E&W Blog

Today, the Subcommittee on Workforce Protections held a hearing that explored the benefits and failures of the Fair Labor Standards Act (FLSA).
 
Subcommittee Chairman Ryan Mackenzie (R-PA) started the hearing by emphasizing the need to update the law. 

"To this day, the Fair Labor Standards Act is the foundation of U.S. wage-and-hour laws. It was enacted during the New Deal Era to set the baseline for minimum wage, overtime, recordkeeping, and other federal requirements enforced by Department of Labor (DOL). Needless to say, the workforce has changed since 1938. It is long overdue for Congress to update this 87-year-old law so workers and businesses have the best opportunities to succeed,” said Mackenzie. 

Witnesses also discussed the need for modernization to meet the needs of the current workforce. 
 
“Policymakers should support initiatives that ensure organizations can meet the complex demands of the modern workplace. As AI and technology advance, we must ensure a workforce capable of creating and maintaining these innovations. This includes recognizing independent workers and employees alike and ensuring laws support updated training opportunities. Forward-thinking changes to the FLSA will empower employers to design benefits and workplace policies that meet talent where they are—ensuring a dynamic, adaptable, and future-ready workforce,” said Paige Boughan, Senior Vice President and Director of Human Resources at Farmers and Merchants Bank.

When discussing the rise of independent contractors, policies like portable benefits were at the forefront.

Mackenzie asked Jonathan Wolfson, Chief Legal Officer and Policy Director of the Cicero Institute, what can be done to expand portable benefits without threatening a worker’s independent contractor status. Wolfson told Mackenzie, “[the Modern Workers Security Act] would make it very clear that when a worker wants to receive that compensation in the form of a portable benefit payment and that the business that they are interacting with on an independent basis wants to put that money into their account. Those dollars do not count towards the determination that this business is in fact their employer.”  
 
Chairman Tim Walberg (R-MI) discussed the workforce’s desire for flexibility through compensatory time off or “comp time.” “Most government workers are eligible to receive comp time, but FLSA prohibits the private sector from using comp time,” Walberg stated. 

Tammy McCutchen, Senior Affiliate for Resolution Economics, agreed with Walberg that this policy must change. “Employees want more paid time off and that’s what you get with comp time. If you look at any of the recent surveys about the types of benefits employees today are looking for, paid time off is high on the list. They could work 30 hours one week and 50 hours the next. That is the type of flexibility workers are looking for today,” McCutchen said.
 
Rep. Mark Messmer (R-IN) raised the topic of elder and child care benefits and how current regular rate calculations discourage businesses from offering these options to nonexempt employees. 

Ms. McCutchen explained how the private sector is required to pay overtime on the value of benefits like child care. “How do you determine what the hourly value of full-time child care is going to be for your employees and have your payroll system programed correctly to include that in the regular rate?” McCutchen asked. “It’s not been changed since 1949; it’s time to recognize that the benefits that we pay our employees today and that employees want is very different than in 1949.”
Rep. Kevin Kiley (R-CA) asked Wolfson to highlight how regulation in California has attacked independent contractors and how the Biden-Harris DOL tried to enact these regulations on a federal level. 

“Workers knew the risks and benefits that they were taking upon themselves in starting the business and then California’s legislature came in and said ‘we’re not going to let you make that decision anymore, we’re going to protect you from yourself,’” said Wolfson. “If suddenly I had to provide anyone who was coming to do HVAC work at my house the same employee benefits as those [at my organization], that would change the entire calculus of how much I’m willing to pay them, what I’m willing to do, and we need to allow people to have these interactions.”
 
Rep. Mary Miller (R-IL) simplified this problem well when she said, “One thing government does well is complicate things and we’re excited to be in the majority now because we want to deregulate and make things work better.”

Bottom line: The workforce has changed significantly since the FLSA was passed in 1938. Education and Workforce Republicans are committed to modernizing labor laws to reflect the needs of the 21st century and providing wage-and-hour flexibility to support workers, employers, and the overall economy.