2 Bills Cutting Red Tape for Employee Benefits Advance in House

Two bills that would cut red tape and make it easier for employers to provide child care and elder care benefits and educational opportunities for their employees have advanced in the U.S. House of Representatives.

The House Committee on Education and Workforce moved the two bills forward on April 9—the Empowering Employer Child and Elder Care Solutions Act and the Flexibility for Workers Education Act.

While the actual dollars that employers must pay to provide their workers with benefits like education or child care subsidies are usually employers’ first consideration, it’s sometimes the labor laws and regulations—not the costs—surrounding these benefits that prevent employers from offering them.

Take employer-provided child care, for example. Suppose that an employer wants to support an on-site child care facility and provide workers with a child care subsidy of $5,000 per year. Under the Fair Labor Standards Act, employers who provide any kind of on-site child care or child care subsidies must include the value of those benefits in employees’ pay calculations when paying overtime. That results in the employer actually paying someone more for overtime than she is due.

Forcing employers to undergo burdensome and confusing calculations and to pay employees more than what is actually owed is a recipe for employers scrapping the idea of a subsidy altogether.

To illustrate, this is how the government’s treatment of a subsidy currently works: If Sue makes $20 per hour, her employer must include the value of her child care subsidy in her hourly rate of pay when calculating overtime.

So, if Sue averages 40 hours a week with two weeks off per year, then the hourly equivalent of her $5,000 child care subsidy equals $2.50 per hour. Although Sue’s actual wage is still $20 per hour, her rate of pay for overtime calculations is now calculated at $22.50.

Therefore, if Sue works five hours of overtime this week, her employer will have to pay her $168.75 in cash wages ($22.50 “regular rate” x 5 hours x 1.5 overtime rate), instead of the $150 ($20 hourly pay x 5 x 1.5) he actually should be paying her.

But that assumes Sue works 2,000 hours per year. If she ends up working more or less—say 2,100 or 1,900 hours—her regular rate of pay would be somewhere between $22.63 and $22.38, which means $22.50 was the wrong regular rate of pay for her employer to use to begin with.

Perhaps more so than the extra dollars that Sue’s employer must pay her and other employees who receive child care benefits, there’s the added concern of being held liable for wage theft if he applies the wrong regular rate of pay.

By amending the Fair Labor Standards Act of 1938 to treat child care and elder care subsidies the same as other fixed-cost workplace benefits such as health and life insurance, the Empowering Employer Child and Elder Care Solutions Act (H.R. 2270) would make it easier for employers to provide these benefits without having to include them in workers’ “regular rate” of pay calculations for overtime. This bill was introduced on March 21 by Rep. Mark Messmer, R-Ind., and was reported favorably out of committee on April 9.  

Another workplace benefit that employers often want to offer employees but which can come with added costs and complications due to overtime laws is voluntary employer-provided education.

Many workers pursue personal growth and development opportunities at their own expense outside of their working hours. But if an employer wants to offer to pay for his employees to attend such opportunities, under current law, the time spent completing that education counts toward their weekly work hours and can trigger added overtime costs and complications.

The Flexibility for Workers’ Education Act (H.R. 2262), introduced by Rep. Ashley Hinson, R-Iowa, would exclude voluntary, employer-provided “upskilling” opportunities from the “hours worked” calculation used to determine overtime pay, so long as employees do not perform work for their employer during that time and the education occurs outside of working hours. This bill was also reported favorably out of committee on April 9.

As lawmakers seek to expand employer-provided benefits and improve workplace flexibility, these two bills demonstrate that less is more when it comes to government intervention in workers’ and families’ lives and in employers’ operations.

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