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104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     104-670
_______________________________________________________________________


 
                WORKING FAMILIES FLEXIBILITY ACT OF 1996

                                _______
                                

 July 11, 1996.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

     Mr. Goodling, from the Committee on Economic and Educational 
                 Opportunities, submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 2391]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Economic and Educational Opportunities, to 
whom was referred the bill (H.R. 2391) to amend the Fair Labor 
Standards Act of 1938 to provide compensatory time for all 
employees, having considered the same, report favorably thereon 
with an amendment and recommend that the bill as amended do 
pass.
  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Working Families Flexibility Act of 
1996''.

SEC. 2. COMPENSATORY TIME.

  Subsection (o) of section 7 of the Fair Labor Standards Act of 1938 
(29 U.S.C. 207) is amended--
          (1) by striking paragraphs (1) through (5) and inserting the 
        following:
  ``(1) An employee may receive, in accordance with this subsection and 
in lieu of monetary overtime compensation, compensatory time off at a 
rate not less than one and one-half hours for each hour of employment 
for which overtime compensation is required by this section.
  ``(2) An employer may provide compensatory time under paragraph (1) 
only--
          ``(A) pursuant to--
                  ``(i) applicable provisions of a collective 
                bargaining agreement, memorandum of understanding, or 
                any other agreement between the employer and 
                representatives of such employees, or
                  ``(ii) in the case of employees who are not 
                represented by a collective bargaining agent or other 
                representative designated by the employee, an agreement 
                or understanding arrived at between the employer and 
                employee before the performance of the work if such 
                agreement or understanding was entered into knowingly 
                and voluntarily by such employee;
          ``(B) in the case of an employee who is not an employee of a 
        public agency, if such employee has affirmed, in a written or 
        otherwise verifiable statement that is made, kept, and 
        preserved in accordance with section 11(c), that the employee 
        has chosen to receive compensatory time in lieu of overtime 
        compensation; and
          ``(C) if the employee has not accrued compensatory time in 
        excess of the limit applicable to the employee prescribed by 
        paragraph (5).
In the case of employees described in subparagraph (A)(ii) who are 
employees of a public agency and who were hired before April 15, 1986, 
the regular practice in effect on such date with respect to 
compensatory time off for such employees in lieu of the receipt of 
overtime compensation, shall constitute an agreement or understanding 
described in such subparagraph. Except as provided in the preceding 
sentence, the provision of compensatory time off to employees of a 
public agency for hours worked after April 14, 1986, shall be in 
accordance with this subsection. An employer may provide compensatory 
time under paragraph (1) to an employee who is not an employee of a 
public agency only if such agreement or understanding was not a 
condition of employment.
  ``(3) An employer which is not a public agency and which provides 
compensatory time under paragraph (1) to employees shall not directly 
or indirectly intimidate, threaten, or coerce or attempt to intimidate, 
threaten, or coerce any employee for the purpose of--
          ``(A) interfering with such employee's rights under this 
        subsection to request or not request compensatory time off in 
        lieu of payment of overtime compensation for overtime hours; or
          ``(B) requiring any employee to use such compensatory time.
  ``(4)(A) An employee, who is not an employee of a public agency, may 
accrue not more than 240 hours of compensatory time.
  ``(B)(i) Not later than January 31 of each calendar year, the 
employee's employer shall provide monetary compensation for any 
compensatory time off accrued during the preceding calendar year which 
was not used prior to December 31 of the preceding year at the rate 
prescribed by paragraph (6). An employer may designate and communicate 
to the employer's employees a 12-month period other than the calendar 
year, in which case such compensation shall be provided not later than 
31 days after the end of such 12-month period.
  ``(ii) The employer may provide monetary compensation for an 
employee's unused compensatory time at any time. Such compensation 
shall be provided at the rate prescribed by paragraph (6).
  ``(C) An employee may also request in writing that monetary 
compensation be provided, at any time, for all compensatory time 
accrued which has not yet been used. Within 30 days of receiving the 
written request, the employer shall provide the employee the monetary 
compensation due in accordance with paragraph (6).
  ``(5)(A) If the work of an employee of a public agency for which 
compensatory time may be provided included work in a public safety 
activity, an emergency response activity, or a seasonal activity, the 
employee engaged in such work may accrue not more than 480 hours of 
compensatory time for hours worked after April 15, 1986. If such work 
was any other work, the employee engaged in such work may accrue not 
more than 240 hours of compensatory time for hours worked after April 
15, 1986. Any such employee who, after April 15, 1986, has accrued 480 
or 240 hours, as the case may be, of compensatory time off shall, for 
additional overtime hours of work, be paid overtime compensation.
  ``(B) If compensation is paid to an employee described in 
subparagraph (A) for accrued compensatory time off, such compensation 
shall be paid at the regular rate earned by the employee at the time 
the employee receives such payment.
  ``(6)(A) An employee of an employer which is not a public agency who 
has accrued compensatory time off authorized to be provided under 
paragraph (1) shall, upon the voluntary or involuntary termination of 
employment, be paid for the unused compensatory time at a rate of 
compensation not less than--
          ``(i) the average regular rate received by such employee 
        during the period during which the compensatory time was 
        accrued, or
          ``(ii) the final regular rate received by such employee,
whichever is higher.
  ``(B) An employee of an employer which is a public agency who has 
accrued compensatory time off authorized to be provided under paragraph 
(1) shall, upon the voluntary or involuntary termination of employment, 
be paid for the unused compensatory time at a rate of compensation not 
less than--
          ``(i) the average regular rate received by such employee 
        during the last 3 years of the employee's employment, or
          ``(ii) the final regular rate received by such employee,
whichever is higher.
  ``(C) Any payment owed to an employee under this subsection for 
unused compensatory time shall, for purposes of section 16(b), be 
considered unpaid overtime compensation.
  ``(7) An employee--
          ``(A) who has accrued compensatory time off authorized to be 
        provided under paragraph (1), and
          ``(B) who has requested the use of such compensatory time,
shall be permitted by the employee's employer to use such time within a 
reasonable period after making the request if the use of the 
compensatory time does not unduly disrupt the operations of the 
employer.''; and
          (2) by redesignating paragraphs (6) and (7) as paragraphs (8) 
        and (9), respectively.

SEC. 3. REMEDIES.

  Section 16 of the Fair Labor Standards Act of 1938 (29 U.S.C. 216) is 
amended--
          (1) in subsection (b), by striking ``(b) Any employer'' and 
        inserting ``(b) Except as provided in subsection (f), any 
        employer''; and
          (2) by adding at the end the following:
  ``(f) An employer which is not a public agency and which willfully 
violates section 7(o)(3) shall be liable to the employee affected in 
the amount of the rate of compensation (determined in accordance with 
section 7(o)(6)(A)) for each hour of compensatory time accrued by the 
employee and in an additional equal amount as liquidated damages 
reduced by the amount of such rate of compensation for each hour of 
compensatory time used by such employee.''.

                                Purpose

    The purpose of H.R. 2391 is to amend the Fair Labor 
Standards Act of 1938 to provide compensatory time for all 
employees.

                            Committee Action

    The Subcommittee on Workforce Protections held an oversight 
hearing on June 8, 1995, on amending the Fair Labor Standards 
Act to provide private sector employers with the option of 
allowing employees to choose to take compensatory time off in 
lieu of overtime pay. The following individuals testified at 
the hearing: Ms. Arlyce Robinson, Administrative Support 
Coordinator, Computer Sciences Corporation, Falls Church, 
Virginia; Ms. Kathleen M. Fairall, Senior Human Resource 
Representative, Timken Company, Randolph County, North 
Carolina; Ms. Sandie Moneypenny, Process Technician, Timken 
Company, Randolph County, North Carolina; Dr. M. Edith Rasell, 
Economist, Economic Policy Institute, Washington, D.C.; and Mr. 
Michael T. Leibig, Attorney-at-Law, Zwerdling, Paul, Leibig, 
Kahn, Thompson & Wolly, P.C., Fairfax, Virginia.
    H.R. 2391 was introduced by Representative Cass Ballenger 
on September 21, 1995. The Subcommittee on Workforce 
Protections held a hearing on H.R. 2391 on November 1, 1995. 
The following witnesses testified on H.R. 2391: Mr. Pete 
Peterson, Senior Vice President of Personnel, Hewlett-Packard 
Company, Palo Alto, California; Ms. Debbie McKay, 
Administrative Specialist, PRC, Inc., McLean, Virginia; and Mr. 
Michael T. Leibig, Attorney-at-Law, Zwerdling, Paul, Leibig, 
Kahn, Thompson & Wolly, P.C., Fairfax, Virginia.
    On December 13, 1995, the Subcommittee on Workforce 
Protections approved H.R. 2391, as amended, by voice vote, and 
ordered the bill favorably reported to the Full Committee. On 
June 26, 1996, the Committee on Economic and Educational 
Opportunities approved H.R. 2391, as amended, by voice vote, 
and ordered the bill favorably reported by a roll call vote of 
20 yeas and 16 nays.

                     Committee Statement and Views

                               background

    The Fair Labor Standards Act (FLSA) \1\ was enacted in 
1938. Among its provisions is the requirement that hours of 
work by ``non-exempt employees'' beyond 40 hours in a seven day 
period must generally be compensated at a rate of one and one-
half times the employee's regular rate of pay.\2\ Exceptions to 
the ``40 hour work week'' are permitted, under section 7 of the 
FLSA,\3\ for employees in collective bargaining agreements and 
for a variety of specific types and places of employment whose 
circumstances have led Congress, over the years, to enact 
specific provisions regarding maximum hours of work for those 
types of employment. In addition, the ``overtime pay'' 
requirement does not apply to employees who are exempt as 
``executive, administrative, or professional'' employees.\4\
---------------------------------------------------------------------------
    \1\ 29 U.S.C. Sec. 201-219.
    \2\ 29 U.S.C. Sec. 207.
    \3\ 29 U.S.C. Sec. 207.
    \4\ 29 U.S.C. Sec. 213.
---------------------------------------------------------------------------
    Under the overtime pay requirement in the FLSA, overtime 
pay for employees in the private sector must be in the form of 
cash wages. This is contrary to the overtime pay provision for 
employees in the public sector. Section 207(o) \5\ provides 
that public agencies may provide compensatory time off in lieu 
of overtime compensation, so long as the employee or his or her 
collective bargaining representative has agreed to this 
arrangement and the compensatory time off is given at a rate of 
not less than one and one-half hours for each hour of 
employment for which overtime compensation is required.
---------------------------------------------------------------------------
    \5\ 29 U.S.C. Sec. 207(o).
---------------------------------------------------------------------------
    The difference in treatment between the private and public 
sectors under the FLSA is explained by the fact that the 
provisions applying the FLSA to the public sector were added in 
1985 and, therefore included a recognition that the workplace 
and work force have changed greatly since the 1930's when the 
private sector provision was written. By 1985, Congress 
recognized that changes in the work force and the workplace had 
led many employers in the public sector to make compensatory 
time available and for their employees to choose compensatory 
time. As the Senate Labor Committee explained the inclusion of 
the compensatory time provision for the public sector:

          The Committee also is cognizant that many state and 
        local government employers and their employees 
        voluntarily have worked out arrangements providing for 
        compensatory time off in lieu of pay for hours worked 
        beyond the normally scheduled workweek. These 
        arrangements--frequently the result of collective 
        bargaining--reflect mutually satisfactory solutions 
        that are both fiscally and socially responsible. To the 
        extent practicable, we wish to accommodate such 
        arrangements.\6\
---------------------------------------------------------------------------
    \6\ Report on S. 1570, Committee on Labor and Human Resources, U.S. 
Senate, 99th Congress, First Session, Senate Report No. 99-159, p. 8.

    The Committee is certain that compensatory time off in lieu 
of overtime pay for hours worked beyond 40 in a week can 
provide ``mutually satisfactory solutions'' in the private 
sector no less than is the case in the public sector.
    Ms. Arlyce Robinson, an Administrative Support Coordinator 
for Computer Services Corporation and an hourly non-exempt 
employee, described to the Subcommittee on Workforce 
Protections how she would like to be able to use compensatory 
time:

          I am here this morning to share with you my feelings 
        about the impact of a law that was created over 50 
        years ago to protect many of us in the workplace, the 
        Fair Labor Standards Act. I know that under this law, 
        as a non-exempt employee I am eligible for overtime if 
        I work more than 40 hours in a work week. And, while I 
        never turned down an opportunity to earn more money, 
        there have been times when I would have gladly given up 
        the additional pay to enjoy flexibility in planning my 
        work schedule, the same flexibility that my exempt 
        colleagues have had for some time. Let me give you an 
        example.
          In a few months, as all of you know, weather around 
        Washington, DC will become much colder. We are likely 
        to see some snow and ice. And if we have winter like 
        the one we had two years ago, we will likely see a 
        great deal of snow and ice. If it snows on a Monday or 
        Tuesday--at the beginning of my workweek--and I can't 
        get to work on one of those days, I know that I can 
        make up the hours that I missed by working extra hours 
        later in that same week--say on Thursday or Friday. 
        However, if it snows at the end of my workweek, we have 
        a different issue. Although my company would like to 
        allow me to make up the work during the following 
        workweek, the fact is that they can't allow it without 
        incurring additional costs. You see, if I only worked 4 
        eight hour days--or 32 hours--the first week, I would 
        have to work 48 hours the following week in order to 
        have a full 80 hour paycheck for the two week period. 
        But right now under the Fair Labor Standards Act, each 
        one of the 8 hours worked over 40 in the second week 
        would have to be paid on an overtime basis. That's just 
        too expensive for my company, given the number of non-
        exempt employees that we have. So since I can't make up 
        the time in the second week, I have to take vacation 
        leave which keeps my paycheck whole but gives me less 
        vacation to use later--when I would like to use it. My 
        only other alternative is to take leave without pay, 
        which keeps my vacation intact, but results in my 
        losing money in my paycheck. And I do need my 
        paycheck!!
          * * * For the first 20 years of my career, I worked 
        in the public sector as a secretary and as an 
        administrative assistant in the DC public school system 
        and for the DC Office of Personnel. When I worked for 
        these agencies, I was able to earn and use compensatory 
        time. I can't earn that now. * * * This lack of 
        flexibility is especially difficult for parents of 
        young children, both mothers and fathers, and, 
        particularly, for single parents. Doctor appointments 
        and school conferences can often only be scheduled 
        during work hours. For non-exempt employees, this often 
        means having to take sick leave or vacation leave to 
        have a few hours off to take care of family 
        responsibilities.\7\
---------------------------------------------------------------------------
    \7\ Hearings on the Fair Labor Standards Act before the 
Subcommittee onWorkforce Protections, Committee on Economic and 
Educational Opportunities, U.S. House of Representatives, 104th 
Congress, First Session, Serial No. 104-46, pp. 180-181.

    Similarly, Ms. Sandie Moneypenny, a process technician for 
Timken Company and an hourly non-exempt employee, described how 
having the option of choosing compensatory time could help her 
---------------------------------------------------------------------------
as a working mother:

          Compensatory time off for a working mother like 
        myself would be very helpful. If I had to leave work 
        because of a sick child, wanted to attend a teachers 
        conference, needed to take my child to the dentist or 
        just wanted time off to be with my family, I would have 
        the option without it affecting my pay.
          Today I can only use compensatory time in the week it 
        occurs, but as most of you know, life doesn't seem to 
        work that way. If I could bank my overtime, I wouldn't 
        have to worry about missing work if my child gets sick 
        on Monday or Tuesday. I also would only be postponing 
        valuable time off with my family when I have a busy 
        work week, because I could always take the time off at 
        a later date.\8\
---------------------------------------------------------------------------
    \8\ Ibid., p. 186.

    Similar support for the use of compensatory time came from 
---------------------------------------------------------------------------
Ms. Deborah McKay, Administrative Specialist, PRC, Inc.:

          At PRC we have a cafeteria-style benefits plan. One 
        option is that we may buy extra leave to be used as we 
        wish. However, in the position that I am currently 
        holding, I see many employees who have purchased leave 
        and their leave is used up by midyear. Most of these 
        employees, again, are single mothers, and from a 
        manager's perspective, as well as an employee's, it has 
        become a Catch-22. The employee needs time off but has 
        used all their leave in their account.
          Under this proposal [H.R. 2391], an employee would be 
        given the option to use overtime compensatory time at a 
        later date when these family emergency type situations 
        occur. Personally, I would find this time useful in 
        working on term papers and projects for school as well 
        as waiting for the repairman. There is nothing more 
        frustrating than having to take a whole day of leave to 
        have a scheduled repairman show up--supposed to show up 
        at 9 a.m. and then not show up until 3 or 4 in the 
        afternoon. * * * [W]hat I am recommending is simple. * 
        * * [H]ave the FLSA amended by giving non-exempt and 
        exempt employees the option of time and a half pay or 
        time and a half of equal value off.\9\
---------------------------------------------------------------------------
    \9\ Ibid., pp. 416-417.

    There is ample support for concluding that Ms. Robinson, 
Ms. Moneypenny and Ms. McKay are not alone in wanting the 
option of being able to earn compensatory time off, rather than 
cash wages, for hours worked in excess of 40 in a workweek. A 
survey conducted in September, 1995 by Penn + Schoen 
Associates, Inc. found that 75 percent of those surveyed 
favored a proposal to give workers the option of time off in 
lieu of overtime wages.\10\
---------------------------------------------------------------------------
    \10\ National poll conducted September 23-25, 1995, by Penn + 
Schoen, Associates, Inc.
---------------------------------------------------------------------------
    Employees who are classified as ``professional, 
administrative, or executive'' and who are exempt under the 
FLSA are permitted much more flexibility in their schedules 
than non-exempt employees. Only non-exempt employees are denied 
such flexibility under current law. As Ms. Arlyce Robinson 
summarized it:

          While the law was intended to protect us--and maybe 
        50 years ago it did--in today's business world it has 
        had the effect of creating the illusion of two classes 
        of workers. The term non-exempt is often misinterpreted 
        to mean ``less than professional.'' \11\
---------------------------------------------------------------------------
    \11\ Hearings on the Fair Labor Standards Act before the 
Subcommittee on Workforce Protections, Committee on Economic and 
Educational Opportunities, U.S. House of Representatives, 104th 
Congress, First Session, Serial No. 104-46, p. 181.
---------------------------------------------------------------------------

                              Legislation

    H.R. 2391 amends the FLSA to permit employees in the 
private sector to have the option to receive overtime pay in 
the form of compensatory time in lieu of cash wages. The 
legislation does not change the employer's obligation to pay 
overtime at the rate of one and one-half times the employee's 
regular rate of pay for any hours worked over 40 in a seven day 
period. The bill simply allows overtime compensation to be 
given in the form of compensatory time off, at the rate of one 
and one-half hours of compensatory time for each hour of 
overtime worked, and only if the employee and employer agree on 
that form of overtime compensation.
    The Committee does not intend for H.R. 2391 to alter 
current public sector use of compensatory time in any way. 
Rather, the legislation seeks to extend the option of 
compensatory time in lieu of overtime compensation to private 
sector employees, which is the same option that federal, state, 
and local government employees have had for many years under 
the FLSA, and which private sector employees overwhelmingly 
support. The legislation includes a number of provisions for 
employees in the private sector which are not provided in 
current law for public sector employees. The additional 
provisions for private sector employees have been added in 
response to concerns which have been raised about the possible 
misuse of allowing employers and employees in the private 
sector to decide on compensatory time in lieu of cash 
compensation.

                               agreement

    Under H.R. 2391, an employer and employee must reach an 
express mutual agreement or understanding that overtime 
compensation will be in the form of compensatory time. If 
either the employee or the employer does not so agree, then the 
overtime pay must be in the form of cash compensation.
    The agreement between the employer and employee must be 
reached prior to the performance of the work for which the 
compensatory time off would be given. The agreement may be 
specific as to each hour of overtime, or it may be a blanket 
agreement covering overtime worked within a set period of time.
    Under the bill, the agreement may be pursuant to a 
collective bargaining agreement, memorandum of understanding, 
or any other agreement between the employer and the collective 
bargaining representative, or in the case of employees who are 
not represented by a collective bargaining representative, an 
agreement between the employee and the employer, which has been 
entered into knowingly and voluntarily by the employee. In 
specifying that an employer and employee may only enter into an 
individual agreement on compensatory time where the employees 
are not represented by a collective bargaining representative, 
the Committee intends that the bill follow and be interpreted 
consistent with the Supreme Court's decision in Moreau v. 
Klevenhagen, 508 U.S. 22, 113 S.Ct. 1905 (1993).
    The bill requires that, with regard to private sector 
employers and employees, the agreement on compensatory time 
between the employer and the employee must be affirmed in a 
written or otherwise verifiable statement. The latter is 
intended to allow computerized and other similar payroll 
systems to include this information, so long as the employee's 
agreement to take the overtime in the form of compensatory time 
is verifiable. The Committee does not intend that an agreement 
to take compensatory time could be purely oral with no 
contemporaneous record kept. The bill authorizes the Secretary 
of Labor, pursuant to section 11(c) of the FLSA,\12\ to 
prescribe the form of records which must be maintained and for 
what period of time the records should be maintained by the 
employer.
---------------------------------------------------------------------------
    \12\ 29 U.S.C. Sec. 211(c).
---------------------------------------------------------------------------
    The bill requires an agreement between the employer and the 
individual employee to be entered into before the overtime work 
to which it pertains is performed. In addition, the employee 
must enter into the agreement ``knowingly and voluntarily.'' 
Although this requirement is not in statute with regard to 
public sector use of compensatory time, it is in the Department 
of Labor's regulations,\13\ and is therefore maintained under 
the bill with regard to the public sector and is also applied 
to the private sector.
---------------------------------------------------------------------------
    \13\ 29 C.F.R. Sec. 553.23(c).
---------------------------------------------------------------------------
    The requirement for a mutual agreement between the employer 
and the employee on the use of compensatory time in lieu of 
cash wages reflects the Committee's intent that the employee be 
able to withdraw from such an agreement at any time. Despite 
arguments made by the opponents of compensatory time that some 
employees should continue to be denied the option of 
compensatory time, the Committee believes that the requirement 
for mutual agreement by the employer and the employee and the 
employee protections in the bill ensure that compensatory time 
is voluntary and the Committee sees no reason to exclude 
certain groups of employees from the use of compensatory time, 
based solely upon their level of income or their occupation.
    To ensure that H.R. 2391 does not change the application of 
the current compensatory time provisions of the FLSA to the 
public sector, but to extend the option of compensatory time to 
the private sector, the bill includes the so-called 
``grandfather'' provisions with regard to a regular practice in 
effect in the public sector prior to April 15, 1986, which 
under current law and under this bill would continue to 
constitute an agreement or understanding for the purposes of 
this Act.

                      employee's voluntary choice

    H.R. 2391 does not require employers to offer their 
employees the option of taking overtime pay in the form of 
compensatory time, but it allows employers to do so. Where 
employers choose to offer compensatory time, the bill provides 
that the decision is then left to the employee, whether or not 
to request compensatory time as compensation for overtime hours 
worked. As described above, the bill requires that the 
employee's request and agreement to take compensatory time in 
lieu of cash wages for overtime be affirmed in a written or 
otherwise verifiable statement.
    The private sector employee's voluntary choice to elect 
compensatory time is further reinforced by other provisions of 
the bill. Under H.R. 2391, private sector employers may not 
make acceptance of compensatory time for overtime hours a 
condition of employment. Current law which allows the 
acceptance of compensatory time to be a condition of employment 
in the public sector is maintained with regard to the public 
sector.
    H.R. 2391 also prohibits a private sector employer from 
directly or indirectly intimidating, threatening, coercing, or 
attempting to coerce, any employee into taking or not taking 
compensatory time in lieu of cash overtime, or requiring the 
employee to use accrued compensatory time during a certain 
period. This provision is not part of current law for public 
sector employees and applies only to the private sector. It 
further responds to arguments by the opponents of private 
sector use of compensatory time that employees would be forced 
to take compensatory time in lieu of cash wages against their 
will. That claim is contrary to the plain language of the bill.
    The bill also creates a new remedy under the FLSA for 
employers who willfully violate the anti-coercion language just 
described. Section 3 of H.R. 2391 provides that such employer 
shall be liable to the employee for the employee's rate of 
compensation for each hour of compensatory time and an equal 
amount as liquidated damages. If the employee has already used 
some or all of the compensatory time, the amount to be paid as 
penalty is reduced by that amount. Thus, in either case, the 
employer is liable for two times the employee's overtime rate 
of pay. Under section 17 of the FLSA,\14\ the Secretary of 
Labor may seek injunctive relief against employers who have 
violated the minimum wage and overtime requirements of the 
FLSA, which would include the coercion provisions provided in 
H.R. 2391.
---------------------------------------------------------------------------
    \14\ 29 U.S.C. Sec. 217.
---------------------------------------------------------------------------
    The new remedy for coercion, intimidation or threats 
against an employee for the purpose of forcing the employee to 
take or not take compensatory time in lieu of cash overtime 
wages or to use accrued compensatory time is in addition to the 
existing remedies under the FLSA. Thus, if the employer fails 
to pay overtime (either in cash wage or compensatory time), he 
or she would be liable under section 16(b) of the FLSA.\15\ 
Similarly, any repeated or willful violations of the ``anti-
coercion'' provision would subject the employer to liability 
for civil penalties under section 16(e).\16\ In addition, if a 
cause of action is brought by an employee, the employer may be 
required to pay the employee's attorney's fees and costs.\17\
---------------------------------------------------------------------------
    \15\ 29 U.S.C. Sec. 216(b).
    \16\ 29 U.S.C. Sec. 216(e).
    \17\ 29 U.S.C. Sec. 216(b).
---------------------------------------------------------------------------

               Employee Use of Accrued Compensatory Time

    Under H.R. 2391, an employee who has accrued compensatory 
time may generally use the time whenever he or she so desires. 
The only limitation which the bill puts on the use of 
compensatory time is that the employee should make the request 
to use compensatory time a reasonable time in advance of using 
it. The employer may deny the employee's request only if the 
employee's use of the compensatory time would ``unduly 
disrupt'' the operations of the employer.
    These conditions on the use of accrued compensatory time 
are the same as those in current law for the public sector 
under the FLSA. Regulations issued by the Department of Labor 
define ``unduly disrupt'' as follows:

          For an agency to turn down a request from an employee 
        for compensatory time off requires that it should 
        reasonably and in good faith anticipate that it would 
        impose an unreasonable burden on the agency's ability 
        to provide services of acceptable quality and quantity 
        for the public during the time requested without the 
        use of the employee's services.\18\
---------------------------------------------------------------------------
    \18\ 29 C.F.R. Sec. 553.25.

    The ``unduly disrupt'' standard, court decisions regarding 
public sector compensatory time have also shown that the 
``unduly disrupt'' standard is narrow and does not allow the 
employer to control the employee's use of compensatory time. In 
Heaton v. Missouri Department of Corrections, 43 F.3d 1176, 
1180 (8th Cir., 1994), the court of Appeals held that banked 
compensatory time ``essentially is the property of the 
employee.'' The Court held that the ``unduly disrupt'' 
limitation on the employee's right to use compensatory time 
whenever he or she desires does not allow the employer to 
control or force the employee to use compensatory time.
    The Committee notes that this same standard, that employee 
leave not unduly disrupt the employer's operations, is used to 
limit an employee's right to take leave for medical treatments 
for the employee or member of his or her family under the 
Family and Medical Leave Act (``disrupt unduly'').\19\ Given 
the long history of this language in the FLSA with regard to 
compensatory time in the public sector and the adoption of the 
same standard in the Family and Medical Leave Act, it is 
disingenuous, if not downright ``goofy,'' for the opponents of 
private sector use of compensatory time to claim that this is a 
deficiency in H.R. 2391 which would lead to the abuse of 
employees by employers.
---------------------------------------------------------------------------
    \19\ 29 U.S.C. Sec. 2612(e).
---------------------------------------------------------------------------
    The narrow exception (``unduly disrupts'') under the public 
sector compensatory time and the FMLA is adopted in this 
legislation for private sector compensatory time. The Committee 
believes that the law must be written to allow the employer 
some ability to maintain the operations of the business. If 
that is not recognized in the law, then no employer will ever 
offer compensatory time as an option for employees and the 
Committee's efforts to respond to employees' desires to have 
this flexibility will be of no effect. Furthermore, providing a 
right to an employee to use compensatory time without any 
regard to workload or business demands, is simply unfair to co-
workers, who in many cases would have to handle the workload of 
the absent employee. The Committee seeks ``to balance the 
employee's right to make use of comp time that has been earned 
and the employer's need for flexibility in operations.'' \20\
---------------------------------------------------------------------------
    \20\ Report on S. 1570, Committee on Labor and Human Resources, 
U.S.Senate, 99th Congress, First Session, Senate Report No. 99-159, p. 
11.
---------------------------------------------------------------------------

               Accrual and Cash Out of Compensatory Time

    The legislation provides that an employee may accrue no 
more than 240 hours of compensatory time. Any accrued 
compensatory time must be ``cashed out'' not less than once per 
year. Unless an alternative date is established, the annual 
cash out date is January 31 for compensatory time accrued prior 
to the previous December 31. An employer may choose to cash out 
an employee's accrued compensatory time more frequently than 
annually.
    An employee may at any time, through a written request to 
the employer, cash out his or her accrued compensatory time. 
The employer must comply with the employee's request within 30 
days of receipt.
    The Committee takes note of concerns expressed regarding 
the number of hours of compensatory time which may be accrued 
by an employee. However, the Committee believes that by 
providing the employee with the ability to cash out accrued 
compensatory time at any time, the employee is ultimately the 
one who decides whether to accrue time at all, and if so, how 
much time to accrue within the 240 hour limit provided for 
under H.R. 2391. Employees and employers may, of course, agree 
to limit accrual of compensatory time to less than 240 hours 
per year.
    The bill provides that upon the voluntary or involuntary 
termination of employment, an employee's unused compensatory 
time must be cashed out. The Committee intends that the payment 
for unused compensatory time in these circumstances should be 
made as soon as is reasonable. The Committee notes that there 
are many state laws which may further address the issue of 
timeliness of the payment of wages owed to an employee by an 
employer.
    H.R. 2391 also provides that any payment owed to an 
employee because of an employee's request to cash out accrued 
compensatory time, or because of the termination of the 
employee's employment, or for any other reason, shall be 
considered unpaid overtime compensation under section 16(b) of 
the FLSA.\21\ In addition to making explicit that the remedies 
of section 16(b) apply, this provision also assures that unpaid 
accrued compensatory time is treated as unpaid employee wages 
in the event of the employer's bankruptcy. Thus, as with other 
wages which are owed to employees, any unpaid or unused 
compensatory time would be a priority claim on the employer's 
assets in the event of the employer's bankruptcy. For the 
purposes of the payment of cash wages owed to an employee for 
accrued compensatory time by an employer in bankruptcy, the 
Committee intends that such wages shall be deemed to be earned 
at the time at which the claim for unpaid wages is made, rather 
than when the compensatory time is accrued.
---------------------------------------------------------------------------
    \21\ 29 U.S.C. Sec. 216(b).
---------------------------------------------------------------------------
    In all cases, accrued compensatory time must be cashed out 
at a rate equal to the employee's current regular rate of pay 
or the average regular rate of pay during the time period in 
which the compensatory time was accrued, whichever is higher. 
Thus, if compensatory time is accrued during the course of a 
year and the employee has received an increase in his or her 
hourly rate during the year, the cash out rate at the end of 
the year would reflect the employee's increase in pay, even if 
the compensatory time was accrued prior to the pay increase.
    The Committee believes that these provisions thoroughly 
address the concerns which have been raised by the opponents of 
private sector use of compensatory time as to the possible 
misuse of a compensatory time option in the private sector.

                                Summary

    H.R. 2391 would give private sector employers and employees 
an option under the Fair Labor Standards Act which federal, 
state, and local governments have had for many years. The bill 
would permit private sector employers to offer their employees 
the option of selecting compensatory time off in lieu of 
receiving cash overtime wages. Employees would be able to 
choose, based upon an agreement with the employer, to have 
their overtime compensated with paid time off.
    The bill would not change the 40 hour work week to affect 
the manner in which overtime is calculated. ``Non-exempt'' 
employees who work more than 40 hours within a seven day period 
would continue to receive overtime compensation at a rate not 
less than one and one-half times the employee's regular rate of 
pay. If the employer and the employee agree on compensatory 
time, then the paid time off would be granted at the rate of 
not less than one and one-half hours for each hour of overtime 
worked.
    H.R. 2391 would provide additional protections for the 
employee in order to protect against the coercive use of 
compensatory time. The bill requires any arrangement for the 
use of compensatory time to be an express mutual agreement 
between the employer and the employee, entered into knowingly 
and voluntarily by the employee.
    The agreement for the use of compensatory time must be a 
written or otherwise verifiable statement that the employee has 
chosen to receive compensatory time in lieu of overtime 
compensation. The agreement must be made, kept, and preserved 
in accordance with the recordkeeping requirements under section 
11(c) of the Fair Labor Standards Act.\22\ A private sector 
employer may provide compensatory time to an employee so long 
as any agreement or understanding was not a condition of 
employment.
---------------------------------------------------------------------------
    \22\ 20 U.S.C. Sec. 211(c).
---------------------------------------------------------------------------
    Any accrued compensatory time which has not been used by 
the employee by the end of each year (or the alternative 12 
month period as designated by the employer) must be paid for by 
the employer to the employee in the form of monetary 
compensation. Likewise, any unused, accrued compensatory time 
would be cashed out at the end of an employee's employment with 
the employer at the average regular rate received by the 
employee during the time period in which the compensatory time 
was accrued; or the final regular rate received by the 
employee; whichever is higher. An employee shall, upon the 
voluntary or involuntary termination of employment, be paid for 
the unused compensatory time at a rate of compensation not less 
than the average regular rate received by the employee during 
the time period in which the compensatory time was accrued, or 
the final regular rate received by the employee, whichever is 
higher.
    An employee may also request in writing that monetary 
compensation be provided, at any time, for accrued compensatory 
time which has not yet been used. Within 30 days of receiving 
such a written request, the employer shall provide the employee 
with the monetary compensation due.
    For the purposes of enforcement, any unused compensatory 
time would be considered to be the same as wages owed to the 
employee. As with any other violation of the Fair Labor 
Standards Act, the provisions in section 16(b) \23\ would 
apply. Any employer who willfully intimidates, threatens, or 
coerces any employee into selecting compensatory time in lieu 
of cash compensation, or who forces an employee to use accrued 
compensatory time would be liable to the employee for the cash 
value of the accrued compensatory time, plus an additional 
equal amount as liquidated damages, reduced by the amount of 
such rate of compensation for each hour of compensatory time 
used by the employee.
---------------------------------------------------------------------------
    \23\ 29 U.S.C. Sec. 216(b).
---------------------------------------------------------------------------

                      Section-by-Section Analysis

                         Section 1. SHORT TITLE

    ``Working Families Flexibility Act of 1996''

                      Section 2. COMPENSATORY TIME

    Any employee may receive in lieu of monetary overtime 
compensation, compensatory time off at a rate not less than one 
and one-half hours for each hour of overtime worked.
    Any employer may provide compensatory time only pursuant to 
the applicable provisions of a collective bargaining agreement, 
memorandum or understanding, or any other agreement between the 
employer and the representative of the employees.
    In the case of employees who are not represented by a 
collective bargaining agent or representative, there would have 
to be an agreement or understanding arrived at between the 
employer and the employee prior to the performance of the work, 
provided that the agreement or understanding was entered into 
knowingly and voluntarily by the employee.
    In the case of private sector employees, compensatory time 
may be provided if the employee has affirmatively chosen to 
receive compensatory time in lieu of overtime compensation, in 
a written or otherwise verifiable statement, which is made, 
kept, and preserved in accordance with section 11(c) of the 
Fair Labor Standards Act.
    Compensatory time may be provided to an employee of a 
public agency provided that the employee has not accrued 
compensatory time in excess of the limits set forth under 
section 7(o)(4) of the bill. In the case of public sector 
employees hired before April 15, 1986, the regular practice in 
effect on that day with respect to compensatory time off in 
lieu of overtime compensation shall constitute an agreement or 
understanding for the purposes of section 7(o)(A)(ii) of the 
bill. A private sector employer may provide compensatory time 
to an employee only if the agreement or understanding was not a 
condition of employment.
    A private sector employer may not directly or indirectly 
intimidate, threaten, or coerce or attempt to intimidate, 
threaten, or coerce employees to request or not request 
compensatory time in lieu of overtime compensation or to 
require employees to use compensatory time.
    A private sector employee may accrue up to 240 hours of 
compensatory time. Not later than January 31 of each calendar 
year, the employer shall provide monetary compensation for any 
compensatory time off accrued during the preceding calendar 
year, which was not used prior to December 31 of that year. The 
monetary compensation for the accrued time shall be at a rate 
not less than (1) the average regular rate earned by the 
employee during the period in which the compensatory time was 
accrued, or (2) the final regular rate received by the 
employee, whichever is higher. A private sector employer may 
designate a 12-month period other than the calendar year, in 
which case compensation shall be provided not later than 31 
days after the end of the 12-month period.
    A private sector employer may provide monetary compensation 
for an employee's unused compensatory time at any time. The 
monetary compensation for the accrued time shall be at a rate 
not less than (1) the average regular rate earned by the 
employee during the period in which the compensatory time was 
accrued, or (2) the final regular rate received by the 
employee, whichever is higher.
    An employee may also request in writing that monetary 
compensation be provided, at any time, for all compensatory 
time accrued which has not yet been used. Within 30 days of 
receiving such a written request, the employer shall provide 
the employee with the monetary compensation due.
    If the work of an employee of a public agency included work 
in a public safety activity, an emergency response activity, or 
a seasonal activity, the employee may not accrue more than 480 
hours of compensatory time for hours worked after April 15, 
1986. If the work was some other type of work, the employee may 
not accrue more than 240 hours of compensatory time for hours 
worked after April 15, 1986. Any employee who, after April 15, 
1986, has accrued 480 or 240 hours of compensatory time as the 
case may be, shall be paid overtime compensation for any 
additional overtime worked.
    If compensation is paid to an employee of a public agency 
for accrued compensatory time, the compensation shall be paid 
at the regular rate earned by the employee at the time the 
employee receives the payment.
    An employee of a private sector employer who has accrued 
compensatory time off shall, upon the voluntary or involuntary 
termination of employment, be paid for the unused compensatory 
time at a rate of compensation not less than (1) the average 
regular rate received by the employee during the period in 
which the compensatory time was accrued, or (2) the final 
regular rate received by the employee, whichever is higher.
    An employee of a public sector employer who has accrued 
compensatory time shall, upon voluntary or involuntary 
termination of employment, be paid for the unused compensatory 
time at a rate not less than (1) the average regular rate 
received by the employee during the last three years of the 
employee's employment or (2) the final regular rate received by 
the employee, whichever is higher.
    Any payment owed to an employee for unused compensatory 
time shall, for the purposes of section 16(b) of the Fair Labor 
Standards Act, be considered unpaid overtime compensation.
    Any employee who has accrued compensatory time off and who 
has requested the use of the accrued time, shall be permitted 
by the employer to use the time within a reasonable period 
after making the request, if the use of the compensatory time 
does not unduly disrupt the operations of the employer.

                          section 3. remedies

    A private sector employer who willfully violates provisions 
of the bill which prohibit an employer from directly or 
indirectly intimidating, threatening or coercing any employee 
for the purpose of (1) interfering with an employee's rights to 
request or not request compensatory time in lieu of overtime 
compensation; or (2) requiring an employee to use accrued 
compensatory time, shall be liable to the employee affected in 
the amount of the rate of compensation for each hour of 
compensatory time accrued by the employee and an additional 
equal amount as liquidated damages reduced by the amount of 
such rate of compensation for each hour of compensatory time 
used by the employee.

                        Explanation of Amendment

    The Amendment in the Nature of a Substitute is explained in 
this report.

                  Oversight Findings of the Committee

    In compliance with clause 2(l)(3)(A) of rule XI of the 
Rules of the House of Representatives and clause 2(b)(1) of 
rule X of the Rules of the House of Representatives, the 
Committee's oversight findings and recommendations are 
reflected in the body of this report.

                     Inflationary Impact Statement

    In compliance with clause 2(l)(4) of rule XI of the Rules 
of the House of Representatives, the Committee estimates that 
the enactment into law of H.R. 2391 will have no significant 
inflationary impact on prices and costs in the operation of the 
national economy. It is the judgment of the Committee that the 
inflationary impact of this legislation as a component of the 
federal budget is negligible.

                    Government Reform and Oversight

    With respect to the requirement of clause 2(l)(3)(D) of 
rule XI of the Rules of the House of Representatives, the 
Committee has received no report of oversight findings and 
recommendations form the Committee on Government Reform and 
Oversight on the subject of H.R. 2391.

                           Committee Estimate

    Clause 7 of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison by the 
Committee of the costs which would be incurred in carrying out 
H.R. 2391. However, clause 7(d) of that rule provides that this 
requirement does not apply when the Committee has included in 
its report a timely submitted cost estimate of the bill 
prepared by the Director of the Congressional Budget Office 
under section 403 of the Congressional Budget Act of 1974.

                Application of Law to Legislative Branch

    Section 102(b)(3) of Public Law 104-1, the Congressional 
Accountability Act (CAA), requires a description of the 
application of this bill to the legislative branch. H.R. 2391 
amends the Fair Labor Standards Act of 1938 to provide 
compensatory time for all employees. Section 203(a) of the CAA 
applies the rights and protections of subsections (a)(1) and 
(d) of section 6, section 7, and section 12(c)of the Fair Labor 
Standards Act \24\ to covered employees and employing offices 
of the legislative branch. Therefore, the changes made by H.R. 
2391 to section 7 of the Fair Labor Standards Act \25\ apply to 
the legislative branch.
---------------------------------------------------------------------------
    \24\ 29 U.S.C. Sec. 206(a)(1) and (d); 207; 212(c).
    \25\ 29 U.S.C. Sec. 207.
---------------------------------------------------------------------------
    The Committee intends to make compensatory time available 
to legislative branch employees in the same way as it is made 
available to private sector employees under this legislation. 
The Committee notes that section 203(a)(3) of the CAA generally 
prohibits congressional employees from receiving compensatory 
time in lieu of overtime compensation; this provision was 
included in the CAA in order to make clear that employees in 
the legislative branch should follow the rules for private 
sector employees rather than for state and local government 
employees.

                       Unfunded Mandate Statement

    Section 423 of the Congressional Budget and Impoundment 
Control Act requires a statement of whether the provisions of 
the reported bill include unfunded mandates. The Committee 
received a letter regarding unfunded mandates from the Director 
of the Congressional Budget Office and has such the Committee 
agrees that the bill does not contain any unfunded mandates. 
See infra.

     Budget Authority and Congressional Budget Office Cost Estimate

    With respect to the requirement of clause 2(l)(3)(B) of 
rule XI of the House of Representatives and section 308(a) of 
the Congressional Budget Act of 1974 and with respect to 
requirements of clause 2(l)(3)(C) of rule XI of the House of 
Representatives and section 403 of the Congressional Budget Act 
of 1974, the Committee has received the following cost estimate 
for H.R. 2391 from the Director of the Congressional Budget 
Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, July 9, 1996.
Hon. William F. Goodling,
Chairman, Committee on Economic and Educational Opportunities, U.S. 
        House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
reviewed H.R. 2391, the Working Families Flexibility Act of 
1996, as ordered reported by the Committee on Economic and 
Educational Opportunities on June 26, 1996. CBO estimates that 
enactment of H.R. 2391 would reduce discretionary spending in 
the federal budget by about $2 million annually, assuming that 
appropriations are reduced correspondingly. Because the bill 
would not affect direct spending or revenues, pay-as-you-go 
procedures would not apply.
    H.R. 2391 would amend the Fair Labor Standards Act (FLSA) 
to allow compensatory time off for all employees, so long as 
both the employer and employee agree to such form of 
compensation for overtime hours worked. Under current law, 
private-sector employers may not offer compensatory time off as 
a substitute for time-and-a-half pay for hours worked in excess 
of a 40-hour work week. However, employees of public entities 
(excluding most employees of the legislative branch of the 
federal government) currently may receive time-and-a-half 
compensatory time in lieu of time-and-a-half overtime pay under 
conditions similar to those specified in H.R. 2391.
    Within the legislative branch of the federal government, 
employees who are not exempt from the FLSA may receive 
compensatory time in lieu of overtime pay under limited 
conditions governed by regulations that implement the 
Congressional Accountability Act. If H.R. 2391 were enacted, it 
is likely that these regulations would be rewritten to reflect 
more closely the options available to the private sector, thus 
giving the legislative branch greater flexibility in 
compensating employees for overtime hours worked. As a 
consequence, some legislative branch employees would opt for 
and receive compensatory time instead of overtime pay. Based on 
the information available at this time, CBO estimates that the 
resulting savings would amount to about $2 million annually, 
beginning in fiscal year 1997
    H.R. 2391 contains no intergovernmental or private-sector 
mandates as defined by Public Law 104-4, and would have no 
impact on the budgets of state or local governments because 
federal law already allows them to provide compensatory time in 
lieu of overtime pay to their employees.
    The bill would have an impact on the budgets of tribal 
governments. The wage provisions of the FLSA clearly apply to 
tribal governments in certain situations. In the cases where 
the FLSA does apply (for example, when employees of tribal 
governments are not members of the tribe), tribal governments 
are not allowed to provide compensatory time in lieu of 
overtime pay. In these instances, the bill would grant tribal 
governments additional flexibility in compensating their 
employees.
    If you require additional information, we will be pleased 
to provide it. The staff contact for federal budgetary effects 
is Christina Hawley. For state and local costs, the staff 
contact is John Patterson, and for private section impacts, the 
staff contact is Ralph Smith.
            Sincerely,
                                              James L. Blum
                                   (For June E. O'Neill, Director).


         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3 of rule XIII of the Rules of the 
House of Representatives, changes in existing law made by the 
bill, as reported, are shown as follows (existing law proposed 
to be omitted is enclosed in black brackets, new matter is 
printed in italic, existing law in which no change is proposed 
is shown in roman):

                    FAIR LABOR STANDARDS ACT OF 1938

          * * * * * * *

                             maximum hours

  Sec. 7. (a) * * *
          * * * * * * *
  (o)[(1) Employees of a public agency which is a State, a 
political subdivision of a State, or an interstate governmental 
agency may receive, in accordance with this subsection and in 
lieu of overtime compensation, compensatory time off at a rate 
not less than one and one-half hours for each hour of 
employment for which overtime compensation is required by this 
section.
  [(2) A public agency may provide compensatory time under 
paragraph (1) only--
          [(A) pursuant to--
                  [(i) applicable provisions of a collective 
                bargaining agreement, memorandum of 
                understanding, or any other agreement between 
                the public agency and representatives of such 
                employees; or
                  [(ii) in the case of employees not covered by 
                subclause (i), an agreement or understanding 
                arrived at between the employer and employee 
                before the performance of the work; and
          [(B) if the employee has not accrued compensatory 
        time in excess of the limit applicable to the employee 
        prescribed by paragraph (3).
In the case of employees described in clause (A)(ii) hired 
prior to April 15, 1986, the regular practice in effect on 
April 15, 1986, with respect to compensatory time off for such 
employees in lieu of the receipt of overtime compensation, 
shall constitute an agreement or understanding under such 
clause (A)(ii). Except as provided in the previous sentence, 
the provision of compensatory time off to such employees for 
hours worked after April 14, 1986, shall be in accordance with 
this subsection.
  [(3)(A) If the work of an employee for which compensatory 
time may be provided included work in a public safety activity, 
an emergency response activity, or a seasonal activity, the 
employee engaged in such work may accrue not more than 480 
hours of compensatory time for hours worked after April 15, 
1986. If such work was any other work, the employee engaged in 
such work may accrue not more than 240 hours of compensatory 
time for hours worked after April 15, 1986. Any such employee 
who, after April 15, 1986, has accrued 480 or 240 hours, as the 
case may be, of compensatory time off shall, for additional 
overtime hours of work, be paid overtime compensation.
  [(B) If compensation is paid to an employee for accrued 
compensatory time off, such compensation shall be paid at the 
regular rate earned by the employee at the time the employee 
receives such payment.
  [(4) An employee who has accrued compensatory time off 
authorized to be provided under paragraph (1) shall, upon 
termination of employment, be paid for the unused compensatory 
time at a rate of compensation not less than--
          [(A) the average regular rate received by such 
        employee during the last 3 years of the employee's 
        employment, or
          [(B) the final regular rate received by such 
        employee,
whichever is higher.
  [(5) An employee of a public agency which is a State, 
political subdivision of a State, or an interstate governmental 
agency--
          [(A) who has accrued compensatory time off authorized 
        to be provided under paragraph (1), and
          [(B) who has requested the use of such compensatory 
        time,
shall be permitted by the employee's employer to use such time 
within a reasonable period after making the request if the use 
of the compensatory time does not unduly disrupt the operations 
of the public agency.] (1) An employee may receive, in 
accordance with this subsection and in lieu of monetary 
overtime compensation, compensatory time off at a rate not less 
than one and one-half hours for each hour of employment for 
which overtime compensation is required by this section.
  (2) An employer may provide compensatory time under paragraph 
(1) only--
          (A) pursuant to--
                  (i) applicable provisions of a collective 
                bargaining agreement, memorandum of 
                understanding, or any other agreement between 
                the employer and representatives of such 
                employees, or
                  (ii) in the case of employees who are not 
                represented by a collective bargaining agent or 
                other representative designated by the 
                employee, an agreement or understanding arrived 
                at between the employer and employee before the 
                performance of the work if such agreement or 
                understanding was entered into knowingly and 
                voluntarily by such employee;
          (B) in the case of an employee who is not an employee 
        of a public agency, if such employee has affirmed, in a 
        written or otherwise verifiable statement that is made, 
        kept, and preserved in accordance with section 11(c), 
        that the employee has chosen to receive compensatory 
        time in lieu of overtime compensation; and
          (C) if the employee has not accrued compensatory time 
        in excess of the limit applicable to the employee 
        prescribed by paragraph (5).
In the case of employees described in subparagraph (A)(ii) who 
are employees of a public agency and who were hired before 
April 15, 1986, the regular practice in effect on such date 
with respect to compensatory time off for such employees in 
lieu of the receipt of overtime compensation, shall constitute 
an agreement or understanding described in such subparagraph. 
Except as provided in the preceding sentence, the provision of 
compensatory time off to employees of a public agency for hours 
worked after April 14, 1986, shall be in accordance with this 
subsection. An employer may provide compensatory time under 
paragraph (1) to an employee who is not an employee of a public 
agency only if such agreement or understanding was not a 
condition of employment.
  (3) An employer which is not a public agency and which 
provides compensatory time under paragraph (1) to employees 
shall not directly or indirectly intimidate, threaten, or 
coerce or attempt to intimidate, threaten, or coerce any 
employee for the purpose of--
          (A) interfering with such employee's rights under 
        this subsection to request or not request compensatory 
        time off in lieu of payment of overtime compensation 
        for overtime hours; or
          (B) requiring any employee to use such compensatory 
        time.
  (4)(A) An employee, who is not an employee of a public 
agency, may accrue not more than 240 hours of compensatory 
time.
  (B)(i) Not later than January 31 of each calendar year, the 
employee's employer shall provide monetary compensation for any 
compensatory time off accrued during the preceding calendar 
year which was not used prior to December 31 of the preceding 
year at the rate prescribed by paragraph (6). An employer may 
designate and communicate to the employer's employees a 12-
month period other than the calendar year, in which case such 
compensation shall be provided not later than 31 days after the 
end of such 12-month period.
  (ii) The employer may provide monetary compensation for an 
employee's unused compensatory time at any time. Such 
compensation shall be provided at the rate prescribed by 
paragraph (6).
  (C) An employee may also request in writing that monetary 
compensation be provided, at any time, for all compensatory 
time accrued which has not yet been used. Within 30 days of 
receiving the written request, the employer shall provide the 
employee the monetary compensation due in accordance with 
paragraph (6).
  (5)(A) If the work of an employee of a public agency for 
which compensatory time may be provided included work in a 
public safety activity, an emergency response activity, or a 
seasonal activity, the employee engaged in such work may accrue 
not more than 480 hours of compensatory time for hours worked 
after April 15, 1986. If such work was any other work, the 
employee engaged in such work may accrue not more than 240 
hours of compensatory time for hours worked after April 15, 
1986. Any such employee who, after April 15, 1986, has accrued 
480 or 240 hours, as the case may be, of compensatory time off 
shall, for additional overtime hours of work, be paid overtime 
compensation.
  (B) If compensation is paid to an employee described in 
subparagraph (A) for accrued compensatory time off, such 
compensation shall be paid at the regular rate earned by the 
employee at the time the employee receives such payment.
  (6)(A) An employee of an employer which is not a public 
agency who has accrued compensatory time off authorized to be 
provided under paragraph (1) shall, upon the voluntary or 
involuntary termination of employment, be paid for the unused 
compensatory time at a rate of compensation not less than--
          (i) the average regular rate received by such 
        employee during the period during which the 
        compensatory time was accrued, or
          (ii) the final regular rate received by such 
        employee,
whichever is higher.
  (B) An employee of an employer which is a public agency who 
has accrued compensatory time off authorized to be provided 
under paragraph (1) shall, upon the voluntary or involuntary 
termination of employment, be paid for the unused compensatory 
time at a rate of compensation not less than--
          (i) the average regular rate received by such 
        employee during the last 3 years of the employee's 
        employment, or
          (ii) the final regular rate received by such 
        employee,
whichever is higher.
  (C) Any payment owed to an employee under this subsection for 
unused compensatory time shall, for purposes of section 16(b), 
be considered unpaid overtime compensation.
  (7) An employee--
          (A) who has accrued compensatory time off authorized 
        to be provided under paragraph (1), and
          (B) who has requested the use of such compensatory 
        time,
shall be permitted by the employee's employer to use such time 
within a reasonable period after making the request if the use 
of the compensatory time does not unduly disrupt the operations 
of the employer.
  [(6)] (8) The hours an employee of a public agency performs 
court reporting transcript preparation duties shall not be 
considered as hours worked for the purposes of subsection (a) 
if--
          (A) * * *
          * * * * * * *
  [(7)] (9) For purposes of this subsection--
          (A) the term ``overtime compensation'' means the 
        compensation required by subsection (a), and
          (B) the terms ``compensatory time'' and 
        ``compensatory time off'' mean hours during which an 
        employee is not working, which are not counted as hours 
        worked during the applicable workweek or other work 
        period for purposes of overtime compensation, and for 
        which the employee is compensated at the employee's 
        regular rate.
          * * * * * * *

                               penalties

  Sec. 16. (a) * * *
  [(b) Any employer] (b) Except as provided in subsection (f), 
any employer who violates the provisions of section 6 or 
section 7 of this Act shall be liable to the employee or 
employees affected in the amount of their unpaid minimum wages, 
or the unpaid overtime compensation, as the case may be, and in 
an additional equal amount as liquidated damages. Any employer 
who violates the provisions of section 15(a)(3) of this Act 
shall be liable for such legal or equitable relief as may be 
appropriate to effectuate the purposes of section 15(a)(3), 
including without limitation employment, reinstatement, 
promotion, and the payment of wages lost and an additional 
equal amount as liquidated damages. An action to recover the 
liability prescribed in either of the preceding sentences may 
be maintained against any employer (including a public agency) 
in any Federal or State court of competent jurisdiction by any 
one or more employees for and in behalf of himself or 
themselves and other employees similarly situated. No employees 
shall be a party plaintiff to any such action unless he gives 
his consent in writing to become such a party and such consent 
is filed in the court in which such action is brought. The 
court in such action shall, in addition to any judgment awarded 
to the plaintiff or plaintiffs, allow a reasonable attorney's 
fee to be paid by the defendant, and costs of the action. The 
right provided by this subsection to bring an action by or on 
behalf of any employee, and the right of any employee to become 
a party plaintiff to any such action, shall terminate upon the 
filing of a complaint by the Secretary of Labor in an action 
under section 17 in which (1) restraint is sought of any 
further delay in the payment of unpaid minimum wages, or the 
amount of unpaid overtime compensation, as the case may be, 
owing to such employee under section 6 or section 7 of this act 
by an employer liable therefor under the provisions of this 
subsection or (2) legal or equitable relief is sought as a 
result of alleged violations of section 15(a)(3).
          * * * * * * *
  (f) An employer which is not a public agency and which 
willfully violates section 7(o)(3) shall be liable to the 
employee affected in the amount of the rate of compensation 
(determined in accordance with section 7(o)(6)(A)) for each 
hour of compensatory time accrued by the employee and in an 
additional equal amount as liquidated damages reduced by the 
amount of such rate of compensation for each hour of 
compensatory time used by such employee.
          * * * * * * *
                             MINORITY VIEWS

       H.R. 2391 Must Be Viewed in the Context of the Real World

    Congress enacted the Fair Labor Standards Act (``FLSA'') in 
1938 to prevent employers from competing on the basis of 
undermining living standards, a destructive race to the bottom 
that impoverishes workers and harms the overall economy. The 
FLSA established two basic standards. First, it established a 
minimum wage. Second, it established the right to premium pay 
(an additional 50% of one's regular salary) for work in excess 
of forty hours a week. Even though there have been occasional 
increases in the minimum wage, the overtime provisions of the 
Act essentially have remained unchanged since their 
enactment.\1\
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    \1\ While the overtime premium, an additional 50% of an employee's 
regular rate of pay for hours in excess of 40 hours a week, has 
remained unchanged since enactment of the FLSA, changes in the manner 
in which employees are compensated have eroded considerably the 
``penalty'' that employers pay for scheduling overtime. Fringe benefits 
are not calculated in determining an employee's regular rate of pay 
and, therefore, are not factored in when an employee's overtime pay is 
calculated. In 1938, pension plans, health insurance, and paid vacation 
leave were generally unheard of in the private sector. Today, fringe 
benefits may equal up to one-third of an employee's total compensation. 
However, because fringe benefits are not counted in determining 
overtime pay, the ``penalty'' must pay today for scheduling overtime 
rather than hiring additional workers has been significantly diminished 
from that initially established in 1938.
---------------------------------------------------------------------------
    The intent of these provisions was simple: to raise the 
incomes of workers and their families by creating more good 
jobs. The minimum wage seeks to ensure that jobs are worth 
having--that work, in fact, enables one to escape poverty. 
Overtime premiums create a market incentive for employers to 
spread work among more employees. Spreading available work 
distributes income more evenly, protects against dangerously 
long hours of work, and assures workers that they have time for 
their families and themselves.
    The rights granted by the FLSA cannot be waived, that is, a 
worker cannot agree to give up his or her right to the minimum 
wage or overtime pay. This fundamental principle of the Act is 
grounded in the reality that individuals will virtually always 
feel compelled to accede to their employer's demands because of 
the inherently greater and more pressing need for the worker 
for an income with which to support himself or herself (and 
family) than the employer's need for the services of an 
individual worker. But, there are other reasons for the rule as 
well. The waiver of statutory rights by even a few workers 
places all workers at risk. It will usually be in the 
``economic self-interest'' of some employees to compromise 
their statutory rights, whether in the hope of greater rewards 
tomorrow or merely to hold onto as much as possible today. But 
even if only a few workers in a workplace ``voluntarily'' waive 
their rights, the rest of the employees will come under severe 
pressure to follow suit in order to keep their jobs. Moreover, 
allowing individuals to waive their right to a living wage or 
overtime pay erodes the broad social purpose of spreading 
available work among all workers.
    The original principles which underlie the FLSA are as 
relevant today as they were in 1938. Can anyone deny that 
America needs more good jobs? In the manufacturing sector, for 
example, average overtime for workers in 1995 is near its 
historic high. In that same year, production employment 
declined by 162,000 jobs between March and October. Revisions 
of the FLSA which allow employers to avoid or reduce overtime 
premiums inevitably will worsen these trends.
    In analyzing H.R. 2391, it is vital to consider the overall 
context in which this proposal is being made. Most Americans 
are working harder and longer than they have before, only to 
see their incomes stagnate. Between 1973 and 1994, the number 
of families with two working parents increased by 56%. Yet, 
despite this increase, median family income increased by less 
than $1,000 over the same period. Since 1989, average family 
income has fallen from $33,500 to $31,200 per year.
    This decline in family income is occurring despite the fact 
that hours worked are increasing for full-time workers.\2\ The 
United States is the only major industrial country in the world 
in which working hours increased between 1960 and 1992. In the 
manufacturing sector, the average workweek in 1994 was 42 
hours--higher than at any time since World War II. In August, 
1995, the average work week in the auto industry was 44.7 
hours.
---------------------------------------------------------------------------
    \2\ The increase in hours worked is not uniform across the 
workforce. While full-time workers have seen their hours worked 
increase, many workers are still having difficulty finding full-time 
employment. In August 1995, 22.6 million workers are employed on a 
part-time basis, of whom 4.5 million--one in five--were working on a 
part-time basis involuntary.
---------------------------------------------------------------------------
    Clearly, more and more Americans depend on overtime pay 
just to make ends meet. This particularly true of families who 
are having the greatest difficulty holding on to middle class 
status. Two-thirds of workers who earned overtime pay in 1994 
had family incomes of less than $40,000. Eighty-one percent 
made less than $30,000 themselves, and 60% earned an average 
wage of ten dollars an hour or less.
    A recent article in The Wall Street Journal reported on 
current, widespread violation of our nation's overtime laws.\3\ 
The Employment Policy Foundation, an employer-funded think 
tank, estimates that workers lose $19 billion a year in unpaid, 
earned overtime. The Foundation estimates that fully 10% of the 
workers entitled to overtime are cheated out of it; many other 
observers consider that a conservative estimate. Only a handful 
of these violations are being prosecuted. The number of wage 
and hour investigators at the Department of Labor has declined 
by 15% since 1990. No one realistically forecasts a change in 
that trend.
---------------------------------------------------------------------------
    \3\ ``Shortchanged, Many Firms Refuse to Pay for Overtime, 
Employees Complain,'' The Wall Street Journal, Monday, June 24, 1996.
---------------------------------------------------------------------------
    Against these present-day realities, the Republican-led 
Congress is pushing legislation that fundamentally changes the 
overtime law. The Republican Majority proposes to do so in a 
manner that significantly weakens workers' understanding of 
their rights, encourages further violations of the overtime 
law, and weakens the ability of workers to enforce their rights 
when the law is violated.
    The Ranking Democrat on the Committee, Representative Clay 
(D-MO), from the outset has expressed his desire to work toward 
a bipartisan bill that would truly afford workers the option of 
compensatory time off in lieu of overtime pay. Every concern 
raised in these Minority views was raised months ago by the 
Democratic staff of the Committee with both Republican staff 
and representatives of the business interest group that is the 
principal proponent of this legislation. The only substantive 
change made to the bill during the Committee mark-up was to 
require that an employee waive his or her right to be paid for 
overtime in writing or in some other verifiable form.\4\ Given 
the remaining deficiencies in the bill, this ``protection'' is 
meaningless. Furthermore, though the Republican rhetoric their 
desire to create a ``voluntary'' bill has not changed, the 
failure of the Republican majority to address any of other 
myriad deficiencies in the legislation stands in glaring 
contradiction to their claims.
---------------------------------------------------------------------------
    \4\ Read literally, H.R. 2391 does not require that a written 
waiver be verifiable.
---------------------------------------------------------------------------
    Republicans and business proponents of H.R. 2391 have 
repeatedly claimed that they are only interested in legislation 
that affords workers a true choice. To quote Sandra Boyd of the 
FLECS Coalition, ``This is meant only to be used in 
circumstances where it's voluntary and where people, in fact, 
really get to use the time.'' \5\ That description, however, 
bares no resemblance to the text of the bill the Committee has 
reported. The bill, as reported, grants rights to employers, 
not to employees. This legislation encourages employers to hire 
fewer employees and to work them longer hours by freeing them 
from having to pay cash for overtime, potentially reducing both 
workers' incomes and employer labor costs by billions of 
dollars. There is no protection for employees from being 
required to work excessive overtime. That the Republican 
Majority would claim that this is family-friendly legislation 
shows how divergent the interests of the Republican Majority 
remain from the concerns of most Americans.
---------------------------------------------------------------------------
    \5\ ``Overtime Laws Become an Election Year Issue'' National Public 
Radio, June 28, 1996.
---------------------------------------------------------------------------

            H.R. 2391 Fails To Meet the Majority's Rhetoric

    The Republican Majority claims that they are merely seeking 
to provide private sector workers with the option to take paid 
time off instead of being paid cash for overtime work. H.R. 
2391 rests on naive and erroneous assumptions about the 
relative circumstances of private sector versus public sector 
employees. The Majority's views claim ``[t]he difference in 
treatment between the private and public sectors under the FLSA 
is explained by the fact that the provisions applying the FLSA 
to the public sector were added in 1985, and, therefore 
included a recognition that the workplace and workforce have 
changed greatly since the 1930's when the private sector 
provision was written.'' The Republicans go on to state ``The 
Committee is certain that compensatory time off in lieu of 
overtime pay hours worked beyond 40 in a week can provide 
`mutually satisfactory solutions' in the private sector no less 
than is the case in the public sector.''
    There are real and substantial differences between the 
public sector and the private sector that not only account for 
the different treatment of overtime, but render the Republican 
confidence in ``mutually satisfactory solutions'' in the 
private sector little more than wishful thinking. Employers in 
the private sector have a direct self-interest in reducing 
labor costs at the expense of workers that does not typically 
exist in the public sector. Employees in the public sector 
generally enjoy much greater protection than their private 
sector counterparts. Whereas more than 40% of the public sector 
work force is organized, more than 85% of the private sector 
work force is not. Further, even where public sector workers 
are not organized, they are typically protected by civil 
service laws that require employers to meet a ``just cause'' 
standard before discharging or otherwise disciplining 
employees. The 85% of the private sector workers who are not 
covered by collective bargaining agreements are ``at will'' 
employees who, except where a legislature has expressly 
provided otherwise, may be fired or disciplined for any reason 
or for no reason whatsoever. Finally, public employers rarely 
go out of business, and if they do, are unlikely to be 
judgment-proof. Private employers regularly go out of business 
and are often judgment-proof when they so do.
    In many particular aspects, H.R. 2391 is by no means benign 
in its purpose or effect. The bill does not guarantee that 
employees will have the right to choose whether to accept 
compensatory time in lieu of paid overtime. H.R. 2391 provides 
that an employer, ``which is not a public agency * * * shall 
not directly or indirectly intimidate, threaten, or coerce or 
attempt to intimidate, threaten, or coerce any employee for the 
purpose of interfering with such employee's rights * * * to 
request or not request compensatory time off in lieu of 
overtime compensation. * * * '' In the first instance, the bill 
appears, by negative inference, to rewrite the law as it 
applies to public employees in a manner that would permit 
public employers to directly or indirectly intimidate, 
threaten, or coerce employees into accepting compensatory time 
in lieu of overtime pay. It is difficult to imagine that the 
Majority really intended to create this kind of disparity. But 
the plain language of the bill renders this conclusion.
    H.R. 2391 remedies are available to an employee who is 
coerced into accepting or using compensatory time only when an 
employer willfully intimidates, threatens, or coerces an 
employee. In effect, to be entitled to any remedy an employee 
must produce a smoking gun that proves that the employer 
engaged in coercive activity for the express purpose of 
interfering with the employee's rights. It is a burden most 
employees are unlikely to be able to meet, as noted by our 
colleague Representative Rob Andrews (D-NJ) during the full 
Committee markup:

          [This standard] is an almost impossible burden of 
        proof to meet against anyone but a very stupid 
        employer. * * * Now I would suggest * * * what would 
        seem to be a subtle legal difference in this bill has 
        totally eviscerated the concept of the bill being 
        voluntary. If you have to prove that the employer 
        willfully decided to deny you the voluntary nature of 
        this decision, I don't think there are very few cases 
        where the employee could ever win.

    The bill does not prohibit employers from assigning 
overtime on the basis of whether the employee has chosen 
compensatory time in lieu of overtime pay. No employee has a 
legal right to work overtime. While H.R. 2391 provides that an 
employer may not interfere with an employee's right to accept 
or refuse compensatory time, because the employee has no legal 
right to work overtime in the first instance, nothing in H.R. 
2391 precludes an employer from only allowing employees who 
``choose'' to receive compensatory time to work overtime hours. 
By permitting employers to qualify the availability of overtime 
work on the decision of a worker to take compensatory time in 
lieu of overtime pay, H.R. 2391 can hardly be said to provide 
employees a ``voluntary'' option to take compensatory time.
    No worker has an actual right to paid time off under this 
bill. No employee even has a right to ask for compensatory time 
off unless the employer first agrees to offer it. Where an 
employer offers compensatory time, the employer may arbitrarily 
decide to only offer compensatory time to some employees while 
denying it to others; or the employer may arbitrarily deny 
compensatory time to an employee on some occasions, while 
offering it to the employee on others. Rather than increasing 
an employee's control over his or her own life, H.R. 2391 
actually increases the employer's control over the worker's 
life.
    Even where an employee earns compensatory time, H.R. 2391 
does not guarantee the employee the right to use it. For 
example, assume an employee has earned 2 weeks of compensatory 
time and notifies the employer that he wants to use 3 days of 
that time to spend with his wife who is undergoing life-
threatening surgery. Under this legislation, there are 3 
alternatives by which the employer can effectively deny that 
employee the use of the compensatory time that the employee has 
already earned. First, the employer can simply deny the leave 
on the basis that it will unduly disrupt the employer's 
business. Second, that employer can unilaterally buy back the 
compensatory time from the employee, thereby wiping out the 
employee's compensatory time bank. And, third, the employer may 
effectively deny leave by requiring the employee to work a full 
40 hours over the 2 days the employee intends to work with no 
overtime pay. If the employer requires that the employee work 
20 hours a day (without overtime pay) and the employee refuses, 
the employee may be fired.
    Under the Family and Medical Leave Act, that same employee 
has a right to take unpaid leave to care for his wife. Yet, 
even though the employee has a legal right to time off, and 
even though the employee gave up overtime pay in order to earn 
compensatory time, under H.R. 2391 an employer may deny the 
employee the right to use that compensatory time, even where 
the employee otherwise has statutory right to take leave.
    H.R. 2391 effectively permits an employer to refuse an 
employee's request to use specific compensatory time days. 
Under the bill's plain language, an employer is only required 
to permit the employee to use the time within a reasonable time 
of making the request. H.R. 2391 provides that ``[a]n employee 
* * * shall be permitted by the employee's employer to use 
[compensatory] time within a reasonable period of making the 
request if the use of the compensatory time does not unduly 
disrupt the operations of the employer.'' An employee may put 
in a request on Monday to use compensatory time to take off the 
following Friday. H.R. 2391 allows the employer to offer the 
employee the option of taking Thursday off (a day within a 
reasonable period of the employee's request), but deny the 
employee the ability to take Friday off, the day the employee 
requested, without even invoking the ``unduly disrupt'' 
exception.\6\ So, who's time is it after all?
---------------------------------------------------------------------------
    \6\ In Heaton v. Missouri Department of Corrections, the 8th 
Circuit held that an employer may not require an employee to use 
compensatory time. Nothing in Heaton, however, nor in the plain 
language of H.R. 2391, precludes an employer from offering an employee 
the use of compensatory time for a period other than the period the 
employee has requested, so long as the period offered by the employer 
is within a reasonable period of the employee's request. The Majority's 
citation to Heaton is off the mark.
---------------------------------------------------------------------------
    The assertion of the Majority, that the ``unduly disrupt'' 
standard adopted by H.R. 2391 is the same standard that ``is 
used to limit an employee's right to take leave for medical 
treatments for the employee or member of his or her family 
under the Family and Medical Leave Act'' distorts fact and law. 
That Act provides that, subject to the approval of the health 
care provider, when planning medical treatment, the employee 
must consult with the employer and make a reasonable effort to 
schedule the leave so as not to disrupt unduly the employer's 
operations. Whether the leave would disrupt unduly the 
employer's operations is apparently a matter to be determined 
jointly by the employer and the employee through mutual 
consultation. More importantly, even if it is agreed that the 
leave would disrupt unduly the employer's operations, the 
employer may not deny the leave if the employee's health care 
provider determines that the treatments must be scheduled at a 
specific time. This is a far cry from the provisions of H.R. 
2391, where the employer may unilaterally determine whether the 
employee will be granted leave based upon the employer's 
unilateral determination of what constitutes an undue 
disruption of the employer's operations. We note for the record 
that had the Committee adopted a standard more similar to the 
standard under FMLA, it would have addressed one of our primary 
concerns with this legislation.
    H.R. 2391 will engender even greater violations of the 
overtime law. Under current law, employers must pay workers in 
a timely manner for the work they perform. If the employee 
works for more than 40 hours, a week, the employer must pay the 
employee time and a half for that work. While the timing of 
wage payments is not specified in the FLSA, all wages which are 
required by the Act, including overtime premiums, are 
considered to be due on the payday for the pay period in which 
the wages were earned. If wages are not paid on the designated 
payday, the employee is entitled to interest and, possibly, 
liquidated damages.
    H.R. 2391 permit an employer to defer paying anything at 
all for overtime work for up to 1 year. In industries that are 
characterized by thinly capitalized enterprises that come in 
and out of business (such as the construction industry, the 
garment industry, and many seasonal industries) the promise of 
compensatory time is likely to be illusory. A random check of 
69 garment contractors in Southern California in 1994 found 
that 73% maintained improper payroll records (without which the 
fair administration of a compensatory time system would be 
impossible), 68% were not paying overtime in accordance with 
current law, and 51% were not even paying minimum wages. As 
employers seek to keep pace with their competitors, the 
temptation to defer payments for overtime work through 
compensatory time in such industries is likely to be 
overwhelming. And when the cumulative value of the compensatory 
time gets too high, these firms are likely to simply close and 
disappear, leaving their workers without any compensation for 
the overtime they worked.
    The remedies provided under H.R. 2391 for violations of 
compensatory time are markedly inferior to those already 
provided in current law for overtime violations. Under current 
law, and employer who has failed to pay overtime is liable for 
the unpaid overtime, an equal amount as liquidated damages, 
attorney's fees, and costs, regardless of whether the violation 
was committed willfully or not. Where the violation was 
willful, the employer may be liable additionally for a fine of 
not more than $10,000 and to imprisonment of up to six months. 
Further, the Secretary of Labor is authorized to sue on behalf 
of employees to recover unpaid overtime compensation.
    In stark contrast, under H.R. 2391, an employer who has 
failed to pay for earned compensatory time, by either denying 
the employee paid time off or by not purchasing the unused 
compensatory time, cannot be used by the Secretary of Labor and 
is not additionally liable for a fine or imprisonment for 
willful violations. By limiting remedies by reference to 
subsection (b) of section 16, rather than coverage of all of 
that section, the Republicans have apparently intentionally 
limited the remedies available to workers for employer 
violations. Under subsection 16(a), an employer who willfully 
violates the overtime law may be liable to a fine of not more 
than $10,000 and to imprisonment for not more than six months. 
Under H.R. 2391, an employer who willfully violates the 
overtime law by failing to pay compensatory time or by 
requiring an employee to receive compensatory time in lieu of 
overtime pay is not subject to subsection 16(a). Under 
subsection 16(c), the Secretary of Labor is authorized to sue 
employers on behalf of employees for unpaid minimum wages or 
unpaid overtime compensation. Yet, because H.R. 2391 provides 
that unpaid compensatory time shall only be considered unpaid 
overtime compensation for purposes of subsection 16(b), the 
Secretary of Labor is precluded from using on behalf of 
employees for unpaid compensatory time.
    In addition, an employee who has been forced to accept 
compensatory time off in lieu of paid overtime or has been 
forced by the employer to use accrued compensatory time at the 
employer's discretion (rather than at the employee's) is 
entitled to no remedy unless the employee can prove that the 
employer willfully violated the law. Finally, because the bill 
provides that liquidated damages shall be offset by ``the rate 
of compensation for each hour of compensatory time used by such 
employee.'' the bill effectively provides a lesser penalty for 
employers who force an employee to accept and use compensatory 
time than that available under current law for overtime 
violations.
    Despite the Majority's assertions that the ``agreement'' 
provisions of H.R. 2391 will ``ensure that compensatory time is 
voluntary,'' the bill fails to require that employers fully 
inform employees of their rights.\7\ Under H.R. 2391, an 
employer is not required to inform employees that they may earn 
compensatory time. An employer is not required to inform 
employees that they have a right to cash out their compensatory 
time. An employer is not required to inform employees under 
what circumstances they may use compensatory time. An employer 
is not required to inform employees that they may revoke a 
compensatory time request. An employer is not even required to 
inform employees that they have a right to refuse compensatory 
time.
---------------------------------------------------------------------------
    \7\ We find this fact especially ironic given the Republican 
concern that employees be informed of their ``Beck'' rights. The 
Republicans think that it is absolutely essential that workers be 
informed or their right to not pay full union dues. And yet, despite 
the fact that overtime income typically vastly exceeds what workers pay 
in union dues, the Majority thinks it unimportant that employees be 
fully informed of their compensatory time and overtime pay rights.
---------------------------------------------------------------------------
    Under this legislation, at the time an employee is hired, 
he or she may be handed a piece of paper that say the employee 
``elects'' to receive compensatory time for all overtime hours 
that employee may work over the course of the employee's 
career. Because the employee wants the job, the employee is 
going to be inclined to sign that piece of paper. Under H.R. 
2391, if the employee signs that paper, the employee never 
again has the right to receive overtime pay for overtime work.
    There are numerous other defects in H.R. 2391. In large 
part because of the excessive overtime bank permitted by the 
bill, H.R. 2391 invites employers to eliminate their paid 
vacation and sick leave policies. H.R. 2391 permits an employee 
to accumulate up to 240 hours of compensatory time in a single 
year. The bill also requires employers to purchase unused 
compensatory time on an annual basis. Realistically, few 
employees would be able to both work 4 weeks of overtime and 
take 6 weeks off within the same year. Yet, an employer may 
nevertheless offer an employee up to 6 weeks paid time off 
based on accrued compensatory time. The question then becomes, 
why should an employer give away paid leave when that employer 
can require employees to work overtime to order to earn paid 
leave instead? Our Republican colleagues say they are 
interested in a voluntary compensatory time bill, but how 
voluntary is compensatory time if the only way employees can 
earn paid leave is to take their overtime compensation in the 
form of compensatory time instead of being paid for overtime? 
\8\
---------------------------------------------------------------------------
    \8\ To both earn and use the maximum amount of compensatory time 
available, an employee would have to work the equivalent of 4 weeks of 
overtime work and take 6 weeks off, all within the same year. 
Realistically, few employees would be able to both work 4 weeks of 
overtime and take 6 weeks off within the same year.
---------------------------------------------------------------------------
    Finally, H.R. 2391 provides no protection for employees 
where an employer goes bankrupt.\9\ The bill does not prevent 
an employer seeking to use the payment for a terminated 
employee's unused compensatory time to diminish that employee's 
unemployment compensation. And, the bill does not ensure that 
compensatory time will be treated similarly to overtime pay for 
pension and health benefit purposes.
---------------------------------------------------------------------------
    \9\ Section 16(b) of the FLSA in no way extends to employees the 
full measure of protections afforded under the Bankruptcy Code.
---------------------------------------------------------------------------

                               Conclusion

    It remains critical that the FLSA maintain basic, 
inviolate, minimum labor standards. Instead, corporate special 
interest and their Republican alies have proposed legislation 
that appears to be aimed at gutting the protections of the FLSA 
and undermining living standards to the detriment of workers, 
the economy, and the country. Today's employees may be better 
educated than their grandparents, but the imperatives of the 
market are the same--and may even be worse in the new global 
economy. Employees are anxious and worried. At a time when 
family income is already stagnating or declining, despite the 
larger presence of women in the workforce, most workers are in 
a poor position to resist their employers' request that they 
adapt their schedules, despite the hardship that may result for 
families, to meet their employers' needs.
    We will work with the Clinton Administration to develop 
legislation that protects and enhances the rights of workers 
who wish to choose compensatory time instead of overtime pay. 
If our Republican colleagues are interested in doing something 
more than undermining the overtime law, we reiterate our 
willingness to work with them, as well. To date, however, there 
has been a fundamental distinction between what the Republicans 
have proposed and what we have said we would support and the 
President has said he would sign. We start from the premise 
that the protection of the basic labor standards of workers is 
paramount. The Republicans would jeopardize those rights in 
order to enhance the rights of employers.
    At its best, H.R. 2391 provides no more than a right to 
employers to defer paying employees for the work they perform. 
If enacted into law, it would inevitably diminish the income of 
working families. At its worst, H.R. 2391 will not only 
diminish the incomes of those who are working, but it will 
diminish the amount of time that full-time workers may spend 
with their families while increasing the number of involuntary 
part-time workers and unemployed workers. We cannot support 
H.R. 2391, as reported, and urge its rejection by the House.

                                   William L. Clay.
                                   Dale E. Kildee.
                                   Matthew G. Martinez.
                                   Tom Sawyer.
                                   Patsy T. Mink.
                                   Jack Reed.
                                   Xavier Becerra.
                                   Gene Green.
                                   Carlos Romero-Barcelo.
                                   Earl Blumenauer.
                                   George Miller.
                                   Pat Williams.
                                   Major R. Owens.
                                   Donald M. Payne.
                                   Robert E. Andrews.
                                   Tim Roemer.
                                   Bobby Scott.
                                   Lynn C. Woolsey.
                                   Chaka Fattah.