House Committee Passes Wage Theft, FLSA Reform Bill

The House Education and Labor Committee passed the Wage Theft Prevention and Recovery Act (H.R. 7701), which would substantially increase the penalties and amend the procedures for alleged Fair Labor Standards Act violations. The Association provided insights on the realities of complying with the 1938 law as well as the bill’s deficiencies in written testimony submitted for a hearing preceding the action.  

Among other provisions, the bill would:

• Drastically increase penalties and liquidated damages for FLSA violations—in some cases by as much as 5,000%—and extend the statute of limitations for FLSA claims;
  
  
• Remove the “opt-in” requirement for FLSA class action claims—workers would be automatically included in class action claims unless they affirmatively opt out; and
  
  
• Prohibit pre-dispute arbitration agreements in employment contracts.

In our testimony, the Association voiced strong opposition to H.R. 7701, highlighting the practical realities of FLSA compliance and deficiencies of the bill. The testimony challenged the presumptions of the hearing, noting, “Increased compliance with the FLSA is in the interest of all stakeholders. The nature of the problem, however, is significantly more nuanced than as characterized by this hearing, and therefore requires similarly nuanced and targeted solutions. The idea, presented during this hearing, that most employers regularly and intentionally violate the FLSA and engage in wage theft is simply false.” 

HR Policy also emphasized that banning arbitration agreements and changing class action requirements are unrelated to the bill’s goal of increased FLSA compliance and would in fact be detrimental to low wage workers, a group that the bill is purportedly meant to protect. The Association pointed out that the bill is primarily a boon for plaintiffs’ attorneys and harmful for all other stakeholders. 

Outlook: H.R. 7701 passed out of the House Education and Labor Committee by a party-line vote of 27-19. It is unclear when the bill will be given a full floor vote in the House, where it would likely pass. This would fit with the House leadership’s strategy of showing productivity in a number of areas before the election, notwithstanding the gridlock in the Senate preventing such bills from becoming law.