AMENDMENT TO EXEMPT EMPLOYEES OF BOAT SALES ESTABLISHMENTS THURSDAY, OCTOBER 26, 1967 HOUSE OF REPRESENTATIVES, GENERAL SUBCOMMITTEE ON LABOR OF THE Washington, D.C. The subcommittee met at 10 a.m., pursuant to call, in room 2257, Rayburn House Office Building, Hon. John H. Dent (chairman of the subcommittee) presiding. Present: Representatives Dent, Daniels, Mink, and Scherle. (Text of H.R. 13192 follows:) [H.R. 13192, 90th Cong., first sess.] A BILL To amend the Fair Labor Standards Act of 1938 to exempt certain employees of boat sales establishments from the overtime compensation requirements of that Act Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 13(b)(10) of the Fair Labor Standards Act of 1938 (29 U.S.C. 213(b)(10)) is amended by inserting "boats," immediately after "farm implements,". Mr. DENT. We are meeting today to look into the possibility of enactment of H.R. 13192. This is a bill to amend the Fair Labor Standards Act of 1938 to exempt certain employees of boat sales establishments from the overtime compensation requirements of the act. It would amend section 13(b) (10) of the act and thereby exempt from overtime provisions salesmen, partsmen, and mechanics. This is in accord with the agreements made prior to the passage of the present act, because we found that it was an extreme hardship to try to tie down overtime hours and salesmen and found at the same time emergency sea servicing brought into play the same problems for the partsmen and mechanics. However, it is late in the session and we felt if we could have a short hearing this morning, we would at least get the thoughts and arguments of the industry. At this time I would like to call the first witness, Mr. Fred Lifton, executive director of the Boating Industry Association. I am happy to say we have in attendance the representatives of the Department of Labor, who are responsible for the administration of this act. I welcome them here because before anything is done, we will have to have long and detailed discussions to see to what limits we may or may not be able to go. STATEMENT OF FRED B. LIFTON, EXECUTIVE DIRECTOR, BOATING INDUSTRY ASSOCIATION, ACCOMPANIED BY WILLIAM PEARSON, PRESIDENT; AND THOMAS H. BOGGS, JR., COUNSEL M: LIFTON. Mr. Chairman and members of the subcommittee. I * Fred B. Lifton, executive director of the Boating Industry Asation, 333 North Michigan Avenue, Chicago, Ill. I am ar panied here this morning by Mr. William Pearson, the immediate president of the Boating Industry Association, and Mr. Thomas HB, Jr., the attorney for the Boating Industry Association. The Boating Industry Association (hereinafter referred to as BIA") is a nonprofit national trade association representing 350 manufacturers of all kinds of pleasure boating equipment and providing many services of an educational and informative nature to the entire industry and to the boating public. In addition, BIA has regular programs of serving marine dealers and distributors. We also work directly with boat owners through our two consumer divisions, the Outboard Boating Club of America (OBC), serving members of affiliated boating clubs, and the Boat Owners Council of America (BOCA serving individual boatowners. We sincerely welcome this opportunity to testify on H.R. 13192, a bill to amend the Fair Labor Standards Act to exempt certain employees of boat sales establishments from the overtime compensation requirements of the act. Sections 6 and 7 of the Fair Labor Standards Act provide for minimum wages and maximum working hours for employees of businesses to which the act applies. Certain businesses, however, are specifically exempted from these sections by section 13 of the act. The reason for the exemptions is that while minimum wage and maximum working hour standards are generally desirable, in some instances these requirements would be self-defeating because of the economic burden they wonk, impose on the employers. The ever in some types of businesses would have to alter his employmer policies and business methods quite drastically to survive And the act. The necessary economic result would be curtailed emolormar and reduced earning power of employees. Congress Way of these economic facts and so stated in part I of Public Law the 8th Congress, which is the policy statement preface to relivin ndments to the Fair Labor Standards Act of 1938. Checonomic conditions in 1966 again warranted further mandmart to the Fair Labor Standards Act. Many of the amendolved exemption of certain types of businesses from the appbhe act where such application would be unjustifiably burderself-defeating. These exclusory amendments are contained it * of the act. Patient to the bill presently under consideration, H.R. 13192, is thelative intent embodied in section 13(a) (3) exempting amuse recreational establishments from sections 6 and 7 of the act rtain conditions. It was the intent of the amendment that hpes of businesses would be exempted from the act if (a) they operate for more than 7 months in any calendar year, or (b) darin the seceding calendar year their average receipts for any 6 months wear were not more than one-third of the average receipts for hotha 6 months of the year. In short, it was the intent of Congress to exempt very seasonal ecreational businesses from sections 6 and 7 of the act when section 3(a)(3) was enacted in 1966. Although conceivably, some marine dealers could qualify under this exemption, which covers them in ntent if not in fact, few do qualify by its explicit terms. Even more pertinent to the bill presently under consideration, and gain illustrative of legislative intent, is section 13(b) (10) which exmpts from section 7 (maximum hours): Any salesman, partsman, or mechanic primarily engaged in selling or servicing utomobiles, trailers, trucks, farm implements, or aircraft, if employed by a nonmanufacturing establishment primarily engaged in the business of selling such vehicles to ultimate purchasers * * * The reason for exempting these vehicle dealers from the maximum our provisions (overtime) of the act is the very seasonal nature of he business. For example, the Chicago Automobile Dealers Associaion states that 60 percent of sales are in the spring of the year and 25 percent are in the fall with the remaining 15 percent spread over the winter and summer seasons. This means that a great amount of overtime would be paid during the peak season-supplementing sales commissions—and creating a substantial burden on the dealer. The dealer would be inclined, indeed forced, to put his salesmen on straight commission during peak periods, or alternately, to employ only part-time salesmen. From the employee's standpoint this would impair both his assured minimum earnings and maximum working hours. Congress recognized that the application of section 7 to vehicle dealers would impose a burden on them, requiring economic adjustmments that would be self-defeating insofar as the employees were concerned and passed the amendment that is section 13(b)(10). It is our opinion through technical oversight, marine dealers were excluded from the exemptions of section 13(b)(10) in 1966. We were hopeful that the Department of Labor might administratively provide an exemption for marine dealers as a result of their similarity to the vehicle dealers excluded by section 13(b) (10). However, the Secretary of Labor, when asked for an informal opinion on this matter, responded that marine dealers could not be included under present law. We submit that the economic situation of marine dealers is exactly similar to that of the vehicle dealers exempted by section 13(b)(10) and that marine dealers should be included in this exemption as now proposed by H.R. 13192. The marine dealers' business is as seasonal as the automotive dealers' with 75 percent of all sales during the 6-month period of March through August. (Source: BIA Market Research Department.) An immense amount of overtime wages would be paid during the summer boating season under section 7, particularly since most marine dealers are open 7 days a week during the summer. If the dealer runs a marine or mooring area, 12-hour days are not uncommon on weekends because that's when boaters go boating. Under these circumstances it would not be uncommon for overtime wages during the summer to exceed straight time wages if section 7 were to apply. The marine dealer would be forced, like the automotive dealer, to restructure his employment policies to the detriment of the employees. As the Fair Labor Standards Act is presently enacted, many marine dealers are now within its scope inasmuch as their gross sales exceed |