4:27 PM 22 Jun 1999
Attached below is a letter from Labor Secretary Herman on HR 1381
"Rewarding Performance in Compensation Act" to be presented to the House
Committee on Education and Workforce prior to a markup of the bill on
Wednesday, June 23rd. The letter is nearly identical to a previous Labor
letter dated May 19th (Please let me know if you would like a faxed copy
of the May 19 letter). Please note that position in the draft letter
contains a secretarial veto recommendation (as did the May 19th letter) .
Due to the short timeframe, your immediate attention is greatly
appreciated. please provide your sign-off or comments no later than
5:00PM TODAY. Thank you!
The Honorable William F. Goodling
Chairman
Committee on Education and the Workforce
U.S. House of Representatives
Washington, D.C. 20515
Dear Chairman Goodling:
I am writing to provide you with the views of the Department of Labor on
H.R. 1381, the "Rewarding Performance in Compensation Act." This bill
would amend the Fair Labor Standards Act (FLSA) to exclude from the
definition of oular rate,oS payments made to reward employees for
meeting or exceeding productivity, quality, efficiency, or sales goals as
specified in a gainsharing, incentive bonus, commission, or performance
contingent bonus plan. The regular rate is the basis for calculating
overtime premium (time-and-a-half pay). As I previously advised
Subcommittee Chairman Ballenger in my letter of May 19, 1999, the effect
of this amendment would be to diminish employeeso, entitlements to overtime
premium pay under the FLSA. Accordingly, if H.R. 1381 were presented to
the President, I would recommend that he veto it:
This bill would substantially reverse the FLSA's long-standing overtime
policy and drastically weaken existing protections for workers to receive
true time-and-a-half overtime premium pay. Moreover, H.R. 1381 does
nothing to guarantee that workers would ever share in their employerso,
gains from their having to work excessive overtime hours.
The bill would allow an employer to pay artificially low hourly wages and
structure a compensation scheme with "excludable" bonus pay that is based
upon production or efficiency, enabling an employer to effectively
transfer much of its risk to the workers. The bill would not guarantee
workers the right to receive any incentive compensation, but it would
guarantee employers the right to exclude any such pay from overtime.
Workers' only rights would be overtime at time-and-a-half of an
artificially reduced hourly wage, not their true regular rate. This bill
would encourage employers to have their employees work for longer hours at
lower earnings, the opposite of the original intent of the. FLSA's overtime
standards--to limit the detrimental impact that long work hours can have
on the health, efficiency and general well-being of workers.
This bill would undermine workers' rights and the 40-hour workweek. These
requirements, which have been in place for over 60 years, provide vital
worker protections that discourage employers from having employees work
excessively long hours and ensure fair compensation to employees for the
burdens of working extended hours for their employer. The Department of
Labor strongly opposes H.R. 1381 because it is contrary to the best
interests of the Nation's workers who would be affected by it.
The Office of Management and Budget has advised that there is no objection
to the presentation of this report and that enactment of H.R. 1381 would
not be in accord with the Presidento,s program.
Sincerely,
Alexis M. Herman
