Aside from the time-consuming and expensive calculations involved in any averaging system of computing overtime rates, a procedure whereby individual longshoremen working side by side performing the same work receive different rates of pay from individual to individual and by individuals from week to week where none are able to determine their wage rates at any particular time is not conducive to harmonious labor relations. Experience of recent months has again demonstrated the harmful effects on national defense resulting from unsettled labor conditions in the stevedoring industry. It is noted that the proposed bill, while amending the Fair Labor Standards Act so as to overcome the effect of the Bay Ridge decision on future operations, does not operate retroactively so as to dispose of the claims for "overtime-on-overtime" arising from past operations.. In the event the overtime provisions of the Fair Labor Standards Act are amended prospectively but not retroactively, we anticipate the following effect: (a) It will subject the stevedoring industry to a large potential liability for additional overtime together with liquidated damages, attorney's fees and court costs. While a large part of such liability will be reimbursable under Government contracts, the nonreimbursable liability is likely to be sufficient to force many stevedoring contractors into bankruptcy. No intelligent estimate can be made as to the actual amount of reimbursable or nonreimbursable liability, due to the uncertainties as to the number of claims that will be filed, the fact that part of the liability will be barred by the statutes of limitations, and the part of liability which may be avoided through the "good-faith defenses" of the Portal-to-Portal Act. (b) It will result in inequality of treatment, as individual longshoremen who have followed the advice of their union leaders in not filing suits will receive less compensation than those who have made claims contrary to the advice of their union leaders. Longshoremen who work for stevedore operators with limited financial means will be unable to collect their judgments while others will be paid in full. Longshoremen working side by side, performing the same work for the same employer at the same time will receive different rates of overtime compensation due to the method of computing the overtime rate of each individual required by the Bay Ridge decision. In the end there is strong probability that demands will be made to Congress by individual longshoremen who are unable to collect their "overtime on overtime" for legislation giving them the same rights as longshoremen who had collected such compensation. (e) It will result in longshoremen receiving higher rates of overtime compensation for the past than will be authorized for the future. In the event the amendment is not made retroactive, it will be difficult to explain to longshoremen why they should not receive in the future the same benefits as will be accorded to them retroactively. On the other hand, some employers might be disposed to bargain for future concessions from longshoremen in exchange for retroactive benefits reimbursable by the Government. (d) The expense of defending the claims will be tremendous, as it. will involve complicated computations concerning the compensation paid each individual longshoreman each week of his employment. The accounting work involved in such computations will be very expensive. (e) The employment of additional personnel and the expense there of to provide proper audit of claims by stevedore contractors would be considerable. The exact amount thereof is impossible to estimate. Two other technical services of the Department of the Army also are affected by the Bay Ridge Operating Co. decision and by the subject bill. The Corps of Engineers has estimated that the additional direct cost to date to the Government on current cost-plus-a-fixed-fee construction projects would approximate $14,950,000, with an anticipated future additional direct cost of $4,250,000 or a possible total increase of $19,200,000 exclusive of such indirect costs as result from court action, administration and other indirect and intangible costs. The Ordnance Department has estimated that for the 1-year period ending August 1, 1949, which it feels probably will be representative of its operations generally, the additional direct cost on its cost reimbursement-type contracts will be in excess of $240,000 per year. It estimates its potential past liability as approximately $200,000. To a lesser but still serious extent the latter two services also will have an increased administrative burden similar to that of the Transportation Corps. Mr. LESINSKI. Did I understand that the decision was rendered for back pay from 1945 on, with no decision prior to 1945? General YOUNT. No, there is no time element in the Supreme Court decision, I believe, Mr. Chairman, when these cases were introduced by the plaintiffs. In these cases as the stevedoring contractors came to us and wanted to abrogate their contracts, as the result of that approach by the contractors we made an arrangement whereby the contracts from February 1, 1945, the Army, the Navy, and the War Shipping Administration all agreed to reimburse the contractor for costs that might later be charged to him. Mr. LESINSKI. But you do not know the liability power to that date! General YOUNT. No, but we have agreed to accept the liability since that date. As to the amount of $115,986,488, and the additional amount of $53,105,581, there is no question as to the Government's liability. There is a question which has not yet been determined as to our liability as tot he $266,126,728, as all was expended before February 1945, and after January 1, 1942. Mr. LESINSKI. Then, probably when the final settlement arises, this back pay may go up to $500,000,000? General YOUNT. The figures that I have given you are only Army figures, of course. Mr. LESINSKI. And has nothing to do with all the other figures! General YOUNT. Nothing to do with the War Shipping Administration's figures, nor do I have the Navy's figures. I have only been told the Navy has a definite liability, and it would not be as great as the Army, but it would be a considerable amount of money. Mr. LESINSKI. Mr. Barden. Mr. BARDEN. General, you do not regard that as being any moral obligation to the men who are bringing these suits, do you? General YOUNT. I would say "no." I think there was a question of understanding of a properly negotiated contract. Mr. BARDEN. I understood the gentlemen yesterday, who was one of the stevedoring contractors, to state that the officials of the International Longshoremen's Union were definitely opposed to the recoveries involved in these suits, and opposed to the bringing of the suits, and did not feel that the amount claimed was in good morals. General YOUNT. I mentioned that, Mr. Barden, in the fact of the differentiation here, men who followed the guidance of their elected representatives in the union did not file suit. They have not brought about this situation; it was men who violated the instructions of their own elected representatives that brought the suits, and I am advised that in the actual case of the Bay Ridge Operating Company versus Aaron, that the officials of the international association did appear before the Court on the side of the defense, and not on the side of the plaintiffs. Mr. BARDEN. And testified against them? General YOUNT. And testified against the plaintiffs. Mr. BARDEN. I believe that has been testified to here by two witnesses, has it not? Mr. LESINSKI. Correct. Mr. BARDEN. That is all I have. Mr. LESINSKI. Mr. Wood? Mr. WOOD. I have no questions. Mr. LESINSKI. Mr. McConnell? Mr. McCONNELL. That is a very clear analysis. I have no questions. Mr. LESINSKI. Mr. Smith? Mr. SMITH. General, are you with the Judge Advocate General's Department? General YOUNT. No, sir; I am with the Transportation Department. Mr. SMITH. I mean the general over there. Mr. LESINSKI. May I interrupt, Mr. Smith? general at one time? Mr. McCONNELL. He is a general. Mr. SMITH. That does not have any point here. Were you not a What do you know about the Huntsville, Ala., cases where the engineering firm was sued down there, and the Army has been compelled to pay overtime-on-overtime down there; do you know about that? General BRANNON. I am not familiar with those cases, Mr. Smith. Mr. SMITH. Are there such cases? General BRANNON. I do not know of the cases. Mr. SMITH. We had testimony last year, you remember, where they were making blueprints Mr. McCONNELL. An engineering company from Baltimore testified. Mr. BOYER. They settled it out of court. General BRANNON. Yes, sir. Mr. SMITH. General, another question: Are you familiar with this wage-hour law? General BRANNON. Not very much, sir. Mr. SMITH. Is it your understanding that this wage-hour law follows the flag? General BRANNON. That is a matter that was just decided, I think, by the Supreme Court a few weeks ago. Mr. SMITH. Will you just tell the committee what the Supreme Court decided? General BRANNON. Mr. Smith, if you do not mind, Mr. Fanning is in my office, and he is our labor man in the office, and if you do not mind I will just ask him to give you a brief résumé of that, sir. Mr. SMITH. All right. Mr. FANNING. I believe you are referring to the Canal decision, Mr. Smith, which was a decision within the last 30 days extending the application of the Fair Labor Standards Act of 1938 to the defense bases that we have all read about in the newspapers, where they obtained, I think it was 99, or some period like that, a 99-year lease from the United Kingdom back in the beginning of the war. And in that suit. employees who were employed in the construction activity on those bases were deemed to be subject, or their employment was deemed to be subject to the Fair Labor Standards Act, and they were successful in maintaining their suit. I understand, however, that the Solicitor General has requested reargument in that case. I do not know what the outcome of it is; I believe the court has not ruled on the motion for reargument or rehearing at the present time. It was not a unanimous opinion, and what the future outcome will be I have no idea, of course. Mr. SMITH. The import of that decision, as handed down by the Supreme Court, simply means that where we hire natives in Timbuktu, or any outlying possession, that we are compelled to follow the Fair Labor Standards Act and pay them these wages; is that not right? Mr. FANNING. That is one possible interpretation, Mr. Smith, but I would refer that to the Administrator's Wage-Hour Division for the interpretation. Mr. SMITH. The Supreme Court says that. Mr. FANNING. That is one interpretation. Mr. SMITH. And where we have the construction work building air bases, the Army or national defense has to consider the question when they hire and pay the people? Mr. FANNING. We would have to consider that possibility; yes. Mr. SMITH. That includes, of course, occupied countries? Mr. FANNING. I would prefer to wait for an official decision on that point. Mr. SMITH. But according to the language of the Supreme Court, that is what it means. That is all. Mr. LESINSKI. Any other questions, gentlemen? Mr. BARDEN. Let me ask one more question. I believe I will let this be off the record. (Discussion off the record.) Mr. LESINSKI. Mr. Wood? Mr. WOOD. As I understand it, if the recent decision of the Supreme Court is adhered to on rehearing involving that question, any native labor, or any group or any person acting on their behalf, can require the authorities employing them on our bases to pay them the prevailing rate set up by this Labor Standards Act, irrespective of the effect it may have on the local economy of the country in which the base is located, is that right? Mr. FANNING. I believe that is the possible interpretation. Mr. BARDEN. Is that not the only interpretation at the present time? Mr. FANNING. When you start to interpret a Supreme Court decision you can come up with any number of interpretations, but whether this is the only interpretation or not, I do not know, sir. Mr. BARDEN. Assuming that is the interpretation, then the very question these countries in which we have the bases located, have raised with reference to the disturbance of their own local economy with respect to the payment of wages we employ there, those disturbances would be right back in their laps again, would they not? Mr. FANNING. The decision could, I believe, be limited to American citizens. It is possible, I think, that it could be limited. Mr. BARDEN. Do you interpret the decision of the Supreme Court to limit the operation of the Fair Labor Standards Act to American citizens, or natives? Mr. FANNING. I am speaking only of the Americans. I do not know what the decision of the Administrator would be. It has been 2 months since I looked at the case, and I would not want to venture an opinion. Mr. BARDEN. You assume the American employing people at those bases, if the decision is adhered to, will employ only American citizens, and eliminate the employment of natives? Mr. FANNING. I said I cannot tell you what the official interpretation, or what the only interpretation of that decision will be. It certainly is a fact that will have be considered, but whether the Department of Labor, through administrative action, will decide to adopt a program which will eliminate natives, I do not know. General BRANNON. The dictum in the case may be broad enough to include the natives, but I think, as Mr. Fanning pointed out, the actual decision involved only American citizens, is that not correct? Mr. FANNING. That is correct. General BRANNON. I thought that was his statement. Mr. BARDEN. May I ask this one other question: At the time the question was raised with reference to the amount of pay the natives should receive, was there any agreement, or anything that would amount to an agreement, that you know of, in existence, or put in existence, assuring them that they would comply with their request? Mr. FANNING. I do not know, sir. I think some of those were handled, as a matter of fact, by the State Department, but I was not personally involved in the negotiations with the foreign governments. I was just advising you of what I have as a matter of common knowledge. I am not familiar with the question you asked. the Mr. BARDEN. Do you know they made the request, and thereafter request was complied with? Mr. FANNING. In certain circumstances that I am familiar with, I know the request was complied with; yes. Mr. BARDEN. Then that implies there is some kind of an agreement or understanding? Mr. FANNING. I think you would have as many different situations as you have localities. The officials in the Philippines might feel one way, and the officials in Bermuda might feel another way; it was a 85539-49-vol. 1-54 |