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“MODERNIZING THE WHITE COLLAR EXEMPTION OF THE FAIR LABOR STANDARDS ACT” mentioning the U.S. Dept of Labor was published in the Extensions of Remarks section on pages E317-E318 on Feb. 26, 1997.
The publication is reproduced in full below:
MODERNIZING THE WHITE COLLAR EXEMPTION OF THE FAIR LABOR STANDARDS ACT
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HON. THOMAS E. PETRI
of wisconsin
in the house of representatives
Wednesday, February 26, 1997
Mr. PETRI. Mr. Speaker, on February 6, 1997, I introduced a bill, H.R. 647, to clarify and modernize the white collar exemption of the Fair Labor Standards Act. I hope this bill will receive close attention during this session of Congress.
The Fair Labor Standards Act is intended to protect workers with provisions like the minimum wage and the 40-hour workweek. As a result, any attempt to tinker with the FLSA is immediately perceived as an attack on these basic protections or at least is so portrayed by political opponents. It is apparent, however, that after a half century of hands-off politics, we are left with a law that is out of step with the times and needs improvement.
Two recent developments have brought the issue to a head. First, disgruntled employees have begun to use the FLSA's salary basis test as a tool for seeking revenge and not for logically distinguishing exempt from nonexempt employees. They do this by claiming that anyone subject to a pay reduction for taking partial day leave is not paid on a salary basis and is therefore entitled to overtime pay, including retroactively. The problem would not be so bad if it were limited to a few individual overtime awards; but it is not. Instead, seizing upon a two-word phrase in the regulations, employees and their attorneys have argued that everyone theoretically subject to a technically flawed payroll policy is entitled to the same windfall--regardless of whether the flaw affected any particular employee's pay. Employers, of course, rarely issue separate payroll policies for different groups of exempt employees; thus, every employee, up to the top levels of the corporate boardroom, becomes an equally viable candidate for a large windfall. The potential overtime liability is as enormous as it is irrational.
Furthermore, the FLSA's duties test is being applied on an increasingly arbitrary basis. Concepts like ``discretion and independent judgment'' have always been difficult to define. These ideas seemed manageable in the era of assembly lines and hierarchical management structures, but this has radically changed. Instead, technology has diversified job duties, service-based employment has proliferated, and even old-line manufacturing operations have moved to team management concepts. In this environment, employers can no longer rely on cookie-cutter paradigms in making duties judgments. Employers often have to guess--and too many are guessing wrong. Even the courts struggle to achieve consistency, reaching irreconcilable results in cases involving the growing ranks of quasi-professionals such as accountants, engineers, insurance adjusters, and journalists.
The legislation I have introduced addresses these problems in three separate ways. First, it restores original understandings of the salary basis test by requiring the Department of Labor and the courts to focus on actual pay reductions rather than speculation as to potential deductions under some nebulous policy. The FLSA still will protect exempt employees from inappropriate practices, since regulatory provisions denying exempt status for employees experiencing actual salary deductions for taking partial day leave would remain unchanged. My legislation, however, will prevent employees from using a policy's theoretical application to extort huge overtime windfalls for company-
wide classes of highly paid employees who never could have imagined themselves as nonexempt laborers.
Second, my proposal will address perhaps the most confusing and indefensible requirement among the FLSA's duties tests: the attempted distinction between ``production'' and ``management'' workers. Under current regulations, for example, an administrative assistant might meet exemption standards simply by opening a management executive's mail and deciding who should handle it, because such a job is
``directly related to management policies or general business operations of the employer or the employer's customers.'' On the other hand, employees with far more sophisticated, challenging, and lucrative jobs may be nonexempt simply because they work on production tasks. The regulations reasonably expect an administrative employee to exercise a certain level of discretion and independent judgment, and my legislation would not alter that requirement. There is no reason to think, however, that a production or management label on the object of an employee's discretion or judgment has anything to do with that employee's professionalism, or the need for FLSA protections. Therefore, my bill eliminates the requirement that the employee's exercise of discretion and judgment be ``directly related to management policies or general business operations of the employer or the employer's customers.''
Finally, my legislation would create an income threshold that automatically exempts from FLSA scrutiny the highest paid strata of the workforce. This would directly reverse the trend toward questionable and irrational overtime awards for highly compensated employees. There is no reason that the FLSA, which was passed to protect laborers who
``toil in factory and on farm,'' and who are ``helpless victims of their own bargaining weakness,'' should ever be interpreted to protect workers making high five-figure or six-figure incomes. Yet, without considering the policy implications, courts are reaching such conclusions on an alarmingly frequent basis.
A worker drawing a large salary must perform some valuable services for an employer. Why, then, should that employer have to satisfy a complex set of artificial and archaic duties tests to prove that the employee is valuable? A worker drawing a large salary also must possess considerable bargaining leverage. Why then, should employers be forced, regardless of the employee's needs or preferences, to calculate paychecks only in the inflexible manner dictated by Government salary basis regulations?
The FLSA, in nearly six decades, has strayed from its laudable goal of protecting the poorest and weakest laborers from workplace abuses. The Department of Labor and the courts need to refocus their efforts. By directly exempting highly paid employees and by making long overdue adjustments to the salary and duties tests, my proposal goes a long way toward providing this new direction.
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