Following is LRM ID: OGG 28.   Please read and respond to it by 1:00 p.m.,
tomorrow, Tuesday, June 22, 1999. The draft testimony on which we request
your comments totals 2 pages and is attached at the end of this LRM.

Agencies: Please contact me if you do not receive this e-mailed LRM in
good working form.  For your convenience, we will follow this e-mail by
sending a copy by fax.

EOP staff: You will not receive a paper copy of this LRM.
---------------------- Forwarded by Oscar Gonzalez/OMB/EOP on 06/21/99
06:37 PM ---------------------------
LRM ID: OGG28
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
Washington, D.C. 20503-0001

Monday, June 21, 1999

LEGISLATIVE REFERRAL MEMORANDUM

TO:                      Legislative Liaison Officer - See Distribution
below
FROM:            Janet R. Forsgren (for) Assistant Director for
Legislative Reference
OMB CONTACT:     Oscar Gonzalez
                                 PHONE: (202) 395 -7754 FAX: (202) 395 - 614 8
SUBJECT:         LABOR Report on HR1381 Rewarding Performance in
Compensation Act

DEADLINE:               1pm Tuesday, June 22, 1999
In accordance with OMB Circular A-19, OMB requests the views of your
agency on the above subject before advising on its relationship to the
program of the president.  Please advise us if this item will affect
direct spending or receipts for purposes of the "Pay-As-You-Go" provisions
of Title XIII of the Omnibus Budget Reconciliation Act of 1990.

COMMENTS: Attached is a letter from Labor Secretary Herman on HR 1381 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 (See LRM ID: MNB72).
Be advised that, like the previous letter, this letter contains a veto
threat. Due to the short deadline, your immediate attention is


appreciated.

DISTRIBUTION LIST

AGENCIES:
25-COMMERCE - Michael A. Levitt - (202) 482-3151
61-JUSTICE - Jon P. Jennings - (202) 514-2141
107-Small Business Administration - Mary Kristine Swedin -   (202) 205-670.0
118-TREASURY - Richard S. Carro - (202) 622-0650

EOP:
Barbara Chow
Iratha H. Waters
Barry White
Larry R. Matlack
Debra J. Bond
Darrel Park
Karen Tramontano
Elena Kagan
Broderick Johnson
Sandra Yamin
Daniel J. Chenok
Stuart Shapiro
Courtney B. Timberlake
Robert G. Damus
Robert L. Nabors
Adrienne C. Erbach
Brian V. Kennedy
Sarah S. Lee
Janet R. Forsgren
James J. Jukes
LRM ID: OGG28    SUBJECT:  LABOR   Report on HR1381 Rewarding
Performance In Compensation Act
RESPONSE TO
LEGISLATIVE REFERRAL
MEMORANDUM

If your response to this request for views is short (e.g., concur/no
comment), we prefer that you respond bye-mail or by faxing us this
response sheet.  If the response is short and you prefer to call, please
call the branch-wide line shown below (NOT the analyst's line) to leave a
message with a legislative assistant.

You may also respond by:
         (1) calling the analyst/attorney's direct line (you will be
connected to voice mail if the analyst does not answer); or
         (2) sending us a memo or letter
Please include the LRM number shown above, and the subject shown below.


TO:            Oscar Gonzalez Phone:   395-7754   Fax: 395-6148
               Office of Management and Budget
               Branch-Wide Line (to reach legislative assistant) :
395-7362

FROM:                                                     (Date)

                                                          (Name)

                                                          (Agency)



                                                          (Telephone)


The following is the response of our agency to your request for views on
the above-captioned subject:

               Concur

        ______ No Objection

        ______ No Comment

               See proposed edits on pages

               Other:

               FAX RETURN of _____ pages, attached to this response sheet
 - FLSACOM4.WPDUnable to convert ARMS_EXT: [ATTACH.D54]ARMS27991887Z.136 to ASCII,
 The following is a HEX DUMP:

FF575043AIIOOOOOOIOA02010000000205000000CCID0000000200OOC940DDB453CC753BA41601
E03676F68FDDC5B058A210CFD691ED54CF25FC46ADB335505EIF8386A9B53A7C5B9BDD41743DF8
81FIA20EA44591ACA4BB3CC920CEBB089F46DF5B13A609F51AIE2AE95F9A5B4F549A41F3387066
6C4DC6CIECAD9F7A997EF3BBD6045B624971FB775BID5B75C03F36D30BEA3FB5107350E2149FEB
E046AA9FOE54FF4AEA9A53F2DC39B3A839563C88B30A9B734AF841E2E6CBD9A547150F7402F8A4
BA963B75DCABC6BB96DOEA52D33D66530126B3EF9EI0605450B8A32963EF48744F0608220861E2
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 "regular rate," 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
employees' 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 employers' 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.



                                              Automated Records Management System
                                              HeK-Dump Conversion




           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 President's program.

                                       Sincerely,



                                       Alexis M. Herman




                                                       Automated Records Management System
                                                       Hex-Dump Conversion
                                            2
tf...   -   ~~
    

- FLSACOM4.WPD==================== ATTACHMENT 1 ==================== ATT CREATION TIME/DATE: 0 00:00:00.00 TEXT: Unable to convert ARMS_EXT: [ATTACH.D54]ARMS27991887Z.136 to ASCII, The following is a HEX DUMP: FF575043AIIOOOOOOIOA02010000000205000000CCID0000000200OOC940DDB453CC753BA41601 E03676F68FDDC5B058A210CFD691ED54CF25FC46ADB335505EIF8386A9B53A7C5B9BDD41743DF8 81FIA20EA44591ACA4BB3CC920CEBB089F46DF5B13A609F51AIE2AE95F9A5B4F549A41F3387066 6C4DC6CIECAD9F7A997EF3BBD6045B624971FB775BID5B75C03F36D30BEA3FB5107350E2149FEB E046AA9FOE54FF4AEA9A53F2DC39B3A839563C88B30A9B734AF841E2E6CBD9A547150F7402F8A4 BA963B75DCABC6BB96DOEA52D33D66530126B3EF9EI0605450B8A32963EF48744F0608220861E2 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 "regular rate," 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 employees' 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 employers' 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. Automated Records Management System HeK-Dump Conversion 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 President's program. Sincerely, Alexis M. Herman Automated Records Management System Hex-Dump Conversion 2 tf... - ~~