Small Business Flexibility Act

— 592 — Mandate for Leadership: The Conservative Promise Overtime Pay Threshold. Overtime pay is one of the most challenging aspects of the Fair Labor Standards Act rules. “Nonexempt workers” (e.g., workers whose job duties fall within the law’s power or whose total pay is low enough) must be paid overtime (150 percent of the “regular rate”) for every hour over 40 in a work- week. Overtime requirements may discourage employers from offering certain fringe benefits such as reimbursement for education, childcare, or even free meals because the benefits’ value may be included in the “regular rate” that must be paid at 150 percent for all overtime hours. And because some of these fringe ben- efits may be more valuable (and often come with tax preferences that benefit the worker), the goal should be to set a threshold to ensure lower-income workers have the protections of overtime pay without discouraging employers from offering these benefits. l DOL should maintain an overtime threshold that does not punish businesses in lower-cost regions (e.g., the southeast United States). The Trump-era threshold is high enough to capture most line workers in lower-cost regions. One possibility to consider (likely requiring congressional action) would be to automatically update the thresholds every five years using the Personal Consumption Expenditures (PCE) as an inflation adjustment. This could reduce the likelihood of a future Administration attempting to make significant changes but would also impose more adjustments on businesses as those automatic increases take hold. l Congress should clarify that the “regular rate” for overtime pay is based on the salary paid rather than all benefits provided. This would enable employers to offer additional benefits to employees without fear that those benefits would dramatically increase overtime pay. l Congress should provide flexibility to employers and employees to calculate the overtime period over a longer number of weeks. Specifically, employers and employees should be able to set a two- or four- week period over which to calculate overtime. This would give workers greater flexibility to work more hours in one week and fewer hours in the next and would not require the employer to pay them more for that same total number of hours of work during the entire period. Compliance-Assistance Programming. Labor agencies are often tempted to encourage “over compliance” by companies subject to regulation by pursuing “regulation through enforcement” strategies. Rather than giving regulated enti- ties clear boundaries for what they can and cannot do under the law, the agencies — 593 — Department of Labor and Related Agencies rely on the vagueness of the law to bring enforcement activity against businesses that fail to meet an inspector or agency head’s personal standard. This is not fair to regulated parties and results in disfavored companies bearing the brunt of the agencies’ enforcement efforts even though their behavior may be within the main- stream of employer behavior. l Labor agencies should provide compliance assistance to help businesses and workers better understand the agencies’ position on their own rules and should do so in a way that makes it easier to follow those rules. This frees people to focus on their work rather than slogging through an ever-growing body of laws, rules, and guidance documents generated by the agencies. Clear and Restrictive Rules on Guidance Documents. Federal agencies not only issue regulations to fill in gaps left by legislation, but also supplement those reg- ulations with “guidance” documents that occupy a unique and often confusing area between law and “helpful advice.” Unfortunately, wielded by overzealous enforcement agents, such guidance, some of it even hidden from public view, morphs into binding law used against unsuspecting employers. Guidance can be a tricky thing and can be used for good or bad. It should be used to make compli- cated regulations easier to understand, so that businesses can do their actual jobs and focus on providing jobs to American workers and value to consumers (really, compliance assistance). But guidance is often used to create new rules overnight without following legal requirements—like giving the public an opportunity to provide valuable input. This wrongful use of guidance hurts workers and those who employ them. In October 2019, President Trump signed an executive order ending this abusive practice and created a new, fairer system for American busi- nesses and their employees. In response, DOL published its PRO Good Guidance rule,10 which expressly limits its use of guidance in enforcement actions and gives the public the opportunity to submit comments to influence the department’s deci- sions on creating, revising, and even rescinding guidance. Under this rule, agencies cannot treat guidance as legally binding and must make all guidance documents readily accessible on their searchable online databases. This rule was immediately rescinded by the Biden Administration. l DOL should reinstitute the PRO Good Guidance rule via notice and comment. l Congress should amend the Administrative Procedure Act11 to explicitly limit the use of guidance documents.

— 612 — Mandate for Leadership: The Conservative Promise Alternative View. Some conservatives believe that temporary worker programs help to fill jobs that Americans will not fill, prevent illegal immigration by giving farmers and others who hire low-skilled labor access to workers, and keep down the prices of food and other products and services produced by the temporary workers. Some credibly argue that, absent the H-2A program, many farmers would have to drastically increase wages, raising the price of food for all Americans, and that even such wage increases may not be sufficient to attract enough temporary American workers to complete the necessary farm tasks to get food products to market since those jobs are, by their nature, seasonal. Those who share this view argue that any plan to phase out the program should weigh the program’s current costs (relatively low) and the program’s current benefits (makes American farming more profitable and sustainable while keeping down food costs). l Phase out the H-2B visa program. The H-2B visa, for nonagricultural seasonal workers, suffers from many of the same harms and abuses as H-2A, albeit of lesser scope because of its cap and distribution across many sectors. Congress should immediately cap this program at its current levels and establish a schedule for its gradual and predictable phasedown over no more than 10 years. Alternative View. As with the H-2A program, some conservatives see the H-2B program as a valuable program that provides low-cost temporary workers in jobs that American companies, by and large, cannot find enough American workers to fill (e.g., tourist season childcare providers at ski resorts, swimming instructors at summer camps, housekeepers and groundskeepers at amusement parks, and extra summer cooks at restaurants that serve national park patrons).These seasonal jobs are less desirable to Americans who predominantly prefer year-round work. Labor shortages after the pandemic support this belief. Absent the H-2B program, many of these seasonal businesses would be forced to cut their hours or even close altogether. Any plan to phase out the program should weigh the program's current costs (relatively low) and the program’s current benefits (makes seasonal business more feasible). Hire American Requirements. When government purchases goods or ser- vices, if at all possible, not only should the company be an American company and the products be manufactured in America, but the companies should also be encouraged to hire American workers. Likewise, private employers should be free to prefer our own countrymen. l Congress should mandate that all new federal contracts require at least 70 percent of the contractor’s employees to be U.S. citizens, with the percentage increasing to at least 95 percent over a 10-year period.

— 612 — Mandate for Leadership: The Conservative Promise Alternative View. Some conservatives believe that temporary worker programs help to fill jobs that Americans will not fill, prevent illegal immigration by giving farmers and others who hire low-skilled labor access to workers, and keep down the prices of food and other products and services produced by the temporary workers. Some credibly argue that, absent the H-2A program, many farmers would have to drastically increase wages, raising the price of food for all Americans, and that even such wage increases may not be sufficient to attract enough temporary American workers to complete the necessary farm tasks to get food products to market since those jobs are, by their nature, seasonal. Those who share this view argue that any plan to phase out the program should weigh the program’s current costs (relatively low) and the program’s current benefits (makes American farming more profitable and sustainable while keeping down food costs). l Phase out the H-2B visa program. The H-2B visa, for nonagricultural seasonal workers, suffers from many of the same harms and abuses as H-2A, albeit of lesser scope because of its cap and distribution across many sectors. Congress should immediately cap this program at its current levels and establish a schedule for its gradual and predictable phasedown over no more than 10 years. Alternative View. As with the H-2A program, some conservatives see the H-2B program as a valuable program that provides low-cost temporary workers in jobs that American companies, by and large, cannot find enough American workers to fill (e.g., tourist season childcare providers at ski resorts, swimming instructors at summer camps, housekeepers and groundskeepers at amusement parks, and extra summer cooks at restaurants that serve national park patrons).These seasonal jobs are less desirable to Americans who predominantly prefer year-round work. Labor shortages after the pandemic support this belief. Absent the H-2B program, many of these seasonal businesses would be forced to cut their hours or even close altogether. Any plan to phase out the program should weigh the program's current costs (relatively low) and the program’s current benefits (makes seasonal business more feasible). Hire American Requirements. When government purchases goods or ser- vices, if at all possible, not only should the company be an American company and the products be manufactured in America, but the companies should also be encouraged to hire American workers. Likewise, private employers should be free to prefer our own countrymen. l Congress should mandate that all new federal contracts require at least 70 percent of the contractor’s employees to be U.S. citizens, with the percentage increasing to at least 95 percent over a 10-year period. — 613 — Department of Labor and Related Agencies l Congress must amend the law so that employers can again have the freedom to make hiring Americans a priority. Despite the significant advantages that preferring citizens over (work-authorized) aliens in hiring would provide to American workers, businesses, and the country at large, such a practice has been illegal since 1986.25 This makes no sense. Alternative View Some conservatives believe that the government has a duty to limit its spending in order to limit how much it takes from American families. This means that when the government spends money, it must find the most econom- ical and effective way to do so. Excessive government spending will be borne by American workers and families through reduced incomes and purchasing power. There may be good reasons to require a certain percentage of American workers on federal contracts, but those decisions should be based on economy and efficiency as opposed to arbitrary quotas. Visa Fraud. American businesses that commit visa fraud and hire illegal immi- grants should not be the beneficiaries of federal spending. But a 2020 report by the Department of Labor’s Office of Inspector General (OIG) examined the depart- ment’s process for excluding employers who commit visa fraud and abuse from federal contracts and found much to be desired. l To protect the American workforce from unscrupulous immigration lawyers, employers, and labor brokers, the department must follow the recommendations of the OIG and institute more robust investigations for suspected visa fraud and speedier debarments for those found guilty. INTERNATIONAL LABOR POLICY Leveling the International Playing Field for Workers. As recent decades of intense import competition and offshoring have made clear, American workers suffer when the U.S. opens its markets to foreign nations’ minimal labor standards and exploitative conditions. While federal law already prohibits the importation of goods produced with forced labor, the prohibitions are toothless without effective means of enforcement and cover only the most basic of workers’ rights. The Trump Administration and its United States Trade Representative (USTR) took unprece- dented steps to redress the issue for workers. The U.S.–Mexico–Canada Agreement (USMCA) contained the strongest and most far-reaching labor provisions of any free trade agreement (FTA), with protections and commitments to reduce labor abuses and raise wages. It also established new modes of enforcement. For future FTAs, the USTR should replicate the labor provisions of USMCA, especially the provisions to: