Order Code RS20970 Updated June 17, 2002 CRS Report for Congress Received through the CRS Web Minimum Wage, Overtime Pay, and Child Labor: Amending the Fair Labor Standards Act William G. Whittaker Specialist in Labor Economics Domestic Social Policy Division Summary The Fair Labor Standards Act (FLSA) is the basic federal statute dealing with minimum wages, overtime pay, and child labor. First enacted in 1938, it has been amended through the years to take into account changing workplace trends and to meet new worker and employer concerns. In the 107th Congress, a wide range of changes in the FLSA has been proposed — some to strengthen the Act; others, arguably, to reduce the level of worker protection. This report provides a quick status overview of these initiatives.1 It will be updated periodically as developments require. An Introduction to the FLSA When the federal wage and hour bill (the FLSA) was enacted in 1938, it was not an especially new concept. Questions about minimum wages, overtime pay, child labor, and related issues had been a central part of American (and world) policy concerns for at least half a century. But only in the wake of the Great Depression was Congress able to forge a comprehensive federal measure that would withstand judicial review while respecting the idiosyncracies both of employers and workers. A living document, the FLSA has undergone major amendment on eight separate occasions, in addition to numerous more narrowly targeted amendments designed to address particular workplace concerns. In terms of subject matter, the Act is divided roughly into three spheres: minimum wage (Section 6), overtime pay (Section 7), and child labor (Section 12). These are accompanied by a body of statutory exemptions or 1 For a more comprehensive overview of legislative initiatives of the 107th Congress, see CRS Report RL30993, The Fair Labor Standards Act: Wage/Hour and Related Issues Before the 107th Congress, by William G. Whittaker. Congressional Research Service ˜ The Library of Congress CRS-2 exceptions (Section 13). Definitions appear in Section 3. Other sections, inter alia, deal with administration, penalties, and appeals. The federal minimum wage is set in statute and remains at a fixed rate (normally, declining in value) until changed through legislative action. Overtime requirements (1½ times a worker’s regular rate of pay) for hours worked in excess of 40 per week are also set in statute. Child labor protections are, in part, set out in statute but with wide latitude for standards-setting and regulation by the Department of Labor. Wage/Hour Proposals in the 107th Congress Because wage/hour and child labor legislation has been on the congressional agenda, intermittently, through more than 6 decades, its consideration has developed along more or less standard lines — but with certain recent variations. Packaging Packaging of wage/hour measures can be critical. From the original Act of 1938 up through the 1989 FLSA amendments, such legislation was freestanding. While it might deal with overtime pay or child labor or minimum wage or immediately related subjects (singularly or as part of a package), it normally did not include broader tax or unrelated business matters. In 1996, however, various FLSA amendments were added to an umbrella tax package as a floor amendment. As the debate over the minimum wage developed in the 106th Congress (and, now, in the 107th Congress), the issue of linkage has come to be viewed as traditional. Thus, some argue that an increase in the minimum wage for workers must be combined with tax breaks for employers: that the former should not move forward without the latter. Since almost every element of the FLSA can be contentious, even internal linkage can impact the likelihood of enactment of new legislation — either enhancing or diminishing the chance that a bill will actually become law. In terms of legislation, any approach — freestanding or a package, purely labor standards or linked with business concerns — is fraught with risks. Support for or opposition to labor standards laws has often been philosophical. The issues, however, are also essentially economic: who wins, who loses, and who pays. Where Things Stand In the 107th Congress, legislation dealing with the minimum wage, overtime pay, and child labor has taken a variety of forms — from simple single-issue proposals to umbrella measures that deal with a range of changes in the FLSA and with other subjects as well. The tables that follow provide a simple overview of the various proposals, broken down by three general categories: minimum wages, overtime pay, and child labor. In some cases, a particular bill will be listed on more than one table. CRS-3 Table 1. Minimum Wage Proposals of the 107th Congress Bill no. Sponsor Increase minimum to: Effective date for the final step increase a H.R. 222 Traficant $6.15 July 1, 2002 — — H.R. 546 Quinn 6.15 April 1, 2002 — Umbrella billb H.R. 648 Graham — — — Exempts certain funeral industry employeesc H.R. 665 Bonior 6.65 January 1, 2003 — CNMId H.R. 881 Isakson — — — Alters wage treatment, blind and disabled workers H.R. 1441 DeMint 5.15 — — States meeting standards may opt out of federal minimum wage H.R. 1990 Miller, George 6.65 January 1, 2003 — Umbrella bill plus CNMIe H.R. 2070 Tiberi — — Subcommittee mark-up; forwarded to full committee Minimum wage and overtime pay exemption for certain sales workers H.R. 2111 Quinn 6.15 April 1, 2002 — Umbrella billf H.R. 2241 Traficant 6.15 July 1, 2002 — — H.R. 2424 Traficant 6.77 2 years & 90 days from enactment — — H.R. 2661 Miller, George 3.55 plus (CNMI) 30 days from enactment, plus a phase-up to federal standard — General reforms concerning the CNMI H.R. 2679 Andrews — — — Minimum wage/overtime pay exemptions, organized camps H.R. 2812 Sanders 8.15 January 1, 2003 — Indexation of minimum wage H.R. 3678 Graham — — — Exempts certain “construction engineering & design professionals” H.R. 4799 Bonior 6.65 January 1, 2004 — CNMId Action beyond referral Other components CRS-4 Sponsor Increase minimum to: S. 8 Daschle $6.65 January 1, 2003 — Umbrella bill plus CNMIg S. 277 Kennedy 6.65 January 1, 2003 — CNMId S. 940 Dodd 6.65 January 1, 2003 — Umbrella bill plus CNMIe S. 964 Kennedy 6.65 January 1, 2003 Legislative Calendar, General Orders, No. 54. CNMId S. 2538 Kennedy 6.65 January 1, 2003 — CNMId Bill no. Effective date for the final step increase a Action beyond referral Other components a Most bills project a series of step increases. The date listed here represents the final step increase. The major portion of the bill deals with tax legislation; alters wage/hour treatment of certain inside sales, funeral industry, and computer services personnel. c Bill would exempt licensed funeral directors and embalmers from minimum wage and overtime pay protections. d Bill would extend federal minimum wage protection, in steps, to workers in the Commonwealth of the Northern Mariana Islands (CNMI). e This is a composite bill dealing with range of education, welfare, and social reform issues in addition to raising the federal minimum wage and extending it, in steps, to the CNMI. The bill also provides for a “living wage.” Further concerning the “living wage,” see H.R. 917 and H.R. 1457. f The major portion of the bill deals with business and real estate taxes. It would increase the minimum wage to $6.15 per hour after April 1, 2002, but make no other changes in the FLSA. g The bill would raise the minimum wage and extend it, in steps, to the CNMI. The bill deals with other socio-economic reforms as well. b Table 2. Overtime Pay Proposals of the 107th Congress Bill no. Action beyond referral Sponsor Impact Other components H.R. 546 Quinn — Exempts certain funeral industry and inside sales personnel; changes, existing exemption, certain computer workers Umbrella billa H.R. 648 Graham — Exempts certain funeral service workers Minimum wage componentb H.R. 1289 Lantos — Restricts mandatory overtime for “a licenced health care employee”c — H.R. 1545 Andrews — Alters existing exemption of certain computer workers — H.R. 1602 Ballenger Hearing in Subcommittee Redefines “regular rate” for overtime pay calculation purposes — CRS-5 Bill no. a Action beyond referral Sponsor Impact Other components H.R. 1902 Langevin — Restricts mandatory overtime for “a licensed health care employee”c — H.R. 1982 Biggert Oversight hearings held Permits private sector employers to offer “comp time” to their employees — H.R. 2070 Tiberi Marked-up by subcommittee, reported to full committee Would exempt certain inside sale personnel, with certain conditions, from overtime pay protection — H.R. 2679 Andrews — Overtime pay exemption, organized camps Minimum wage exemption H.R. 3017 Udall (N.Mex.) — Mandates report on mandatory overtime of nurses, Dept. of Veterans’ Affairs Employment policy, Veterans’ Health Admin. H.R. 3238 Stark — Limits mandated overtime for nurses serving Medicare patients — H.R. 3678 Graham — Exempts certain “construction engineering & design professionals” — S. 624 Gregg — Proposes a restructuring of the overtime pay provisions of the FLSAd — S. 1188 Rockefeller Reported from committee, S.Rept. 107-80 Mandates report on mandatory overtime of nurses, Dept. of Veterans’ Affairs Employment policy, Veterans’ Health Admin. S. 1686 Kennedy — Limits mandated overtime for nurses serving Medicare patients — The major portion of bill deals with tax legislation; would increase the minimum wage. It also exempts certain funeral industry workers from minimum wage protection. b Bill would exempt licensed funeral directors and licensed embalmers from minimum wage protection. c H.R. 1289 (Lantos) and H.R. 1902 (Langevin) are similar, not identical. d The bill would allow for employers to offer “comp time” to their employees, permit a biweekly work period (80 hours) rather than the now standard 40-hour work week, and make other changes in the FLSA. CRS-6 Table 3. Child Labor Proposals of the 107th Congress Bill no. a b Sponsor Action beyond referral Impact H.R. 961 Lantos — Umbrella bill strengthening U.S. child labor law H.R. 1869 Frost — Bill to protect young persons employed in firm also employing person with record of crime or of violence H.R. 2239 Roybal-Allard — The CARE Act of 2001: strengthens U.S. child labor law, special provisions dealing with children in agriculturea H.R. 2639 Pitts — To permit Amish youth, at age 14, to work in wood processing plants H.R. 3070 Petri — To provide regulations governing traveling sales crews and to prohibit employment of persons under 18 years of age in traveling sales work, under specified conditions.b S. 96 Kohl — Would provide new protections for young persons engaged in sales work and prohibit employment by persons under 18 years of age in traveling sales work under specified conditionsb S. 869 Harkin — The CARE Act of 2001: strengthens U.S. child labor law, special provisions dealing with children in agriculturea S. 1241 Specter — To permit Amish youth, at age 14, to work in wood processing plants S. 2549 Kohl — Prohibits employment of persons under 18 years of age in “door-to-door” or related sales work that keeps them away from home more than 24 hoursb H.R. 2239 and S. 869 are, in part, similar. However, H.R. 2239 is more far-reaching and comprehensive. While H.R. 3070 and S. 96 deal with the same subject area, they are structured somewhat differently and are not identical bills. S. 2549 is an abbreviated version of S. 96.