Senate Committee on Appropriations: A Review of the President’s Fiscal Year 2025 Budget Request for the Department of Labor
Senate Committee on Appropriations
Subcommittee on Labor, Health and Human Services, Education, and Related Agencies
A Review of the President’s Fiscal Year 2025 Budget Request for the Department of Labor
Topline
- Democrats raised concerns about the uptick in child labor violations, and pressed Su on how the DOL could improve the backlog impacting visa programs.
- Sen. Capito questioned the motive behind the Fiduciary Rule, which she said makes investments overtly political. Other Republican members discussed concerns with the DOL’s Overtime Rule.
Witnesses
- The Hon. Julie Su, Acting Secretary, U.S. Department of Labor (DOL)
Opening Statements
Subcommittee Chair Tammy Baldwin (D-Wisc.)
In her opening statement, Baldwin said she looked forward to working with Republicans on common sense agreements rather than forcing partisan riders and draconian cuts to workforce development programs. She noted the country is experiencing the longest stretch of unemployment below 4% in 40 years, and commended the Biden Administration for investing in a strong economy that supports workers and meets the needs of employers. Baldwin discussed the ongoing work to improve apprenticeship programs, community colleges, public workforce systems, and other workforce development programs. She said she was pleased with the additional investments in the Department of Labor’s Wage and Hour Division, noting the Division’s staff has fallen to historical lows, which needs to be fixed. Baldwin emphasized the need to address the egregious rise in child labor violations and workplace safety issues. She concluded that she was pleased with the funding requests for addressing labor abuses abroad, including in China.
Subcommittee Ranking Member Shelley Moore Capito (R-W.V.)
In her opening statement, Capito outlined her concerns that the Department of Labor is pushing an expensive and harmful agenda of overregulation. She acknowledged that not all regulations are bad but urged the DOL to focus on workforce development and job creation instead of overly burdensome and expensive regulations. Capito discussed the Wage and Hour Division’s new, complicated six-factor test to determine who qualifies as an independent contractor, which she said jeopardizes workers’ freedom of choice, flexibility, and livelihoods. Capito noted the ESG rule allows and pressures retirement fund fiduciaries to consider environmental, social, and government factors when advising retirement savings accounts, which pushes fiduciaries to move retirees hard-earned dollars into the Biden Administration’s radical climate agenda.
Capito said that by drastically increasing the overtime salary threshold, the Department of Labor has further harmed worker flexibility and imposed additional burdens on employers. She predicted that Congress would come together to support the Apprenticeship Program, but noted her concerns that the DOL would use the funds for that program to support a green jobs agenda. Capito raised concerns about the Administration’s decision to completely overhaul the regulations governing the Apprenticeship Program. She concluded that she wants to expand apprenticeship opportunities and childcare workforce development.
Testimony
Julie Su, Acting Secretary, U.S. Department of Labor
In her testimony, Su discussed how the DOL’s budget request would help more people get good jobs that can support families, uplift communities, and provide dignity and pride. She explained that the DOL wants to expand proven, high-quality job training programs, including the Job Training Fund and the Apprenticeship Program. Su noted that business owners are concerned about how they can find and retain skilled workers, which is why the DOL needs to invest in workforce training and development programs. She said that employers who hire minors for dangerous jobs, fail to pay overtime, or put employees in a position to lose their limits or lives do so because they think they won’t get caught, which is why the DOL is requesting modest, but important funding increases for its worker protection agencies, including the Wage and Hour Division. Su affirmed the request would help advance workers’ rights and promote a level playing field internationally for U.S. workers and businesses. She concluded by discussing how the request would support better implementation of the Secure 2.0 Act, the No Surprises Act, and the Mental Health Parity and Addiction Equity Act.
Question & Answer
Consideration of ESG Factors by Fiduciaries
Capito noted that in 2022, the DOL issued a rule that allowed fiduciaries to consider ESG issues when making investment plans. She said retirees should see the maximum financial benefit of their savings and warned that this rule would limit people’s ability to invest in natural gas and coal companies that may be maximizing profits.
Capito asked what prompted the Fiduciary Rule, and whether President Biden pushed for it. Su said the Administration wants retirees’ savings to give them the greatest returns. She explained that the rule does not mandate investment advisors take these factors into consideration, but simply allows them to do so after the previous Administration took that ability away. Su said environmental and labor practices can increase profits, so these factors should be available for advisors to consider.
Capito said the rule makes investments overly political, and asked who made the decision to move forward with the rule. She also asked whether Su was aware that some ESG funds have closed down because they aren’t profitable. Su noted the previous Administration was the one to politicize this issue and said the DOL heard from the industry that they wanted to be able to consider all factors. She explained the Department went through the proper channels to make the rule and wants to provide more flexibility.
Overtime Rule
Capito asked whether the threshold for overtime would be increasing soon under the new rule. Su explained that in July, there will be a bump up based on the current methodology. She clarified that the new methodology will not kick in until the first of next year. Capito asked if the bump up is projected to be $75,000. Su said it’s just $58,000, and explained the DOL is giving employers time to ramp up.
Capito said the Overtime Rule will harm worker opportunities, force colleges to increase their tuition, and limit flexibility in the workplace. She asked Su to justify the 65 percent increase when the threshold was increased four years ago. Su explained that overtime protections have been eroded, causing too many people to go unpaid for the overtime they were working. She said the DOL is issuing the change to ensure that the overtime law in the Fair Labor Standards Act remains meaningful.
Capito asked whether the DOL received a lot of pushback on the Overtime Rule from small businesses. Su said the DOL engaged with stakeholders and small businesses specifically, including by responding to public comments. She explained they adopted a two-tiered implementation system to support businesses.
Sen. Katie Britt (R-Ala.) warned the new Overtime Rule would have a hugely detrimental impact on small businesses and colleges. She asked whether the Department of Labor would grant additional flexibilities, at least on the timing of the rule’s implementation. Su said small businesses are important, and noted they received comments from small businesses on both sides of the issue. She added the DOL adopted a two-phase implementation for the rule in response to public comments.
Apprenticeships
Sen. Susan Collins (R-Maine) discussed the recent changes to the Apprenticeship Program, which would base completion on time rather than competency, and noted that competency programs have higher rates of success. She asked why the Administration removed competency-based approaches in the Apprenticeship Program. Su said the DOL wants to make sure that this program remains successful and wants to expand the program. She explained that they want apprentices to finish their programs and become successful and competent workers.
Joint Employer Rule
Sen. Joe Manchin (D-W.V.) criticized President Biden for recently vetoing a bipartisan resolution that would have overturned the National Labor Relations Board’s rule on determining who is a joint employer. Manchin warned the rule will put the franchise model at risk, and asked what the DOL was planning to do about it, and whether Su was pushing for the rule. Su explained that the NLRB is separate from the Department of Labor and reiterated that the Department of Labor doesn’t have a joint employer rule on its agenda.
Manchin asked Su to acknowledge the job losses the last time a similar rule was implemented. Su said she understands the benefits of the franchise model, noting that her parents were franchise owners. She emphasized that the Biden Administration has created jobs.
International Labor Standards & Visas
Baldwin warned that American workers are hurt by the race-to-the-bottom labor practices in other countries. She asked how the DOL’s requested budget would promote a fair global playing field and protect workers at home by advancing workers’ rights abroad. Su said the DOL can support a race to the top, noting that International Labor Affairs Bureau (ILAB)’s position is that the welfare of workers abroad impacts the welfare of American workers. She explained how ILAB conducts research and monitors issues like child labor, while also been helping Mexico with the implementation of the US-Mexico-Canada Agreement to improve workers’ rights there and level the playing field.
Sen. Jeanne Shaheen (D-NH) said business owners in her district are having a hard time finding seasonal workers and emphasized the need for H-2B visa workers. She explained that before these visas can be permitted, businesses need to be reviewed by the DOL to ensure that there are no local workers who can fill those positions. Shaheen asked what the DOL is doing to address the backlog of those reviews, and how the budget request would help the backlog. Su explained the H-2B visa program has grown, with the DOL now receiving four times as many applications as they are able to issue. She said they are working to improve processing, since their funding has not increased as they have received more applications.
Shaheen discussed the need to improve the certification process and increase the number of H-2B visas available. Su agreed, and noted the DOL’s budget request includes additional funding for staff to assist in processing, but the requested amount was shaped by the Fiscal Responsibility Act. She said they would welcome the opportunity to explore other options to resolve this as well.
Collins agreed with Senator Shaheen’s comments on H-2B visas, and said she hopes the DOL will recommend the Department of Homeland Security issue the maximum authorized number of visas.
Manchin noted that while the DOL has the authority to update the Schedule A visa list to streamline the process for workers in industries with critical understaffing, the DOL has only added two professions to that list since 2005. He said he was pleased to see the request for information on how the Schedule A list could be modernized to include STEM occupations and asked about the timeline to do so. Su said she would get back to him.
Child Labor & Wage Theft
Sen. Patty Murray (D-Wash.) voiced her concerns about the increasing number of child labor violations. She noted that she introduced the Child Labor Act with Sen. Bob Casey (D-Pa.) to help combat the issue and strengthen the law. Murray asked Su what the funding requests in the DOL’s budget would mean for protecting children and enforcing child labor laws. Su noted some of the rise in child labor statistics is related to the DOL’s increased investigations and enforcement activity. She explained how the budget requests funding for inspectors and litigators and works to increase enforcement capacity while remaining within the bounds of the Fiscal Responsibility Act. Su emphasized that we cannot have thirteen-year-olds working the night shift on the kill floor of meat packing facilities or sixteen-year-olds dying in sawmills.
Murray noted that she also introduced the Wage Theft Prevention and Wage Recovery Act, and asked what the Department of Labor is doing to prevent wage theft. Su said they frequently see minimum wage violations, while failure to pay overtime is the most common issue they deal with. She explained the DOL has investigators in the field, because employers who violate these laws will do a lot to hide it. She called for increased enforcement to ensure a level playing field.
Sen. Brian Schatz (D-Hawaii) agreed with Senator Murray about the importance of the Office of the Solicitor and the need to combat child labor violations, noting the existing child labor statutes are not sufficiently enforced. He explained that he and Senator Todd Young (R-Ind.) proposed a different child labor statute that would address the issue more pointedly by increasing violation penalties.
Schatz noted the current maximum penalty for a child labor law violation that results in a child’s death is just $68,801. He asked about the impact of these penalties and what would happen if Congress increased them. Su said companies won’t comply with the law if the penalties are so low and can be seen as just another cost of doing business. Schatz said Congress should look at increasing the penalty through consent or a must-pass piece of legislation.
FDIC
Sen. John Kennedy (R-La.) noted that almost one in ten FDIC employees reported workplace complaints to outside investigators and cited multiple examples of sexual and workplace harassment. He asked what the DOL is doing about the issues at the FDIC, and whether senior leadership should be fired and prosecuted. Su said she didn’t know if a formal complaint was made to the Equal Employment Opportunity Commission (EEOC).
Kennedy asked whether she would call for FDIC Chair Martin Gruenberg to resign, and whether the Biden Administration feels that Me Too applies everywhere except at the FDIC. Su said they don’t believe that and reiterated that FDIC employees deserve a safe workplace. She noted the sexual harassment claims would fall under the jurisdiction of a different federal agency.
Kennedy asked if it is Su’s imperative to ask Martin Gruenberg to resign. Su said she trusts her fellow federal agencies to act appropriately and said she would make sure that the EEOC is aware of the issue.
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