Education and Workforce Committee Passes 3 Bills to Expand Flexibility, Boost Earnings, and Hasten Back Pay

On Thursday, the House Education and Workforce Committee passed three bills to boost flexibility, wages, and efficiency for workers.

These three bills would modernize the 1938 Fair Labor Standards Act to provide flexibility for workers, simplicity for tipped employees, and more efficient resolutions to payroll errors. Importantly, none of these provisions will cost taxpayers a single dime because they simply remove unnecessary barriers to flexibility and higher pay. In fact, at least one of the bills would likely save taxpayers from unnecessary administrative costs.

The first bill, H.R. 2870, is the Working Families Flexibility Act. This act would allow lower-income hourly workers to choose whether they want to accumulate paid leave overtime pay when they work more than 40 hours in a week. Paid leave, or so-called comp time, would accumulate at 1.5 times the rate of overtime, meaning if a worker performed four hours of overtime one week, he would accumulate six hours of paid leave to use in the future.

This proposal would particularly help lower-income workers, who are the least likely to have access to paid family leave. If an employee regularly worked 5 hours of overtime per week for one year, she would accumulate 10 weeks’ worth of paid leave—time that could be used, for example, in the case of a birth, a family medical need, or even just wanting to attend a child’s soccer game. Public sector workers already have access to this flexible comp-time option; it’s time to provide private sector workers the same choice.

The second bill, H.R. 2312, is the Tipped Employee Protection Act. In general, the FLSA allows for lower base wages for tipped employees, but their total wages—including their base pay plus tips—must meet or exceed the minimum wage. Problems have arisen as different administrations and different courts have come to different interpretations of who qualifies as a tipped worker.

Moreover, the Biden administration imposed an unreasonable—if not impossible—tipped minimum wage rule that required employers to separate tipped workers’ activities into three different buckets and keep track of the time spent on each—down to the exact minute and second.

Take restaurant waiters, for example. Under the Biden rule, making a salad is “not part of the tipped occupation,” but applying dressing to the salad is “tip-producing.” Wiping up a spill in the bathroom is “not part of the tipped occupation,” wiping up a spill in the dining room is “direct tip-supporting,” and wiping up a spill at or adjacent to the server’s customer table is “tip-producing.”

How are workers and employers possibly supposed to keep track of and properly classify every minute and second of their work?

The Tipped Employee Protection Act would provide clarity to businesses on the definition of a tipped employee, which would better protect the rights of tipped workers. By removing the complexity and administrative costs of confusing regulations, the act would reduce compliance costs and free up opportunities for tipped employees to work and earn more.   

Last is H.R. 2299, the Ensuring Workers Get PAID Act. This act would permanently authorize the successful and voluntary Payroll Independent Audit Determination, or PAID program, at the Department of Labor. Initially launched in 2018, the PAID program promotes compliance without litigation.

By allowing employers to conduct self-audits to identify potential payroll violations and to then work with the Department of Labor to correct those violations without litigation, the PAID program resulted in faster and more efficient resolution for workers.

Before the PAID pilot program was cancelled by the Biden administration, the average back wages paid per case in the PAID pilot were four times the back wage payments of compliance actions. Cases included just one-tenth the costs of compliance actions and each resulted in nearly 10 times as many back wage payments as traditional compliance cases.    

As Education and Workforce Committee Chairman Tim Walberg, R-Mich. noted, “These three bills together provide clear, modern, and flexible solutions that expand flexibility for families, boost earnings for tipped workers, and ensure workers get paid faster when payroll mistakes occur. Simply put, they are commonsense solutions that put workers and families first.”

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