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Committee Statements

Walberg Statement: Hearing on "Examining Regulatory and Enforcement Actions Under the Fair Labor Standards Act"

As prepared for delivery.

Today, we will examine the Obama administration’s regulatory and enforcement agenda under the Fair Labor Standards Act. This law affects the lives of an estimated 135 million workers and the business decisions of roughly six million private employers. Given the law’s broad reach, it is critical we have smart policies that enforce the law in a responsible manner – a task even more important in the midst of the nation’s budget crisis.

For this reason, many have expressed concerns with enforcement policies adopted in recent years. Without a doubt, the overwhelming majority of employers want to do the right thing; they want to run a successful business and they don’t want to break the law. Federal resources should educate employers about their legal obligations, offer assistance to promote compliance, and when necessary, hold bad actors accountable. 

However, not only has the administration proposed budget cuts to important resources that assist and educate employers, it has also taken an adversarial approach to enforcement of the law. The bureaucracy is growing with more staff dedicated to punitive enforcement activities and drafting burdensome regulations, which means employers will have fewer resources to help follow the law and face an ever growing bureaucracy ready to catch them when they don’t. 

The effect of this decision can be seen in the Department of Labor’s recent launch of a broad investigation into the nation’s home building industry. Without basis, the department sent letters to numerous home builders warning a “comprehensive” investigation was underway. The department is demanding these employers – again, without basis – make available documents concerning payroll, subcontractors, and projects that have been or may be completed, as well as detailed information regarding every supplier of materials associated with their business. 

The department concludes by suggesting this may only be the beginning of their intrusive request. Imagine you’re an employer in an industry that has been shattered by the recession, and you receive this letter. You have no reason to believe you’ve violated the law but now you must dedicate substantial time and resources to meet the demands of this unwarranted investigation. 

When we suggest federal action can have a chilling effect on job-creators, this is what we mean. Those who support more stimulus spending say that our economy simply lacks demand. Well, I think our economy lacks sensible policies and practices from Washington, and it is time to demand better. 

If an employer is fortunate enough to avoid a baseless investigation, they may still face the burden of the department’s regulatory efforts. For example, the department is developing a regulation that requires employers to create a written legal analysis explaining why certain workers are considered exempt under the law. This may stimulate demand for lawyers, but it will cost businesses time and money. 

The department is also crafting a proposal to eliminate an exemption for certain home care workers. These workers provide invaluable services to the elderly and infirm at private residences, yet this regulatory effort may increase the cost of care – forcing some individuals to abandon their homes and enter institutional support. I, along with Rep. Lee Terry of Nebraska and other members of Congress, have raised significant concerns about this proposal and we will continue to as long as those concerns are not adequately addressed.

Finally, in direct contrast to the demands set on employers, the department now releases little public information about its own activities, denying Congress and the American people an opportunity to properly judge the success or failure of its actions.

As is always the case, federal policies lead to real world consequences. Wasted resources on a flawed enforcement agenda may deny workers the wages and benefits they deserve. And job creators - men and women trying to survive in this tough economy and provide a livelihood for their employees – face greater uncertainty. At a time when millions of Americans are searching for work, this is simply unacceptable.

In closing, let me say that the Congress and this committee have a constitutional responsibility to conduct oversight of the executive branch. The administration prides itself on running the most open and transparent government in modern history. However, responses to basic congressional inquiries are routinely delivered late and when they do arrive, they are largely incomplete. 

I hope the administration will abandon this obstructionist course and begin to work with Congress on policies that benefit the American people.  I am dedicated to that work Administrator Leppink, and I am hopeful that you are too. I look forward to working closely with you in the weeks and months ahead.


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