SECTION-BY-SECTION DESCRIPTION OF H.R. 7935,
AS REPORTED

The following is a description of the changes made in the Fair Labor Standards Act of 1938 (referred to in the description as the "Act") by H.R. 7935 as reported by the committee:

Section 1. Short Title; References to Act.-Subsection (a) provides that the bill when enacted may be cited as the "Fair Labor Standards Amendments of 1973". Subsection (b) is a technical provision.

Title I-Increases in Minimum Wage Rates

Section 101. Increase in Minimum Wage Rate for Employees Covered Before 1966.-This section amends section 6(a) (1) of the Act to provide an increase in the minimum wage rate for nonagricultural employees covered by the Act prior to the effective date of the 1966 amendments and for Federal employees covered by the 1966 amendments. The minimum wage rate for such employees is raised from not less than $1.60 an hour to (1) not less than $2 an hour beginning on the first day of the second full month after the date of enactment, or August 1, 1973, whichever occurs first, and (2) not less than $2.20 an hour beginning July 1, 1974.

Section 102. Increase in Minimum Wage Rate for Nonagricultural Employees Covered in 1966 and 1973. This section amends section 6(b) of the Act to provide an increase in the minimum wage rate for nonagricultural employees (other than Federal employees) covered by the 1966 and 1973 amendments to the Act. The minimum wage rate for such employees is raised from not less than $1.60 an hour to (1) not less than $1.80 an hour beginning on the first day of the second full month after the date of enactment, or August 1, 1973, whichever occurs first, (2) not less than $2 an hour during the year beginning July 1, 1974, and (3) not less than $2.20 an hour beginning July 1, 1975.

Section 103. Increase in Minimum Wage Rate for Agricultural Employees. This section amends section 6(a) (5) of the Act to provide an increase in the minimum wage rate for agricultural employees covered by the Act. The minimum wage rate for such employees is raised from not less than $1.30 an hour to (1) not less than $1.60 an hour beginning on the first day of the second full month after the date of enactment, or August 1, 1973, whichever occurs first, (2) not less than $1.80 an hour during the year beginning July 1, 1974, (3) not less than $2 an hour during the year beginning July 1, 1975, and (4) not less than $2.20 an hour beginning July 1, 1976.

Section 104. Government, Hotel, Motel, Restaurant, Food Service, and Conglomerate Employees in Puerto Rico and the Virgin Islands. This section amends section 5 of the Act to provide that the minimum wage rate for hotel, motel, restaurant, food service, con

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glomerate, Government of the United States, and Virgin Islands government employees employed in Puerto Rico and the Virgin Islands shall be determined without regard to the wage order provisions of section 6(c) of the Act. Thus, the minimum wage rate for such employees shall be the applicable rate in effect under section 6(a) (1) or 6(b).

Section 105. Increases in Minimum Wage Rates for Other Employees in Puerto Rico and the Virgin Islands.—Subsection (a) of this section amends section 6(c) of the Act to provide for employees in Puerto Rico and the Virgin Islands covered by wage orders issued under that section minimum wage rate increases corresponding to the ones provided mainland United States employees. Except for subsidized agricultural employees (1) the increases are stated in terms of percentages of the most recent wage rate applicable to the employee before the effective date of the 1973 amendments, which wage rate is referred to as the employee's "base rate", and (2) there is continued the authority (described below) for special review committees to be established to provide wage rates different from the increased ones prescribed by section 6 (c) (as amended by this section).

Employees covered before 1966.-Subsection (c) (2) of the Act provides for an initial 25 percent increase in the base rate applicable to employees covered by the Act prior to the 1966 amendments. Such increase shall (unless superseded) take effect 60 days after the effective date of the 1973 amendments or 1 year from the effective date of the most recent wage order, whichever is later. One year thereafter, an increase equal to 12.5 percent of the employee's base rate is provided.

Agricultural employees.—Subsection (c)(3)(A) provides for three 15.4 percent increases in the base rate applicable to agricultural employees covered by the Act. Such increase shall (unless superseded) take effect 60 days after the effective date of the 1973 amendments or 1 year from the date of the most recent wage order, whichever is later. One year after the effective date of the first increase an additional increase equal to 15.4 percent of the employee's base rate will take effect, and one year thereafter a third 15.4 percent increase will take effect.

In the case of an agricultural employee whose hourly wage is increased, above that required by a wage order, by a subsidy (or income supplement) paid, in whole or in part, by the Government of Puerto Rico, the three 15.4 percent increases shall be applied (as provided in subsection (c) (3) (B)) to the sum of (1) the employee's base rate and (2) the amount of the subsidy (or income supplement). The increases for these employees will take effect at the same time as the increases for other agricultural employees, but these increases may not be superseded by a wage rate recommended by a review committee.

Nonagricultural employees covered in 1966.-Subsection (c) (4) provides three 12.5 percent increases for nonagricultural employees first covered in 1966. The first 12.5 percent increase will take effect (unless superseded) 60 days after the effective date of the 1973 amendments or 1 year from the effective date of the most recent wage order, whichever is later; the second increase 1 year later; and the third increase 1 year thereafter.

Nonagricultural employees first covered in 1973.-Subsection (c) (5) provides for establishment of special industry committees to recommend minimum wage rates for employees newly covered by the 1973 amendments (other than employees subject to the amendment made by section 104, that is, hotel, motel, restaurant, food service, government, and conglomerate employees).

Wage floor and ceiling.-On and after the effective date of the first increase prescribed under subsection (c) (2), (3), (4), or (5), the minimum wage rate of employees covered by such increase may not be less than 60 percent of the otherwise applicable rate under section 6(a) (pre-1966 mainland employees) or 6(b) (1966 and 1973 nonagricultural employees). In the case of subsidized agricultural employees, the increase prescribed by subsection (c) (3) (B) may not exceed the applicable rate under section 6 (a) (5).

Review procedure. This procedure (first established by the 1961 amendments) permits any employer, or group of employers, employing a majority of the employees in an industry in Puerto Rico or the Virgin Islands to petition the Secretary for the appointment of a special industry committee to recommend the minimum wage rate or rates to be paid such employees in lieu of the rate or rates required as a result of the increases prescribed by subsection (c) (2), (c) (3) (A), or (c) (4), whichever is applicable. The Secretary may then appoint a special industry committee if he has reasonable cause to believe that employment in such industry will otherwise be substantially curtailed."

Other amendments.-Subsection (b) amends section 8 of the Act to provide that special industry committees shall recommend the otherwise applicable rate under section 6(a) (1), 6(a) (5), or 6(b) except where substantial documentary evidence, including pertinent financial information, demonstrates an inability to pay such rate. Section 10 (a) of the Act is amended to provide that a court may, in reviewing a wage order issued under section 8, prescribe an appropriate minimum wage rate for the employees covered by such order.

Title II-Extension of Coverage; Revision of Exemptions

Section 201. Federal and State Employees.-Section 201 (a) amends the definitions (in section 3 of the Act) of "employer", "enterpise", and "enterprise engaged in commerce or in the production of goods for commerce" to include the United States and any State or political subdivision of a State. These amendments result in the extension of minimum wage and overtime coverage to all Federal, State, and local public employees. Under the amendment made to section 13 (b) of the Act, State and local public employees engaged in fire protection or law enforcement activities and Federal employees (other than those covered by the 1966 amendments) are exempt from overtime coverage. Section 18 of the Act is amended to include Federal employees in the Canal Zone under the section 6(a) (1) rate.

Section 202. Transit Employees.-Section 13 (b) (7) of the Act is amended to reduce the overtime exemption currently in effect for any driver, operator, or conductor employed by an employer engaged in the business of operating a street, suburban or interurban electric railway, or local trolley or motor bus carrier, whose rates and services are subject to regulation by a State or local agency. During the first year

after the effective date of the 1973 amendments, overtime compensation must be paid to such employees for hours worked in excess of 48 per week; during the second year after such effective date, for hours worked in excess of 44 per week; and beginning in the third year after such effective date, for hours worked in excess of 42 per week. Section 7 of the Act is amended to provide that in determining the hours of employment of such an employee for purposes of determining overtime compensation, hours employed in charter activities shall not be included if (1) the employee's employment in such activities was pursuant to an agreement or understanding with his employer arrived at before engaging in such employment, and (2) employment in such activities is not part of such employee's regular employment.

Section 203. Nursing Home Employees.-Sections 7 and 13(b) (8) of the Act are amended to provide an overtime exemption for nursing home employees for employment up to 8 hours in any workday and up to 80 hours in any 14-consecutive-day work period. This exemption is identical to that for hospital employees in section 7(j). The present overtime exemption in section 13(b) (8)) for nursing home employees is for employment up to 48 hours in any workweek.

Section 204. Seasonal Industry Employees.-This section reduces and ultimately repeals the overtime exemption for employees in seasonal industries and agricultural processing. Existing law (section 7(c)) provides an overtime exemption for employment in seasonal industries up to 10 hours in any workday or 50 hours in any workweek for not more than 10 workweeks during the calendar year. Existing law (section 7(d)) also provides an overtime exemption for employment in agricultural processing up to 10 hours in any workday or 48 hours in any workweek for not more than 10 workweeks during the calendar year. In the case of an employer who does not qualify for the overtime exemption under both categories, the exemption is extended to 14 workweeks during the calendar year for the category under which he does qualify.

The overtime exemption for employees in seasonal industries (provided by section 7 (c)) is eliminated as follows:

(1) During the first year after the effective date of the 1973 amendments, overtime is required for employment over 9 hours (in lieu of 10) in any workday and 48 hours (in lieu of 50) in any workweek; and the period of the exemption is reduced from 10 workweeks (or 14 in the case of an employer who qualifies under only the section 7(c) exemption) in a calendar year to 7 workweeks (or 10 in the case of a single exemption) in a calendar year.

(2) During the second year from such effective date, overtime is required for employment over 9 hours in any workday and 48 hours in any workweek (note that the hour limits are the same as the limits for the preceding year); and the period of the exemption is reduced from 7 workweeks (or 10 in the case of a single exemption) in a calendar year to 5 workweeks (or 7 in the case of a single exemption) in a calendar year.

(3) After two years after such effective date the exemption under section 7 (c) is repealed.

The overtime exemption for employees in agricultural processing (provided by section 7(d)) is eliminated as follows:

(1) During the first two years after such effective date, overtime is required for employment over 9 hours (in lieu of 10) in any workday and 48 hours in any workweek (note that the 48hour workweek limitation is the same as existing law).

(2) During the first year from such effective date the period of the exemption is reduced from 10 workweeks (or 14 in the case of a single exemption) in a calendar year to 7 workweeks (or 10 in the case of a single exemption) in a calendar year; and during the second year from such effective date such period is reduced to 5 and 7 workweeks, respectively.

(3) After two years after such effective date the exemption under section 7 (d) is repealed.

Section 205. Domestic Service Employees Employed in Households. Subsection (a) of this section states a finding of Congress that domestic service in households directly affects commerce and that the minimum wage and overtime protections of the Act should have been available to such employees since its enactment.

Subsection (b) amends sections 6 and 7 of the Act to provide minimum wage and overtime protection for employees who (1) are employed in domestic service in households, and (2) are being paid for such service wages which will require the payment of the Social Security taxes (those imposed under chapter 21 of subtitle C of the Internal Revenue Code of 1954), and consequently provide Social Security benefits. Under section 3121 (a) (7) of the Internal Revenue Code of 1954 and section 209 (g) of the Social Security Act wages of less than $50 in a calendar quarter for domestic service in the private home of the employer will not require the payment of Social Security taxes and consequently do not qualify as wages for purposes of benefits under title II of the Social Security Act. The minimum wage rate required for such employees under the amendment to section 6 is that required under section 6(b), that is, not less than $1.80 an hour beginning on the first day of the second full month after the date of enactment, or August 1, 1973, whichever occurs first, not less than $2 an hour beginning July 1, 1974, and not less than $2.20 an hour beginning July 1, 1975. Under an amendment to section 13 (a), the minimum wages and overtime is not applicable in the case of any such employee who resides in the household of his employer.

Section 206. Employment of Students. This section amends sections 14(b) and (c) to provide for the employment of full-time students (regardless of age but in compliance with applicable child labor laws) at wage rates less than those prescribed by the Act.

Existing law (section 14(b)) permits the employment at rates below the applicable minimum wage of full-time students outside their school hours in retail or service establishments. Such employment is subject to the following: (1) such employment will be authorized only to the extent necessary to prevent curtailment of employment opportunities, (2) the employment must be in compliance with applicable child-labor laws and during the school year may not exceed 20 hours in any workweek, (3) the wage rate may not be less than 85 percent of the otherwise applicable minimum wage, (4) the proportion of students hours of employment to total hours of employment of all employees in any retail or service establishment may not exceed certain limitations, and (5) before a special certificate for such employment may be issued, the Secretary must find that the employment