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The Subcommittee on Workforce Protections, chaired by Rep. Tim Walberg (R-MI), today held a hearing entitled, “Examining Regulatory and Enforcement Actions Under the Fair Labor Standards Act.” Members of the committee discussed the punitive enforcement agenda adopted by the Obama Department of Labor and its effect on workers and job-creators.

“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,” said Rep. Walberg. “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.”

Witnesses with vast experience in FLSA enforcement described current policies that are undermining an employer’s ability to understand and follow the law, as well as a worker’s ability to receive the wages and benefits they have earned.

According to Tammy McCutchen, former administrator of the Department of Labor’s Wage and Hour Division, the Obama administration has pursued significant changes that abandon historic policies and practices. “The Division has closed its doors to employers seeking guidance regarding what the FLSA requires,” Ms. McCutchen said. “In other words, the Wage and Hour Division has stopped efforts to inform employers how to comply with the law, preferring only to impose draconian punishments when an employer guesses wrong about what the law requires.”

Ms. McCutchen’s sentiments were echoed by David Fortney, a former Deputy and Acting Solicitor of Labor. Fortney noted during his testimony, “DOL is not striving to effectively implement the FLSA in today‘s workplaces. Indeed, just the opposite result is being achieved. The Wage and Hour Division has charted an FLSA enforcement course that fails to provide for the most positive outcome for employers and employees.”

Workers stand to lose under the administration’s failed policies, Mr. Fortney explained. “As a result of the increased risks employers face, many employers are restructuring their workforce to adopt the most restrictive working arrangements in order to minimize risks and costs resulting from DOL audits and litigation challenges. These changes diminish the ability to provide working arrangements that best meet the needs of the employees and employers,” Mr. Fortney said.

These consequences are confirmed by a new survey released by the HR Policy Association. According to this comprehensive survey:

• The increase in FLSA litigation—primarily over the vague rules as to which employees are exempt from the law’s requirements—has resulted in lawsuits involving 55.8 percent of companies [who responded to the survey];
       
• In their efforts to protect themselves against further litigation, employers are imposing restrictions on popular practices such as telecommuting (32.2 percent), flexible working hours (44.4 percent) and the use of state-of the art information technology, such as smartphones outside the workplace (55.6 percent); and
      
• When, to ensure compliance with the law, employers reclassified employees from salaried exempt to hourly non-exempt, more companies reported that employees were generally unhappy with being reclassified (31.9 percent) than were happy (17.6 percent). 

“As is always the case,” concluded Rep. Walberg, “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.” 

To learn more about this hearing, click here.

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