WASHINGTON, D.C. | July 14, 2011
Since the start of the 112th Congress, the Education and the Workforce Committee has actively examined federal laws, rules, and regulations within our jurisdiction. The intent of our oversight has been to take a close look at federal policies and their impact on the economy, job creation, and taxpayers. As a result of these efforts, just yesterday we advanced bipartisan legislation to modernize the federal workers’ compensation program, updating assistance for beneficiaries and promoting better use of taxpayer dollars. I hope this hearing will build upon the success of yesterday’s bipartisan initiative.
We all agree that the Fair Labor Standards Act affects the lives of millions of workers. In fact, according to the Department of Labor, the act governs the employment of more than 130 million workers. The law was a significant expansion of the government’s authority when it was created in the midst of the Great Depression, and it wields considerable influence over the workplaces of today’s modern economy.
The law sets forth rules and regulations concerning minimum wage, the maximum number of hours worked in a week, and overtime pay. The law reflects our shared desire to see individuals receive fair compensation for their work. We all want, as the saying goes, to see a worker complete an honest day’s work for an honest day’s pay. That goal remains to this day, and it must be advanced in a manner that encourages economic growth and job creation.
However, as we have learned time and again with federal policies, good intentions can often lead to unintended consequences. It is hard to imagine a law intended for the workforce known to Henry Ford can serve the needs of a workplace shaped by the innovations of Bill Gates. Unfortunately, it is becoming increasingly clear that current federal labor standards have fallen short of the times.
In recent years, the law has caused a number of challenges for employers. A long history of regulations and judicial rulings has created ambiguity and uncertainty for employers who attempt to follow its every detail. This burden falls especially hard on small business owners, who typically lack the expertise needed to understand the full scope of the law. As a result, an employer’s good intentions could leave him susceptible to costly legal challenges.
That is why the explosion in wage and hour litigation is so disturbing. Private lawsuits filed under the Fair Labor Standards Act have skyrocketed over the last two decades, rising from roughly 1,500 in the early 1990s to nearly 7,000 last year. At a time when every employer should be focused on creating jobs and hiring new workers, this is unacceptable.
The law’s unintended consequences also affect workers. As anyone who carries a smartphone knows, the advantages of modern technology have blurred the line between work and home. This has invited the opportunity for greater flexibility in the workplace, and can encourage more family-friendly work environments. Unfortunately, the law can often stand in the way of this progress, creating more unknowns than opportunities for workplace flexibility and growth.
As employers grapple with these complicated questions, they often institute defensive employment policies in order to better ensure full compliance with the law. As a result, workers are often kept to strict 40-hour work week requirements, even though they may welcome more work in exchange for additional income or a more flexible work schedule. Bonus payments and opportunities for after-hour job training can be limited. Employers may also curtail the use of certain technology that provides the very kind of flexible work schedules employees increasingly desire.
Last week, we learned unemployment continues to hover around 9 percent and more than 14 million are unemployed. Smart policies that encourage growth and worker freedom are desperately needed in today’s economy. I look forward to today’s discussion, and to considering positive solutions that will encourage greater flexibility and certainty in the workplace.
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