prevailing in the area since 1938, this would cost the company about $114,000, and that is a very small operation. Since it cannot possibly pay such an amount, the company has no choice but to either shut down or continue in operation hoping that the Supreme Court will eventually rule that in such a case travel time is not payable. If in another case, or in litigation in which this company is involved, there is an adverse ruling on this issue, the company would be bankrupt. If the limitation proposed by this bill is enacted, the total liability would amount to about $24,000, or about $500 to each worker, based on overtime on 1944 wage rates in the southern area. While even this reduced amount would be a burden to such a small operator, the reduction would, in at least some cases, avert the bankruptcy that would be inevitable in most cases under the present law.

As an example of the tremendous contingent liabilities facing larger operators having higher rates of pay, it has been estimated that some companies face possible judgments amounting to many millions of dollars if there is an adverse decision on the travel time issue and no limitation is imposed on retroactive recovery.

The potential liabilities on this travel time issue for the entire industry would undoubtedly amount to hundreds of millions of dollars.

I have used the travel-time issue as an outstanding example of the type of controversy which particularly demonstrates the need for a statute of limitations against wage-and-hour-law claims. There are however, many other confusing and contradictory interpretations of this law which have given rise to litigation and with respect to which many operators are faced with varying degrees of contingent liabilities. These arise particularly with respect to classifications of exempt supervisory personnel and independent contractors.

In

The wage-and-hour law provides that executive, administrative, and professional employees are exempt. The administrator has issued an interpretative bulletin specifying requirements which must be met before a worker can be classed in one of these categories. addition to arbitrarily fixed salary requirements certain other standards are set. The language of the regulations defining these standards, however, is ambiguous and very difficult of application to many types of supervisory personnel. Some representatives of the Division are inclined, where there is any doubt, to interpret these regulations in favor of the exemption if the salary requirement is met, while other inspectors apply extremely restricted and unrealistic interpretations.

To give another example, Bill Smith is employed by a lumber company as a yard foreman at a salary of $50 a week. He works for the company for 5 years at this salary, working an average of 50 hours a week. His regular duties are supervisory only, but because of the wartime shortage of men, he may, at times, help grade some lumber. For 4 years inspectors of the Wage and Hour Division have looked over the plant operation at least once a year and agreed that this man is an exempt employee. Early this year, however, a different inspector has told the company manager that because Bill Smith has been grading lumber he is not exempt as a foreman, and states that unless Bill Smith is paid overtime for all hours worked in excess of 40 during the past 5 years, the Division will seek an injunction restraining the company from shipping any of its lumber in interstate commerce.

I will use assumed names but the facts are based on actual cases. There are two sawmills located on the outskirts of the town somewhere in the South. These operations are fairly large for the South, although they are small by comparison with west coast mills. Both of the operators are cutting timber to be hauled to the mills from sites located along a public highway about 20 miles distant. Virtually the entire woods crew of one of these operations, which we will call the Jones Lumber Co., lives in town in the vicinity of the sawmill. The workers of this company are supposed to be on the job in the woods at 8 o'clock in the morning. Workers who have an auto and can get sufficient gasoline are free to drive to the job. However, under present-day conditions they prefer to have transportation furnished. Since the company's trucks must go out to the job in the morning, arrangements have been made to pick up the men at a gasoline station which is within a few blocks walk of their homes.

The other company, which we will call the Brown Lumber Co., has a mill a quarter of a mile down the road from the Jones Co., and has recruited a woods crew from small farmers located along the main road leading to its woods operations. Each morning a Brown Co. truck goes down the road and picks up the men at their front gate.

The director of one of the Wage and Hour Division regional offices stated that in the case of the Jones Lumber Co., where the men gather at a central point, compensation must be paid for the time spent by the men in being transported to the job. On the other hand, since the Brown Lumber Co. picks the men up at their front gate this is considered to be transportation furnished for the convenience of the employee and he has ruled that travel time payment is not required. Although the necessity for providing transportation to workers has been greatly increased because of wartime shortages of autos, tires and gas, it has from time immemorial been the accepted practice, both of workers and employers, to compute working time from the moment at which the men are at the job in the woods. The Jones Lumber Co. thus suddenly finds itself confronted with an entirely now theory of working time.

Even under a liberal interpretation of the principles laid down by the Supreme Court in the mining cases almost any attorney will feel that there is considerable doubt as to the legal obligation of the company to treat travel of this character as working time. Suppose, however, that the company does not wish to become involved in litigation; let us assume also that it believes it can afford to absorb this added burden of cost in the future and still stay in business.

After a conference with Wage and Hour Division representatives the company agrees that henceforth it will pay the workers for time spent in travel. The company manager calls in the workers' representative and asks him if the company's proposal is acceptable. The workers hold a meeting, agree to the company's proposal to pay travel time in the future, and offer to execute a release of claims for any retroactive compensation. This release is drawn up by an attorney engaged by the workers themselves and is given to the company

manager.

The company's attorney, however, points out that the workers cannot release their claims to back pay and an equal amount as liquidated damages. With an average crew of 50 men, and the rates of pay

prevailing in the area since 1938, this would cost the company about $114,000, and that is a very small operation. Since it cannot possibly pay such an amount, the company has no choice but to either shut down or continue in operation hoping that the Supreme Court will eventually rule that in such a case travel time is not payable. If in another case, or in litigation in which this company is involved, there is an adverse ruling on this issue, the company would be bankrupt. If the limitation proposed by this bill is enacted, the total liability would amount to about $24,000, or about $500 to each worker, based on overtime on 1944 wage rates in the southern area. While even this reduced amount would be a burden to such a small operator, the reduction would, in at least some cases, avert the bankruptcy that would be inevitable in most cases under the present law.

As an example of the tremendous contingent liabilities facing larger operators having higher rates of pay, it has been estimated that some companies face possible judgments amounting to many millions of dollars if there is an adverse decision on the travel time issue and no limitation is imposed on retroactive recovery.

The potential liabilities on this travel time issue for the entire industry would undoubtedly amount to hundreds of millions of dollars.

I have used the travel-time issue as an outstanding example of the type of controversy which particularly demonstrates the need for a statute of limitations against wage-and-hour-law claims. There are however, many other confusing and contradictory interpretations of this law which have given rise to litigation and with respect to which many operators are faced with varying degrees of contingent liabili ties. These arise particularly with respect to classifications of exempt supervisory personnel and independent contractors.

The wage-and-hour law provides that executive, administrative, and professional employees are exempt. The administrator has issued an interpretative bulletin specifying requirements which must be met before a worker can be classed in one of these categories. In addition to arbitrarily fixed salary requirements certain other standards are set. The language of the regulations defining these standards, however, is ambiguous and very difficult of application to many types of supervisory personnel. Some representatives of the Division are inclined, where there is any doubt, to interpret these regulations in favor of the exemption if the salary requirement is met, while other inspectors apply extremely restricted and unrealistic interpretations.

To give another example, Bill Smith is employed by a lumber company as a yard foreman at a salary of $50 a week. He works for the company for 5 years at this salary, working an average of 50 hours. a week. His regular duties are supervisory only, but because of the wartime shortage of men, he may, at times, help grade some lumber. For 4 years inspectors of the Wage and Hour Division have looked over the plant operation at least once a year and agreed that this man. is an exempt employee. Early this year, however, a different inspector has told the company manager that because Bill Smith has been grading lumber he is not exempt as a foreman, and states that unless Bill Smith is paid overtime for all hours worked in excess of 40 during the past 5 years, the Division will seek an injunction restraining the company from shipping any of its lumber in interstate commerce.

There have been a number of cases involving the status of independent contractors engaged by logging and sawmill operators. In these cases the courts have generally ruled against the Wage and Hour Division. However, the issue has not yet been passed on by the Supreme Court and although principles which it has laid down in cases involving liability for social security tax payments indicate that in a typical situation the men involved will not be considered to be employees, there is no assurance that the Supreme Court may not reverse itself when and if it is faced with the same facts under a different law.

Independent contractor arrangements have long been common practice in the lumber industry. These arrangements vary considerably as between different operations, but generally are along the following pattern: A sawmill owner who does not maintain a logging crew purchases timber rights on a tract of land. Logging contractors who have trucks, tractors, and other necessary equipment and a supply of experienced woods labor are available. The company asks these contractors to bid on removal of the timber from the tract on the basis of a price per thousand feet for the logs delivered to the mill. After the bid is accepted a contract is drawn up and the contractor proceeds with his job.

In some such cases the Wage and Hour Division has taken the position that the contractor and all of his workers are employees of the company. Under the definition of employment as contained in the act and all heretofore prescribed legal definitions of the employment relationship, these men are not employees of the company, yet here again the Division can insist that the company make restitution for years back covering all employees so engaged under threat of applying a "hot goods" injunction against lumber to be shipped by the

company.

Another and final example of a wage-hour law problem facing the lumber industry arises out of the question of computation of pay of men employed on a piece-rate basis. The Supreme Court last week handed down new rulings on regular rates of pay which are largely inconsistent with previous rulings and which leave in a state of uncertainty the question of computation of overtime pay to workers employed on a piece rate.

Some operators in this industry have long followed a practice of basing payments for certain jobs, such as lumber stackers, on a piece rate, and any change in this basis will aggravate labor problems. However, the Court's rulings leave considerable doubt as to the proper method of setting basic and overtime rates for such jobs. It leaves operators who continue on this method-which provide earnings to the workers substantially in excess of the legal minimum-vulnerable to heavy penalties for guessing wrong in the wording of an employment agreement worked out under collective bargaining procedures.

I have tried here to give you only a few examples of the confusion and uncertainties prevailing with respect to the application of one important Federal law to this industry. The lumber industry would like to see the wage-and-hour law amended so that the rights and liabilities of employees and employers are clearly set forth and these uncertainties eliminated. But in any event, we believe some action

must be taken to prevent employers from being put out of business overnight by the whims of changing administrative interpretations or because of an overthrow of long-established legal principles.

The Wage and Hour Administrator has himself recommended the addition to the act of a reasonable statute of limitations. In his annual report for the fiscal year ended June 30, 1944, Administrator Walling further emphasized the problems facing employers by pointing out that

an employer who complies with the Administrator's interpretation on a doubtful question can never be sure that he will not be subjected to liability in an employee suit.

Representative Gwynne's proposition for a limitation of actions would appear to relieve this situation in a substantial way. We hope that this committee will move promptly toward its early enactment. Mr. FEIGHAN. What about à controversy between employer and employee with reference to payment; a controversy continuing but not having reached the stage of having suit filed?

Mr. BAHR. If in the case of a particular employer there is such controversy, I should think there might be an exception made. Generally, however, those controversies have been on a broader scale, as a general principle of travel time, not its application to particular cases. Mr. FEIGHAN. You understand why I ask that?

Mr. BAHR. Yes; I do.

Mr. FEIGHAN. Because if there is a fair claim, I don't think it should be cut off arbitrarily by a year's statute. Thank you.

Inasmuch as the time is pressing, are there some gentlemen who would like to submit their statements for the record?

Mr. WEIGESTER. I would like to have about 5 minutes.

Mr. FEIGHAN. What is your name?

Mr. WEIGESTER. Weigester.

Mr. FEIGHAN. Is Mr. A. W. Dickinson here?

Mr. DICKINSON. Right here.

Mr. SPRINGER. Did you call me over the telephone this morning?

Mr. DICKINSON. That is correct.

Mr. FEIGHAN. You would prefer to testify, would you, Mr. Dickinson?

Mr. DICKINSON. Very briefly.

Mr. FEIGHAN. Mr. Peterson.

STATEMENT OF A. A. PETERSON, TRAVEL TIME EXECUTIVE COMMITTEE OF PORTLAND, OREG.

Mr. PETERSON. My name is A. A. Peterson. I am here today at the request of the Travel Time Executive Committee of Portland, Oreg., a committee composed of management representatives of manufacturing and logging companies in the west-coast lumber industry. Industry associations such as the Western Pine Association of Portland, Oreg., and the West Coast Lumbermen's Association of Seattle, Wash., as well as the several industrial-relations committees, concur in this statement.

I wish to read the industry's statement in support of Gwynne bill, H. R. 2788, and ask that it be incorporated into the record.