Minimum Wage, Overtime Pay, and Child Labor: Inventory of Proposals in the 108th Congress to Amend the Fair Labor Standards Act

Order Code RL32353 CRS Report for Congress Received through the CRS Web Minimum Wage, Overtime Pay, and Child Labor: Inventory of Proposals in the 108th Congress to Amend the Fair Labor Standards Act Updated February 9, 2005 William G. Whittaker Specialist in Labor Economics Domestic Social Policy Division Congressional Research Service ˜ The Library of Congress Minimum Wage, Overtime Pay, and Child Labor: Inventory of Proposals in the 108th Congress to Amend the Fair Labor Standards Act Summary The Fair Labor Standards Act (FLSA, 29 U.S.C. 201-219) is the basic federal statute dealing with minimum wages, overtime pay, child labor, and related issues. Enacted in 1938, it has been modified through the years to take into account changing workplace trends and to meet new worker and employer concerns. The act has undergone general amendment on eight separate occasions (1949, 1955, 1961, 1966, 1974, 1977, 1989, and 1996) in addition to numerous more specific legislated changes. It has also been the subject of continuing administrative rulemaking by the Department of Labor (DOL) — and has been the focus of extensive litigation that has impacted the manner in which the act is applied. The FLSA is divided roughly into three parts corresponding to its subject areas: minimum wage (Section 6), overtime pay (Section 7), and child labor (Section 12). These are accompanied by a body of statutory exemptions or exceptions (Section 13). Definitions appear in Section 3. Other sections deal with administration, penalties, and related matters. Nothing in the act requires that Congress revisit the statute. Amendment has tended to respond to change in the value of the minimum wage. As the level of the wage floor has eroded through inflationary pressure, Congress has revisited the FLSA and, while addressing the wage rate, it has also, often, revised coverage patterns and modified overtime pay and other requirements. Child labor, by and large (but with exceptions), has been primarily the responsibility of the Secretary of Labor operating within general guidelines laid down by Congress. Until recently, legislation to amend the FLSA had been free-standing — the product of extended hearings. In 1996, that pattern shifted. The 1996 FLSA amendments were adopted as a floor amendment to a broad proposal dealing with business and related tax issues. As a result, some have come to view as a tradition a linkage of labor standards enhancement with sometimes unrelated benefits for employers. Others argue that there is no inherent reason to tie FLSA amendments to benefits for employers. In the 108th Congress, further changes were proposed with respect to the FLSA — some to increase worker protections and others, arguably, to reduce them. Most of these proposals have been narrowly focused, reviewing a single aspect of the Act — though several have been more complex. Only one, dealing with Amish children, was adopted. Contents An Introduction to the FLSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Structure of the Fair Labor Standards Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Focus of the Legislative Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 An Inventory of Legislative Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 List of Tables Table 1. Minimum Wage Proposals of the 108th Congress . . . . . . . . . . . . . . . . . . 4 Table 2. Overtime Pay Proposals of the 108th Congress . . . . . . . . . . . . . . . . . . . . 7 Table 3. Child Labor Proposals of the 108th Congress . . . . . . . . . . . . . . . . . . . . 10 Table 4. General or Structural Amendment of the Fair Labor Standards Act, Proposed During the 108th Congress . . . . . . . . . . . . . . . . . . 11 Minimum Wage, Overtime Pay, and Child Labor: Inventory of Proposals in the 108th Congress to Amend the Fair Labor Standards Act The Fair Labor Standards Act (FLSA, 29 U.S.C. 201-219) is the basic federal statute dealing with minimum wages, overtime pay, child labor, and related issues. Almost immediately after its enactment in 1938, various Members of Congress proposed its amendment to address worker and employer concerns. The act has now undergone general amendment on eight separate occasions (1949, 1955, 1961, 1966, 1974, 1977, 1989, and 1996) in addition to numerous more specific legislated changes in the statute. It has also been the subject of continuing administrative rulemaking by the Department of Labor (DOL). In the 108th Congress, further changes have been proposed — some to increase worker protections and others, arguably, to reduce them. Only one bill — that dealing with Amish children — was adopted. This report provides an overview of legislation proposed during the 108th Congress. For analysis of the issues, consult the CRS reports listed in the footnotes of this report. An Introduction to the FLSA When the federal wage and hour statute (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) labor policy concerns for at least half a century. But only in the wake of the Great Depression (1929 ff.) was Congress able to forge a comprehensive federal measure that would withstand judicial review while respecting the differing interests of employers and workers. Structure of the Fair Labor Standards Act The FLSA is divided roughly into three parts: minimum wage (Section 6), overtime pay (Section 7), and child labor (Section 12). These are accompanied by a body of statutory exemptions or exceptions (Section 13). Definitions appear in Section 3. Other sections deal with administration, penalties, and related matters. The federal minimum wage is set in statute and remains at a fixed rate (declining in value over time as a result of inflationary pressures) until changed through legislative action. Although the general rate is currently $5.15 an hour, there are also a series of sub-minima (or special treatment) for students, youth, persons with CRS-2 disabilities, regularly tipped employees, and others. In addition, special treatment for certain small businesses has been written into the statute.1 In general, the overtime requirements of the act now set 40 hours as the standard workweek. Thereafter, a worker must be compensated at not less than 1½ times a worker’s regular rate of pay for hours worked in excess of 40 per week. No daily hours standard is provided in the act, thus allowing for flexible scheduling within the 40 hour standard. As with the act’s minimum wage requirement, exceptions from the overtime standard have been built into the statute. These exceptions are technical and complex but allow employers a variety of options beyond the general requirements of the act.2 Efforts to restrict or to regulate child labor date from the 19th century. After a series of federal initiatives uniformly deemed unconstitutional, language dealing with child labor was incorporated within the original FLSA of 1938. Beyond several broad and general child labor provisions, the act leaves wide discretion in standard setting to the Secretary of Labor who exercises that authority through the rulemaking process. But, periodically, Congress has intervened to deal directly with a particular aspect of child labor law.3 Focus of the Legislative Process Because wage/hour and child labor legislation has been on the congressional agenda, intermittently, through more than six decades, its consideration has developed along more or less standard lines — but with certain recent variations. Speaking generally, labor standards laws have been opposed by employers and supported by workers. Economists can be found of all sides of the issue — with “little consensus” with respect to impact.4 The arguments, pro and con, voiced during the first three decades of the 20th century, remain en vogue — little seems to have changed. Packaging of wage/hour measures can be critical. From the original Act of 1938 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 1 See CRS Report RL30993, The Fair Labor Standards Act: Minimum Wage in the 108th Congress, by William G. Whittaker. 2 See CRS Report RL32215, The Fair Labor Standards Act: Overtime Pay Issues in the 108th Congress, by William G. Whittaker. 3 CRS Report RL31501, Child Labor In America: History, Policy and Legislative Issues, by William G. Whittaker. 4 See Willis J. Nordlund, The Quest for A Living Wage: The History of the Federal Minimum Wage Program (Westport, Conn.: Greenwood Press, 1997), p. xvii. Nordlund is referring, here, specifically to the minimum wage — but that same conclusion might arguably be drawn with respect to overtime pay and to child labor. CRS-3 or unrelated business matters. However, in 1996 (the 104th Congress), various FLSA amendments were added to an industry-oriented tax package as a floor amendment. As the debate over the minimum wage developed in the 106th and 107th Congresses, the issue of linkage came to be viewed as traditional. Thus, some now 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. Others argue that there is no reason to tie minimum wage standards (or changes in overtime pay and child labor policy) to benefits for employers: that they stand independently as issues of economic justice and worker protection. Almost every element of the FLSA can be contentious. Each proposed change can (and often does) bring forth advocates, pro and con, to argue the justice and/or economic impact of proffered legislation. The approach taken — whether a freestanding measure or a package (whether of purely labor standards or linked to business concerns) — can, by offering diverse legislative choices, either create an incentive for enactment or provide a reason for opposing any action at all. Further, 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. An Inventory of Legislative Proposals In the 108th Congress, legislative proposals dealing with the minimum wage, overtime pay, and child labor are taking a variety of forms. The tables that follow provide a simple overview of the various initiatives, broken down by the three general categories: minimum wage, overtime pay, and child labor. In some cases, a particular bill will be listed on more than one table. CRS-4 Table 1. Minimum Wage Proposals of the 108th Congress (The federal minimum wage is now $5.15 per hour) Bill no. Sponsor Increase minimum to: Effective date for the final step increase Action beyond referral Other components H.R. 936 Miller, George $6.65 To $5.90 per hour 60 days after enactment; to $6.65 1 year later — CNMI minimum wage componenta; mandates a “living wage” for workers engaged in federal contract work; and makes certain changes in TANF H.R. 965 Miller, George $6.65 To $5.90 per hour 60 days after enactment; to $6.65 one year later — CNMI minimum wage componenta H.R. 1829 Hoekstra — — Passed House Nov. 6, 2003 (H.Rept. 108286); received in Senate, Nov. 7, referred to Judiciary Committee. Passed House on Nov. 6, 2003. Provides system of minimum wages for inmate workers in the Federal Prison Industries programb H.R. 1996 Wilson, Joe — — — Exempts certain computer-related workers from minimum wage and overtime payc H.R. 2065 Tiberi — — — Exempts employees who are licensed funeral directors and embalmersd H.R. 2145 Andrews — — — Conditions the minimum wageexempt status of organized camps upon compliance with certain safety standards H.R. 2263 Sessions — — — Exempts employees engaged in seasonal sale of fireworks H.R. 3174 Payne — — — Adjusts coordination of FLSA with Motor Carrier Act of 1935 CRS-5 Bill no. Sponsor Increase minimum to: Effective date for the final step increase Action beyond referral Other components H.R. 4256 Miller, George $7.00 To $5.85 per hour 60 days after enactment; to $6.45 a year later; and to $7.00 one more year later — CNMI minimum wage componenta H.R. 4396 DeMint — — — Exempts certain construction engineering and design professionals H.R. 5043 Bell $7.00 To add an indexation component —- —- H.R. 5093 English $6.50 After Oct. 2007 —- Provides expensing, modification of tip credit, and related tax matters S. 20 Daschle $6.65 To $5.90 per hour 60 days after enactment; to $6.65 one year later — CNMI minimum wage componenta S. 224 Daschle $6.65 To $5.90 per hour 60 days after enactment; to $6.65 one year later Legislative Calendar No. 3: Jan. 29, 2003 CNMI minimum wage componenta S. 237 Graham (SC) — — — Exempts certain construction engineering and design professionals S. 292 Graham (SC) — — — Exempts employees who are licensed funeral directors and embalmersd S. 448 Dodd $6.65 To $5.90 per hour 60 days after enactment; to $6.65 one year later — CNMI minimum wage componenta; mandates a “living wage” for workers engaged in federal contract work; with certain changes in TANF S. 495 Graham (SC) — — — Exempts certain computer-related workers from minimum wage and overtime payc CRS-6 Bill no. Sponsor Increase minimum to: Effective date for the final step increase Action beyond referral Other components S. 2370 Kennedy $7.00 To $5.85 per hour 60 days after enactment; to $6.45 a year later; and to $7.00 one more year later; Legislative Calendar No. 496 — CNMI minimum wage componenta H.R. 4, S.Amdt. 2945 Boxer, Kennedy $7.00 Increases wage in steps over 26 months from date of enactment Cloture vote fails, 51 yeas to 47 nays (Apr. 1, 2004) on H.R. 4 CNMI minimum wage componenta (H.R. 4 is welfare reform reauthorization legislation) a. Bill would extend federal minimum wage protection, in steps, to workers in the Commonwealth of the Northern Mariana Islands (CNMI). b. For background purposes, see CRS Report 96-892, Federal Prison Industries: UNICOR, by JoAnne O’Bryant; and 93-895, The Fair Labor Standards Act: Minimum Wage Protection for Prison Inmate Workers and for non-Prison Labor, by William Whittaker (both archived: available from the author: 7-7759) c. Alternative pay standards are established by the act. For general background, see CRS Report RL30537, Computer Services Personnel: Overtime Pay Under the Fair Labor Standards Act, by William Whittaker. d. For general background, see CRS Report RL30697, Funeral Services: The Industry, Its Workforce, and Labor Standards, by William Whittaker. CRS-7 Table 2. Overtime Pay Proposals of the 108th Congress Bill no. Sponsor Action beyond referral Impact Other components H.R. 745 Stark — Limits mandated overtime for nurses serving Medicare patients, with other related provisions — H.R. 1119 Biggert Hearing held; reported, H.Rept. 108-127; placed on Union Calendar, No. 64a Provides a “comp time” option for private sector employers and their employees — H.R. 1996 Wilson, Joe — Exempts certain computerrelated workers from minimum wage and overtime payb — H.R. 2065 Tiberi — Exempts employees who are licensed funeral directors and embalmersc — H.R. 2263 Sessions — Exempts employees engaged in seasonal sale of fireworks — H.R. 2660 Regula Passed House and Senate. See H.R. 2673, P.L. 108-199 Language limiting DOL option on Section 13(a)(1) overtime pay rulemaking dropped from conference report, passed by House and Senated Appropriations for DOL and related agencies H.R. 2660, H.Amdt. 222 Obey Defeated in House (July 10, 2003) Prevents DOL from administratively expanding overtime pay exemption under the FLSAd — H.R. 2665 King — Prevents the DOL from administratively expanding overtime pay exemption under the FLSAd — H.R. 3174 Payne — Adjusts coordination of FLSA with Motor Carrier Act of 1935 — H.R. 4396 DeMint — Exempts certain construction engineering and design professionals — S. 237 Graham (SC) — Exempts certain construction engineering and design professionals Minimum wage exemption S. 292 Graham (SC) — Exempts employees who are licensed funeral directors and embalmersc Minimum wage exemption S. 317 Gregg — Permits private sector employers to offer their employees compensatory time off and certain work hours alternatives to cash payment for overtime — CRS-8 Bill no. Sponsor Action beyond referral Impact Other components S. 373 Kennedy — Limits mandated overtime for nurses serving Medicare patients, with other related provisions — S. 495 Graham (SC) — Exempts certain computerrelated workers from minimum wage and overtime payb — S. 991 Inouye — Limits mandated overtime for nurses serving Medicare patients, with other related provisions — S. 1485 Kennedy — Prevents DOL from administratively expanding the overtime pay exemption under Section 13(a)(1) of the FLSAd — S. 1611 Specter — Provides for a commission to review overtime pay policy; freezes DOL administrative action pending commission report — H.R. 2660, S.Amdt. 1580 Harkin Approved by Senate (September 10, 2003), dropped in conference Prevents the DOL from administratively expanding the overtime pay exemption under Section 13(a)(1) of the FLSAd — S. 1637, S.Amdt. 2881 Harkin Offered March 22, 2004; 1st cloture vote fails, 51 yeas to 47 nays (March 24, 2004); second cloture vote fails, 50 yeas to 47 nays (April 7, 2004). Bill recommitted with instructions (April 8, 2004); called up, May 2004 and amended; passed Senate, June 2004; conference on House bill (H.R. 4520); Harkin amendment dropped. Prevents the DOL from administratively expanding the overtime pay exemption under Section 13(a)(1) of the FLSAd Broad legislative package dealing with tax, trade and related matters S. 1637, S.Amdt. 3107 Harkin Offered May 3, 2004; agreed to by Senate, May 4, 2004: 52 yeas to 47 nays. [see S. 1637, above] Prevents the DOL from administratively expanding the overtime pay exemption under Section 13(a)(1) of the FLSAd — CRS-9 Bill no. Sponsor Action beyond referral Impact Other components S. 1637, S.Amdt. 3111 Gregg Offered May 4, 2004; agreed to by Senate, May 4, 2004: 99 yeas to ) nays. [see s. 1637, above] Lists certain categories of work which could be expected to be covered by overtime pay protection notwithstanding Section 13(a)(1). — S. 2975 Harkin Passed by the Senate Would amend the FLSA to prevent curtailment of Section 13(a)(1) exemptions —- a. CRS Report RL31875, Compensatory Time vs. Cash Wages: Amending the Fair Labor Standards Act, by William Whittaker. b. CRS Report RL30537, Computer Services Personnel: Overtime Pay Under the Fair Labor Standards Act, by William Whittaker. c. CRS Report RL30697, Funeral Services: The Industry, Its Workforce, and Labor Standards, by William Whittaker. d. CRS Report RL32088, The Fair Labor Standards Act: A Historical Sketch of the Overtime Pay Requirements of Section 13(a)(1), by William Whittaker. Restraints upon DOL’s authority to issue a Section 13(a)(1) overtime regulation have been attempted in connection with other legislation as well — as discussed in the report. CRS-10 Table 3. Child Labor Proposals of the 108th Congress Bill no. Sponsor Action beyond referral Impact H.R. 756 Foley — To prohibit “exploitive child modeling” involving persons under 17 years of age H.R. 1943 Pitts Hearing, House Subcommittee on Workforce Protections, October 8, 2003. See H.R. 2673 Permits employment of children, 14 years of age, in wood processing plants H.R. 3139 Lantos — Comprehensive restructuring of FLSA child labor requirements; adds prohibition on youth peddling; modifies coverage with respect to youth who work in agriculture H.R. 2673 Bonilla Omnibus Appropriations Conference Report, P.L. 108-199 Substance of H.R. 1943 and S. 974 included in H.R. 2673: permits Amish youth, over age 14, to be employed in certain wood processing plants (H.R. 2673 provides appropriations for DOL, inter alia) H.R. 4190 Markey — Requires the Secretary of Labor to declare operation of power driven amusement park rides hazardous for persons under 18 years of age S. 404 Bunning — To prohibit “exploitive child modeling” involving persons under 17 years of age S. 974 Specter See H.R. 2673 Permits employment of children, over the age of 14 years, in wood processing plants CRS-11 Table 4. General or Structural Amendment of the Fair Labor Standards Act, Proposed During the 108th Congress Bill no. Sponsor Action beyond referral Impact H.R. 2516 Ballenger — To amend Section 3(f) to include Christmas tree farming within the definition of agriculture S. 2088 Kennedy — To amend Section 16 of the FLSA to waive state sovereign immunity with respect to enforcement of wage/hour and related labor standards under the act