(2) Whatever minimum wage policy be declared as public policy in the law or committee action which could comp

(3) Clearly defined policies coverin authority and clarification of exempt written into the law.

(4) Reasonable periods of time shou cover record keeping and liabilities.

(5) Government should maintain a suits and work to establish a reputation permit employers to have confidence in We thank you for the opportunity in important legislation.

Mr. LUCAS (presiding). We thank y Mr. Bailey, do you have any questions Mr. BAILEY. I believe not. His prese along the lines of some of those others. suggests on page 6, we would be outlin mittee.

Mr. LUCAS. I grant you that, althoug serious thought to it.

Mr. Smith, any questions?

Mr. SMITH. How many small-busines Quincy?

Mr. MERIDETH. Oh, in Quincy and su ably speaking for 40 firms employing less Mr. SMITH. That is all.

Mr. LUCAS. There seem to be no mo You have been helpful to the committee. Off the record.

(Discussion off the record.)

Mr. LUCAS. We will now hear from Co

TESTIMONY OF HON. JOSEPH P. O'HAR CONGRESS FROM THE STATE

Mr. LUCAS. Before you begin, Mr. O'F very glad to have you here this afternoo been kept waiting for so long a time. If with your statement.

Mr. O'HARA. Thank you, Mr. Chairma O'Hara, and I am a Member of Congress sional District of Minnesota.

Mr. Chairman and members of the com the opportunity to appear before you. 1 by reason of the large number of telegra received from my congressional district, a requests from some of my constituents wh their views regarding proposed changes in before this committee.

My district is what is often referred to as 136 communities, composed of villages, greater number of which are under 1,500 p

I have, in a general way, a general knowledge of the operations of lhe average business in these towns, such as the small telephone comletpanies, the retail stores, the lumber yards, the country grain elevators, msche hotels, the laundries, the canneries and other types of small busisness, and know something of the problems which they face.

In the consideration of the present bill, as it would affect small usiness operations, it is generally recognized that living costs are ess in the small towns; that an average house may rent for approxmately one-half or less the rental as compared with the metropolitan nish areas. Many of these people also have their own vegetable garden, aise chickens, and have a cow in the barn.

In the interest of time, I will analyze in a general way, the complaints, protests, and objections to H. R. 2033 and its effect upon the Meveral segments of the business operations of the people of my disrict, as they have expressed themselves to me.

I might say, Mr. Chairman and gentlemen of the committee, that hat was no small labor, because, as you see, I have in my hand two olders for consideration of telegrams and letters which I have reeived from those in my district.

Mr. LUCAS. And may I say to you, sir, that that would not comprise hundredth of the letters and telegrams I have received.

Mr. O'HARA. I appreciate that. I appreciate that many members of this committee, by virtue of the fact that they are on this comnittee, have received a great many more from the districts than those Members of Congress who are not on the committee. I appreciate

hat.

Now, I have subdivided it into certain small business functions and lepartments, with my own apologies for so doing.

First, telephone companies. There are numerous so-called small elephone companies in my district, which is natural due to the large number of small towns within the area.

These telephone companies have operated, since the Wage and Hour Act became effective, under an exemption which exempts any switchoard operator employed in a public telephone exchange which has ess than 500 stations. The operators of these small telephone companies feel that if this exemption is repealed it will drive many of hese exchanges to the wall, since a telephone exchange must provide 24-hour service and; therefore, a wage increase hits it three times a lay. They would be compelled to increase rates so high that many farmers and small-income people in rural areas would have to take out heir telephones. Service would thereby be seriously curtailed, and this essential branch of American small business would be on its way out. What may be a fair and equitable wage law in metropolitan centers is not necessarily the measuring stick for little business. I quote a letter from one of the managers of a telephone exchange in my district, in which he states as follows:

We have a small exchange of about 400 stations, of which most of the patrons ire rural subscribers. We are already paying above-the-average wage scale for that town; and, if we are forced to pay our operators 75 cents per hour, that would oring us far out of line with the store clerks and office girls.

Our total revenue for that exchange was about $12,000 for 1948. We paid out $3,341.40 only for operators' wages. In order to make a little profit on that Exchange for 1949, we were authorized to increase our rates beginning with January 1, 1949. If the Lesinski bill goes through, we will have to pay $6,552 a year for operators' wages; and, in order to make up for that in revenue, our 85539-49-vol. 2- -32

of nonexempt employees. They thus lose their status of adminis trative employees, even though less than 20 percent of such work is performed.

We believe that the broad interpretations in favor of coverage, which the Administrator has issued, should be abolished and that concise definitions of executive, administrative, and professional employees should be written into the statute itself. These definitions should eliminate such unrealistic distinctions as $30 per week for executives and $200 per month for administrative employees, and whether the employee is performing manual or nonmanual work.

After all, what is sought to be determined is whether the employee has the responsibility to direct, establish, or carry out the employer's policy in the operation of the business. The amount of money he earns is not a controlling test during these times. And most assuredly whether, in these days of full employment, he does manual or nonexempt work is not too important a factor.

We propose that the following definitions be specifically written into the law describing the criteria for determining which employees are exempt from the overtime provisions of the law.

Executive. The term "employee employed in a bona fide executive capacity" shall mean an employee (a) whose primary duty consists of the management of the establishment in which he is employed or of a customarily recognized department or subdivision thereof, and (b) who customarily and regularly directs the work of other employees therein, and (c) who has authority in the interest of the employer to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees, or responsibility to direct them. or to adjust their grievances, or effectively to recommend such action, if in connection with the foregoing exercise of such authority is not of a merely routine or clerical nature, but requires the use of independ ent judgment, and (d) who customarily and regularly exercises discretionary powers.

Administrative.-The term "employee employed in a bona fide administrative capacity" shall means any employee (a) who regularly and directly assists an employee employed in a bona fide executive or administrative capacity where such assistance normally and regularly requires the exercise of discretion and judgment which are not merely routine or clerical; or (b) who performs under only general supervision, work directly related to management policies or general business operations, along specialized or technical lines requiring special training, experience, or knowledge, and which requires the exercise of discretion and judgment which are not merely routine or clerical; or (c) whose work involves the execution under only general supervision of special assignments and tasks directly related to management policies or general business operations involving the exercise of discre tion and judgment, which are not merely routine or clerical; or (d) who is engaged in transporting goods or passengers for hire and who performs, under only general supervision, responsible outside work of a specialized or technical nature requiring special training, experience, or knowledge, and whose duties require the exercise of discretion and judgment, not merely routine or clerical.

Professional. The term "employee employed in a bona fide professional capacity" shall mean any employee who is (a) engaged in work, or training to engage in work (1) predominantly intellectual

and varied in character as opposed to routine mental, manual, mechanical, or physical work, and (2) requiring the consistent exercise of discretion and judgment in its performance, and (3) of such a character that the output produced or the result accomplished cannot be standardized in relation to a given period of time, and (4) whose hours of work of the same nature as that performed by nonexempt employees do not exceed 20 percent of the hours worked in the workweek by the nonexempt employees; provided, that where such nonprofessional work is an essential part of and necessarily incident to work of a professional nature, such essential and incidental work shall not be counted as nonexempt work; and (5) (a) requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study, as distinguished from a general academic education and fro man apprenticeship, and from training in the performance of routine mental, manual, or physical processes; or (b) predominantly original and creative in character in a recognized field of artistic endeavor as opposed to work which can be produced by a person endowed with general manual or intellectual ability and training, and the result of which depends primarily on the invention, imagination, or talent of the employee.

6. Section 16 (c) covering penalties proposes that the Secretary of Labor sue jointly with the employees against the employer for alleged violations of the law. This we believe is unsound because:

(a) The very accusation that employers could improve their employee relations by avoiding paternalism now becomes the policy of the Government. It was that desire to avoid paternalism in government that created our own country and caused innumerable people to flee from many foreign lands espousing that philosophy. Benevolent paternalism can turn into despotic paternalism.

(b) Government is made a champion to one party in a suit for damages when its only purpose would be to stop violation of the law. (e) The policy of the Government in making itself a trustee in a private lawsuit places it in the position of being an intermeddler and further destroys the possibility of both parties looking to the Government with a hope for impartiality.

7. Time limits for bringing suits as mentioned several places in this act are vital to small industry and the present statute of limitations of 2 years is in itself excessive because of the potential accrued liabilities for acts which they are unknowingly in violation of due to administrative rules or policies.

(a) Expansion of the liability period beyond 2 years could result in bankruptcy for small industry because it could bring into being excessive claims which could not be foreseen.

(b) Employees under the proposed plan who know of a technicality whereby an employer was in violation of the law could set on his claim for 4 years and collect back wages plus liquidated damages-2 years should be plenty of time for an employee to file suit if he feels his rights have been violated.

In conclusion, we call to the committee's attention that we speak in the interest of small industry and the public who feels that:

(1) The administration of the Fair Labor Standards Act must be in an independent agency to foster the confidence of the public as well as the employer.

(2) Whatever minimum wage policy is adopted by Congress should be declared as public policy in the law and not left to administrative or committee action which could completely destroy small business. (3) Clearly defined policies covering the limits of staff members authority and clarification of exempt employees criteria should be written into the law.

(4) Reasonable periods of time should be written into the law to cover record keeping and liabilities.

(5) Government should maintain a neutral position in damage suits and work to establish a reputation in administration which will permit employers to have confidence in that administration.

We thank you for the opportunity in presenting our views on this important legislation.

Mr. LUCAS (presiding). We thank you, Mr. Merideth.
Mr. Bailey, do you have any questions?

Mr. BAILEY. I believe not. His presentation has been pretty much along the lines of some of those others. If we follow the action he suggests on page 6, we would be outlining quite a job for the committee.

Mr. LUCAS. I grant you that, although it proves that he has given serious thought to it.

Mr. Smith, any questions?

Mr. SMITH. How many small-business firms do you represent in Quincy?

Mr. MERIDETH. Oh, in Quincy and surrounding area, I am probably speaking for 40 firms employing less than 500.

Mr. SMITH. That is all.

Mr. LUCAS. There seem to be no more questions, Mr. Merideth. You have been helpful to the committee.

Off the record.

(Discussion off the record.)

Mr. LUCAS. We will now hear from Congressman O'Hara.

TESTIMONY OF HON. JOSEPH P. O'HARA, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MINNESOTA

Mr. LUCAS. Before you begin, Mr. O'Hara, let me say that we are very glad to have you here this afternoon, and sorry that you have been kept waiting for so long a time. If you will, you may proceed with your statement.

Mr. O'HARA. Thank you, Mr. Chairman. My name is Joseph P. O'Hara, and I am a Member of Congress from the Second Congres sional District of Minnesota.

Mr. Chairman and members of the committee, I deeply appreciate the opportunity to appear before you. I have been moved to do so by reason of the large number of telegrams and letters which I have received from my congressional district, and also by reason of specific requests from some of my constituents who have asked me to present their views regarding proposed changes in the Wages and Hours Act before this committee.

My district is what is often referred to as a rural district; it has some 136 communities, composed of villages, towns and cities, the far greater number of which are under 1,500 population.