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Witnesses Describe Challenges Caused by Complex, Outdated Wage and Hour Regulatory System

The Subcommittee on Workforce Protections, chaired by Rep. Tim Walberg (R-MI), today held a hearing to explore concerns with regulations implementing federal wage and hour standards. Members discussed how the complex, burdensome, and outdated regulatory structure of the Fair Labor Standards Act is impacting workplaces and creating uncertainty for both employees and employers.

“For more than 75 years, the Fair Labor Standards Act has been the foundation of our nation’s wage and hour protections. It establishes important rights for American workers and continues to guide employers in protecting those rights,” Chairman Walberg said. “However, the workplace looks very different today than it did in 1938 when the law was enacted, and the rules and regulations defining the law are failing to meet the needs of a 21st century workforce.”

Employees who are covered by the law’s requirements are referred to as “non-exempt” employees, and those who are not covered are considered “exempt” employees. Most professional, administrative, or managerial employees qualify as exempt as defined in regulations written and enforced by the Department of Labor. Concerns have been raised that the current regulatory structure is extremely complicated and was written before the advent of smartphones and telecommuting.

“The FLSA is a cornerstone among America’s workplace statutes,” stated Nicole Berberich, director of Human Resources at the Cincinnati Animal Referral and Emergency Center. “But the [law] was crafted for a different time, and should be evaluated to ensure it still encourages employers to hire, grow, and better meet the needs of their employees.” Berberich described the difficult process employers face trying to properly classify employees, noting, “An employer acting in good faith can easily mistakenly misclassify employees” and warned that “the stakes in improperly classifying employees are high.”

Leonard Court, an attorney with more than 40 years of experience dealing with wage and hour policies, echoed these concerns, explaining there is “ample opportunity for differing interpretations and misunderstandings of the law’s requirements in the contemporary setting.” Unfortunately, the enforcement policies of the current administration have only made these challenges worse, Court added, by shifting from an approach built on “cooperation and education to one of confrontation and coerced settlement.”

Expressing similar views, Jamie Richardson, vice president at White Castle System, Inc., explained his company’s concerns “in light of a regulatory regime that is increasingly proscriptive” and “seems increasingly disconnected from the needs and desires of the modern worker and contemporary business owners.” He noted, “Today, with many of our urban centers continuing to suffer record high levels of unemployment … regulatory actions go beyond providing protections for those employed and make it harder for employers everywhere to create more jobs.”

Witnesses also discussed a pending Department of Labor proposal that is expected to significantly alter existing overtime regulations. Berberich expressed concern that upcoming changes may “further exacerbate an already complicated set of regulations” and “further limit workplace flexibility.” Richardson agreed, stating, “Rather than providing more opportunities for individuals to earn overtime pay, it appears that the new regulations will only result in a more complicated law … and more litigation.”

Acknowledging concerns related to the department’s pending proposal, Chairman Walberg said, “Thanks to an administration notorious for overreaching and governing through executive fiat, I share many of those same concerns … it is my hope the department will heed these concerns and ultimately put forward a proposal that encourages – rather than stifles – productivity, personal opportunity, and economic growth.”

 

 

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