Labor Income Fairness and Transparency Act
- Bill Number
- H.R. 3662
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Labor and Employment
- Status
- Introduced
- Latest Action
- 2025-05-29: Referred to the Committee on Education and Workforce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- Last Updated
- 2025-07-21T19:44:15Z
AI-Generated Summary
Purpose of the Legislation
The Labor Income Fairness and Transparency Act (LIFT Act), H.R. 3662, aims to raise the federal minimum wage, eliminate certain lower wage rates for specific groups of workers, strengthen protections for tipped employees, enhance enforcement of wage laws, and restore and make permanent expansions to the Earned Income Tax Credit (EITC)—a tax benefit for low- and moderate-income workers. It seeks to improve fair pay and support economic security for vulnerable workers by updating the Fair Labor Standards Act of 1938 (FLSA), which sets basic labor standards like minimum wages and overtime.
Key Provisions
- Minimum Wage Increases:
- Sets the federal minimum wage at $10.25 per hour starting one year after enactment.
- Increases to $13.75 per hour after 12 months, $17.00 per hour after 24 months.
- After 36 months, the wage adjusts annually based on the median hourly wage of all U.S. employees (calculated by the Department of Labor's Bureau of Labor Statistics), ensuring it never decreases and rounds up to the nearest $0.05.
- Phased Elimination of Subminimum Wages:
- Youth Employees (first 90 days of employment): Starts at $8.50 per hour, rising to $12.75, $17.00, and then matches the full minimum wage after 36 months.
- Student-Learners and Full-Time Students: Introduces minimums starting at $9.29 and $9.77 per hour, respectively, phasing up to the full minimum wage.
- Workers with Disabilities (under special certificates): Starts at $9.77 per hour, phases to $17.00, and ends the program entirely after 36 months—no more subminimum wages allowed.
- Tipped Employees:
- Employers must pay the full minimum wage directly (phasing from $7.09 to $17.00 over time), with tips kept entirely by workers (no employer retention or use for costs like processing).
- Allows tip pooling among tipped workers but prohibits managers/supervisors from taking any share.
- Requires daily notice to employees of tips received.
- Enforcement and Penalties:
- Doubles civil penalties for FLSA violations from $1,100 to $2,200 per violation.
- Prohibits layoffs or reductions in force for Wage and Hour Division investigators at the Department of Labor (DOL).
- Authorizes DOL grants to states, local governments, and Tribal governments for developing/enforcing wage laws and providing training/workshops.
- National Advisory Committee on the Hospitality Industry:
- Establishes a 15-member committee (5 labor reps, 5 employer reps from hotel/food/gaming sectors, 3 public experts, 2 government reps) to advise DOL on hospitality worker issues like wages, safety, apprenticeships, independent contractors, and visas.
- Meets at least twice a year; DOL provides staff support.
- Earned Income Tax Credit (EITC) Enhancements:
- Lowers the minimum age for eligibility: Generally age 19 (age 24 for students, age 18 for former foster youth or homeless youth).
- Defines "qualified former foster youth" (those in foster care after age 14, with consent for data sharing) and "qualified homeless youth" (self-supporting unaccompanied youth at risk of homelessness).
- Doubles the credit and phaseout percentages (from 7.65% to 15.3%), increases phaseout thresholds (e.g., from $4,220 to $9,820 for some), and adjusts inflation basing to 2020.
- Applies to tax years after December 31, 2025.
- Effective Dates:
- Wage changes: One year after enactment.
- Penalties: 120 days after enactment.
- EITC changes: Tax years starting after December 31, 2025.
Significant Changes to Existing Law
- FLSA Amendments: Raises the stagnant federal minimum wage (currently $7.25 since 2009) with a phased approach and ties future increases to median wage data, replacing fixed annual adjustments. Ends subminimum wages for youth, students, learners, and disabled workers over three years, promoting equal pay. Phases out the "tip credit" (where employers could pay tipped workers $2.13/hour base plus tips), requiring full wages from employers— a shift from current rules allowing tip offsets.
- EITC Amendments (Internal Revenue Code): Permanently restores temporary COVID-19 expansions (e.g., age reductions, higher credits), making the credit more accessible to younger and vulnerable workers, unlike prior temporary boosts that expired.
- New Mechanisms: Introduces quarterly median wage tracking by DOL, a hospitality advisory committee (no prior equivalent), state grant programs for enforcement, and protections against DOL staff cuts—expanding beyond core wage rules.
Potential Impacts
- On Citizens: Low-wage workers (about 1.3 million at federal minimum) could see income rises of up to 135% initially, reducing poverty and boosting spending power. Tipped workers (e.g., servers) gain wage security without losing tips. EITC changes could provide larger refunds (up to double) for millions of low-income families, especially young adults, former foster/homeless youth. Youth and disabled workers benefit from ending lower pay rates, promoting fairness.
- On Government Agencies: DOL gains resources for enforcement (grants, protected staff, advisory input), potentially increasing compliance checks and reducing violations. IRS handles expanded EITC claims, which may raise administrative costs but support revenue-neutral tax relief. States/Tribes receive aid for local wage laws, easing federal burden.
- On Employers: Small businesses and hospitality sectors (restaurants, hotels) face higher labor costs (e.g., full wages for tipped staff), possibly leading to price hikes, reduced hours, or automation. No direct international relations impacts, though it could indirectly affect U.S. tourism competitiveness.
- Broader Economy: May narrow income inequality but could slow job growth in low-wage industries if costs rise sharply.
Main Stakeholders Affected
- Workers: Low-wage earners, tipped employees (e.g., waitstaff), youth/new hires, students, learners, workers with disabilities, and low-income taxpayers (especially young, foster/homeless youth).
- Employers: Businesses in retail, hospitality (hotels, restaurants, gaming), and small operations reliant on minimum/subminimum wages.
- Government Entities: DOL (enforcement role), IRS (tax administration), state/local/Tribal governments (grant recipients and wage enforcers).
- Labor Organizations and Public Experts: Gain advisory roles in the hospitality committee to influence policy.
Notable Legal, Constitutional, or Political Implications
- Legal: Strengthens FLSA enforcement with higher penalties and data-driven adjustments, potentially increasing lawsuits for violations but providing clearer wage rules to reduce disputes. EITC changes require IRS rulemaking for certifications (e.g., foster/homeless status), raising privacy concerns under data-sharing consents. Ends special certificates for disabled workers, which could face challenges under the Americans with Disabilities Act if seen as limiting accommodations.
- Constitutional: No major issues; aligns with Congress's commerce clause authority over wages and taxation. Federal preemption of state laws is unchanged, but grants encourage state alignment.
- Political: Addresses wage stagnation and inequality, likely appealing to labor advocates but contentious for business groups over cost burdens. Phased implementation allows adaptation, but indexing to median wages introduces ongoing federal oversight, potentially sparking debates on economic intervention. As a 119th Congress bill (introduced May 2025), it reflects post-pandemic priorities like restoring temporary relief.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Recent Actions
- 2025-05-29: Referred to the Committee on Education and Workforce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- 2025-05-29: Referred to the Committee on Education and Workforce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- 2025-05-29: Introduced in House
- 2025-05-29: Introduced in House
Bill Versions
- Labor Income Fairness and Transparency Act — issued 2025-05-29 — PDF (15 pages)