Hon. JOSEPH H. BALL, UNITED STATES BEET SUGAR ASSOCIATION, Chairman of Subcommittee, Committee on Labor and Public Welfare, United States Senate, Washington 25, D. C. DEAR SENATOR BALL: It is understood that, in addition to considering your bill, §. 2386, a bill to provide for the amendment of the Fair Labor Standards Act of 1938, your subcommittee also has had referred to it and has under consideration several other bills to amend this act, some of which propose the deletion of the seasonal exemptions for employers engaged in the first processing of agricultural ommodities and from the payment of overtime for work in excess of 40 hours per week during the period of seasonal operation. The United States Beet Sugar Association, for the reasons stated below, strongly opposes any legislation which would delete from the Fair Labor Standards Act of 1938 the seasonal exemptions provided for in sections 7 (b) (3) and 7 (c) of the act and we support the Continuation of these exemptions as provided in your bill S. 2386. These seasonal exemptions were put into the act originally in recognition of the fact that some industries, like the beet-sugar industry, are necessarily seasonal in character. These industries operate for a short production season only. They shut down for the remainder of the year-apart from maintenance, repair, clerical, and sales work. These industries are engaged in the handling and processing of agricultural materials only during that season of the year when, because of climatic or other natural conditions, these commodities are available. In putting these exemptions into the act, Congress recognized that its objective of spreading work could not be accomplished in these seasonal industries by making rigidly applicable to them the general provisions of the law adapted to onseasonal industries. In fact, the Congress fully appreciated that, if it failed to make special provision for seasonal industries, it would not only be defeating itself in the achievement of its purposes but also would penalize these industries because of their peculiar nature. The facts of life are still the same: The beet-sugar industry, because it is a beet-sugar industry, is still seasonal in character. The validity of the inclusion of the afore-mentioned provisions remains as sound and practical today as it was when the Congress enacted the act in 1938. No facts, no reasons justifying a change in the situation insofar as we are aware have been presented to your committee. Since some members of your committee are from sugar-beet States and are, therefore, familiar first-hand with the character of the beet-sugar industry and, further, in view of the parade of witnesses who have appeared before your committee and who have ably demonstrated in detail the disastrous effects which the elimination of the exemption contained in sections 7 (b) (3) and 7 (c) of the act would have upon the operations of their respective seasonal industries, we do not feel it necessary at this time to go into any detailed statement of the character of the beet-sugar industry. However, perhaps a few basic facts about the character of the beet-sugar industry should be stated. The beet-sugar industry is engaged in extracting beet sugar from sugar beets as a direct-consumption sugar with factories located in various States where sugar beets may be successfully grown. The manufacture of beet sugar is necessarily a seasonal operation, occurring chiefly in autumn and early winter. In areas other than California, where low temperatures are not encountered, the growing season for beets is the period between the last frost in the spring and the first frost in the fall. This is a relatively brief period in each year. Because of the short growing season, the harvesting of the beet crop is delayed as long as practicable to permit the maturing of the crop. The lateness of maturity makes it impossible to start the harvest in most States until September 20 to October 1. The harvesting of the crop is limited to a short period in the fall. This harvesting time is a critical one since beets which are not gotten out of the ground while digging is possible are lost for all purposes. The beet crop is of a highly perishable nature and after harvest can be stored for a relatively short period of time only. Beets cannot be carried over from 1 year for processing in the next operating season. During the period of storage, there is a constant loss of sugar from the beets. This is in direct proportion to the length of time the beets are in storage. Ever since the establishment of the beet-sugar industry in the United States, it has been the practice to operate factories for 7 days a week during the seasonal period when beets are being processed into sugar. Owing to the perishable nature of the beet and juices of the beet during the intermediate stages of the processing it is imperative that factory operations be carried on continuously from the commencement of the harvest until all beets have been processed. Beets are brought into the factory in a constant flow and sliced. The juice is extracted from the sliced beets, purified, filtered, evaporated, and crystallized; the crystals are then separated as granulated sugar. The length of the period during which beet-sugar factories are in operation in the fall and winter of each year varies with the supply of beets available at the respective factories. The average period of factory operations in the 1947-48 campaign was about 90 days during which the factories are operated continuously with three 8-hour shifts per day. During the remainder of the year the factories are maintained on a 40-hour workweek. Beet-sugar factories are located in agricultural areas, mostly in small villages and towns of less than 4,000 population. The supply of factory labor for beetsugar factories is, to a considerable extent, drawn from the surrounding agricultural area. The very nature of the business is, as indicated, one over which processors have no control and results in employment peaks during the campaign period. It is necessary to employ additional workers during the campaign, as distinguished from the permanent or intercampaign employees. The campaign employees are. as stated, employed only during the processing season when it is necessary to operate continuously 7 days a week. Necessarily, the hours of these campaign employees exceed 40 per week and over this situation the processors have no control. Accordingly, it must be apparent that the elimination of the seasonal eremptions contained in section 7 (b) (3) and 7 (c) of the Fair Labor Standards Act would cause serious disruptions in the beet-sugar industry. The very nature of the business results in employment peaks during the campaign period. The elimination of the exemptions in question would thus in effect penalize this industry without, on the other hand, accomplish any of the objectives sought to be obtained by the act. For these reasons, he United States Beet Sugar Associa tion strongly urges that the seasonal exemptions contained in sections 7 (b) (3) and 7 (c), and the related agricultural exemptions contained in sections 13 (a) (6) and (10), should not be eliminated in the Fair Labor Standards Act. The United States Beet Sugar Association, which submits this statement for the record, is composed of the beet-sugar companies engaged in the processing of sugar beets and beet-sugar sirup into sugar, and all of the byproducts incident thereto, in Midwestern and Western States including California, Colorado, Idaho, Iowa, Kansas, Minnesota, Montana, Nebraska, Oregon, South Dakota, Utah. Washington, and Wyoming. A list of the individual members of the association is attached. Sincerely yours, ROBERT H. SHIELDS, Executive Vice President. Members of the United States Beet Sugar Association: Amalgamated Sugar Co., Ogden, Utah. Los Alamitos Sugar Co., Long Beach, Calif. Union Sugar Co., San Francisco, Calif. Utah-Idaho Sugar Co., Salt Lake City, Utah. BRIEF FROM VAN WAGENEN SAGER, INC., SUBMITTED AT REQUEST OF SENATOR J. H. BALL, SETTING FORTH THE FACTS AND VIEWS OF OUR INDUSTRY AS A WHOLE REGARDING THE DEFINITIONS OF EMPLOYER AND EMPLOYEE UNDER THE FAIR LABOR STANDARDS ACT, INSOFAR AS THEY APPLY TO SO-CALLED HOME WORKERS As to the facts in this situation, this company has been engaged in the urchase and sale at wholesale, of infants hand-knit and crocheted wool outerwear for over 50 years. During these last few years we have made a point of talking to hundreds of these manufacturers from whom we purchase merhandise. In addition, we have conducted two extensive investigations (by questionnaire method) seeking certain information, i. e., how long these manufacturers have been in business, age, social status, etc. We found most of these manufacturers produce merchandise for sale in their own homes; most of them are over 50 years of age; most of them live in rural communities; over half of them are physically handicapped; most of them are women; they have been selling products of their own handicraft for many years; they sell to many different customers-stores, individuals, or wholesalers such as ourselves—wherever they can secure the best prices for their merchandise; they furnish all their own materials; they work when and how they please; they design and create their own styles for sale; they submit samples to prospective buyers, such as our company, and quote these customers the price at which they wish to sell; they solicit orders for the merchandise they wish to sell; most retail department stores buy from this type of manufacturer; the products made at home are not limited to infants wear, but include basket wear (an entire industry in itself), art work, and dozens of other items. We have found out, as a matter of fact and record, that there are two types of so-called home work. There is one type where work is given out, materials supplied by the employer for the production of article made by him in the homes rather than in his factory. By furnishing the materials, specifying the type and kind of work to be done, and setting the price he will pay for this type of home work, this employer (often called sweatshop work) can produce merchandise and sell it at a much cheaper price than if made in his own factory. There is another type of home work, which is described at some length in the second paragraph above, which is a result and a direct descendant from the old home industries of the early days of our country's history. This type of home industry has been going on for hundreds of years in this country. It is the type of home industry where an individual, be he man or woman, designs, originates, and creates some article; it may be of art, wearing apparel, or the like, and feels free to sell it at a profit whenever and wherever he can. It may be furniture, it may be articles of clothing, or pieces of metal craft; but whatever it is, it is designed by him from materials purchased by him and offered to any and all interested purchasers at a price set by him who creates it. It is this type of home product our company, and the many other wholesale concerns like us, buy and sell. Wholesalers, such as ourselves, furnish a large and steady market for the home producers and buy from samples submitted by them at prices quoted by them. The completed article is delivered to us after an order has been placed from sample submitted. We, in turn, sell through salesmen and samples to department stores and other retail outlets. Being wholesalers, a stock is carried at all times. There are many like ourselves who are engaged as entrepreneurs, buying the home-designed and produced products, and acting as a source of this type of merchandise for the department store and other retail outlets. When all types of home products are considered, such as basketwear, linens, knitted outerwear, sporting goods, to name a few, the volume of this business exceeds several million dollars each year. Some years ago this company experienced a long and costly litigation, which all but ruined it, in which the company, its officers, and a number of its employees defended themselves against serious criminal charges (conspiracy and perjury) which were based upon the allegations that the manufacturers such as described in the second paragraph above, were employees of the company. This litigation was intiated by the United States Department of Labor, which, fortunately, resulted favorably, the Labor Department concurring finally in the decision that such producers were not employees within the meaning of the Fair Labor Standards Act. Understandings were entered into with the Labor Department and the Treasury Department, under which the company has been operating ever since. Within the past few months, however, the company has been given definite assurance that the Labor Department is proceeding against it again, upon th theory that more recent interpretations have abrogated the understanding previously made. These recent interpretations, we understand, have all stemmed from the Hearst newsboys' case (NLRB v. Hearst Publications, Inc., 321 U. 8. wherein the court made use of the general and broad language of the definitions of employ and employee, which they interpreted in a very general and broad manner, disregarding any common-law concepts of employee and employer. Since then, and since our first letter to Senator Ball, Congress has passed an amendment to the FLSA, specifically exempting these entrepreneurs, the newsboys, from the application of the act, excluding them as not being employees. It is the thought of the many wholesalers such as ourselves, and the thousands of people involved in our industry, that, as in the case mentioned above, it was not the intention of Congress to include in the category of employees those persons engaged in the creative type of home industry. It is for this reason that our industry as a whole urges that an exemption be made of the creative home producer, that he is not an employee of the party, be he whole saler, individual, or department store, who buys the product from him. The mere production of an article in a home should not automatically make that producer an employee of the purchaser. Specific exemption, we hope, should be in your new revision of the law to help further clarify the distinction between the sweatshop type of home work and the creative home industry referred to at some length above. Since an exemption might be worded: “Any definition of the term 'employ' or 'employee' is not intended to include individuals who engage in creative production on their own behalf, in their own homes. whether selling their product direct to the consumer or to others for resale." Our industry as a whole feels that rules of common law should govern the possible relationship of employer and employee and that specific references to the use of common-law rules to determine cases should appear in the new reve sion; common-law interpretation not merely the "opinion" of some administrative head which (as in our case) changes from time to time, should determine a questionable definition. As your bill now stands, the term "employ" (sec. 3, pt. G, line 15) is now defined "as to suffer or permit to work." This is open to such wide interpretations and has been so interpreted (as in the Hearst newsboys' case and what they are now intending to do in our case) that some such additional phrase might be added “as determined by rules of common law." It is the thongt of those engaged in our industry that the interpretation of common law should be the basis of determining employer and employee relationship, and should le so indicated in the law itself. It is the hope of the industry that your coumittee will see fit to insert such provisions in your new revision. For example. the word "employ" could be defined as "the hiring of an individual for the performance of work to be done under the usual interpretations of common. law." Or perhaps amplification of the definition of employee (sec. 3. pt. E lines 22-23) to read somewhat as follows: "Employee; any individual hire: by an employer to perform certain work under conditions determining an employee relationship as usually defined by common law." The many wholesalers, like ourselves, who are engaged in this type of industry. hope that your committee will see the justice of our request, as it is not our interests alone which are concerned in this matter, but the rights and oppor- | tunity of thousands of independent individuals in our country, to prodness and sell the products of their own ingenuity and creative efforts in a free market and not to become, by their act of selling, an employee of the purchaser, be he wholesaler, retailer, or individual, free from restricting controls, regulations, investigations, and administrative rulings. RESOLUTION OF THE VESSEL OWNERS' AND CAPTAINS' ASSOCIATION, OF At the regular meeting of the board of directors of the Vessel Owners' and Captains' Association, of Philadelphia, held on April 7, 1948, at 6:30 p. m., the following preamble and resolution was adopted: Whereas the membership of this association is composed of owners of vessels, including towing vessels, steamers, barges, lighters, and other class of watercraft; and Whereas this board of directors after carefully studying the Senate bill 2062 of the second session of the Eightieth Congress, is convinced that the enactment of this proposed bill known as the Fair Labor Standards Amendments of 1948 is so prejudicial to the interests of all classes of vessels and their owners that it would practically result in such owners being unable to continue to operate their respective vessels and they would be forced out of business because of the greatly increased expense of operation; be it Resolved by the Vessel Owners' and Captains' Association, of Philadelphia, That the Congress of the United States be requested not to enact the aforesaid bill into law; and it is further Resolved, That a copy of this resolution be sent to the Labor and Public Welfare Committees of both the United States Senate and the United States House of Representatives. In witness whereof, the president of this association has set his hand and seal this 9th day of April, A. D. 1948. Attest: [SEAL] VESSEL OWNERS' AND CAPTAINS' ASSOCIATION OF PHILADELPHIA, THOMAS J. DONNELLY, Secretary. X |