] [TIFF OMITTED] T3385.043 ______ Heritage Foundation, WebMemo 485,''The New Overtime Regulations: Clearer Rules, Fewer Conflicts'', April 20, 2004 [GRAPHIC] [TIFF OMITTED] T3385.044 ______ Food Marketing Institute (FMI), Press Release, ``Food Retailers and Wholesalers Applaud DOL for Rewriting Overtime Rules for the 21st Century Economy'' April 20, 2004 [GRAPHIC] [TIFF OMITTED] T3385.045 ______ National Federation of Independent Business (NFIB), News, ``NFIB: DOL Overtime Rule Offers Clarity for Small Business'', April 20, 2004 [GRAPHIC] [TIFF OMITTED] T3385.046 ______ American Insurance Association (AIA), Press Release, ``AIA Praises New Labor Regulations'', April 20, 2004 [GRAPHIC] [TIFF OMITTED] T3385.047 ______ Mortgage Bankers Association (MBA), Statement by Kurt Pfotenhauer, Senior Vice President of Government Affairs, ``MBA Applauds Department of Labor for Modernizing the Fair Labor Standards Act'', April 20, 2004 [GRAPHIC] [TIFF OMITTED] T3385.048 ______ National Restaurant Association, Press Release, ``National Restaurant Association Recognizes Labor Department's Modernization of Overtime Regulations'', April 20, 2004 [GRAPHIC] [TIFF OMITTED] T3385.049 ______ National Association of Manufacturers (NAM), Press Release, ``NAM Welcomes Labor Dept. Announcement of Update of Nation's Antiquated Overtime Regulations'', April 20, 2004 [GRAPHIC] [TIFF OMITTED] T3385.050 ______ Americans for Tax Reform (ATR), News, ``Labor Department Announces New Rule to Clarify 50-Year Old Regulations and Increase Overtime Pay for Millions of Workers'', April 20, 2004 [GRAPHIC] [TIFF OMITTED] T3385.051 ______ National Association of Convenience Stores (NACS), Press Release, ``Convenience Store Industry Commends Labor Department's Efforts on `Fair Pay' Overtime Initiative Under FLSA'', April 20, 2004 [GRAPHIC] [TIFF OMITTED] T3385.052 ______ National Retail Federation (NRF), News Release, ``Retailers Welcome New Overtime Regulations'', April 20, 2004 [GRAPHIC] [TIFF OMITTED] T3385.053 ______ Statement of Cheryl Johnson, RN, President, United American Nurses, AFL-CIO (UAN), April 28, 2004 [GRAPHIC] [TIFF OMITTED] T3385.054 [GRAPHIC] [TIFF OMITTED] T3385.055