During a House Education and the Workforce Committee hearing prior to the congressional recess, Rep. Mark Messmer (R-IN) questioned Paige Boughan, Senior Vice President and Director of Human Resources of Farmers and Merchants Bank on behalf of SHRM, about company compliance costs.
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00:00Ms. McCutcheon, you mentioned in your written testimony, overtime pay is based on an employee's regular rate of pay, not their hourly rate of pay.
00:07Unfortunately, regular rate calculations discourage businesses from offering benefits to employees, such as child care, elder care, and dependent care services.
00:16Could you go into more detail into how the Empowering Employer Child and Elder Care Solutions Act would help?
00:22It would free employers to provide child care.
00:27For example, like the DOL does, they actually have an on-site child care facility where employees can drop off their kids.
00:36But guess what?
00:37They don't pay overtime on the value of that benefit.
00:40In the private sector, you have to.
00:43And the complexity is, how do you determine what the hourly value of full-time child care is going to be for the employees and have your payroll system programmed correctly to include that in the regular rate?
00:56So, by not allowing, and it's not just child care, right?
01:01To me, it's like, you really want to help workers pay back their student loans?
01:07Make a change to that one section, and you can encourage employers to offer repayment of student loans as a very valued benefit.
01:16So, this is a change that is great for workers, and I really, it's the one thing I would really love to see happen because it's child care, elder care, college tuition, and repayment of student loans.
01:31Public transit subsidies, another benefit that federal employees get, as you all know, but which a private employer can't because if they do it, they might get sued.
01:41They might have a huge overtime bill. It's hard to calculate what that overtime would be.
01:46So, this is, it's, it has not been changed since 1949, 76 years ago.
01:52It's time to recognize that the benefits that we pay our employees today and that employees want is very, very different than in 1949.
02:01Are there any other legislative fixes needed to the FLSA that would stop discouraging businesses from offering these benefits?
02:10Well, I would also suggest that we need to put new provisions in the FLSA to allow businesses who make mistakes to correct them, to self-audit and self-correct.
02:23The FLSA is different from any other federal employment law.
02:26There is no affirmative defenses like in Title VII, right?
02:29So, let's have an affirmative defense to encourage employers to have a, have a wage and hour policy, to have complaint procedures, to investigate those complaints, and to pay back wages when they're due.
02:42Let's bring back that paid program, which I used during the first Trump administration to bring millions of dollars of back wages to workers under the paid program.
02:51Let's allow private settlement of claims and private waivers, just like under any other federal employment law.
02:58Then, employers would be less scared to make those mistakes.
03:05Ms. Bowen, the Biden administration's overtime rule would have cost businesses roughly $18.8 billion, according to an estimate from the American Action Forum.
03:14Those increased compliance costs will have to come from somewhere within the businesses themselves.
03:18What decisions are businesses forced to make when such large regulatory burden is enacted at the federal level?
03:27Thank you, Congressman.
03:30I, I think, you know, it can be hard, but, you know, one thing you look at every year is the need for labor.
03:40So, you can be creative in perhaps getting more done with less people.
03:46Okay.
03:48Mr. Wolfson, non-exempt or hourly workers are often, often want to participate in professional development opportunities outside of regular work hours, but FLSA's compensable time requirements restrict their ability to take advantage of these opportunities.
04:04Do you believe that non-exempt workers should have the same ability under the FLSA to attend voluntary training as, as their, as their exempt or salaried counterparts do?
04:14Yes, Congressman, I think that the worker who would like to enhance their skills and upskill so that they can move on to additional jobs in their career should be encouraged to do so.
04:24And many businesses want to train their workers to do another thing.
04:28There might be professional development opportunities for that worker.
04:30And if they are an exempt worker from overtime, then it's really clear that those workers are doing those activities.
04:37And to the chairman's question earlier, many workers want that status of being able to move up.
04:43But by requiring employers to count provision of additional training in the off hours as hours worked or even at the training costs as part of the overtime calculation, businesses are less inclined to offer that, which is going to further divide
04:58the exempt worker from the non-exempt worker and make it harder for that non-exempt worker to move up in their career in that job.
05:05And so I think it's really important that the Fair Labor Standards Act recognize that and all of these changes recognize that the employer and the worker do have the opportunity to negotiate.
05:13And we want to give the worker the ability to ask for the things they want and the employer to provide that if that's in everyone's best interest.
05:19Thank you. I yield back my time.
05:21Thank you, sir. Next up, my fellow.