FAIR LABOR STANDARDS ACT AMENDMENTS

THURSDAY, APRIL 22, 1948

UNITED STATES SENATE,

COMMITTEE ON LABOR AND PUBLIC WELFARE,

SUBCOMMITTEE ON LABOR,
Washington, D. C.

The subcommittee met, pursuant to adjournment, at 10 a. m., in the hearing room of the Committee on Labor and Public Welfare, United States Capitol Building, Senator Joseph H. Ball (chairman of the subcommittee) presiding.

Present: Senators Ball (presiding) and Murray.

Senator BALL. The committee will come to order. Congressman Goodwin, I understand you would like to make a brief statement. We will be glad to hear from you at this time.

STATEMENT OF HON. ANGIER L. GOODWIN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MASSACHUSETTS

Mr. GOODWIN. I will be very brief, Mr. Chairman. Angier L. Goodwin is my name. I represent the Eighth Massachusetts District in the House of Representatives. My interest is particularly in that issue which has come to be known as overtime on overtime. I will be brief, Mr. Chairman, because I want to get back to my own Committee on Ways and Means on the House side, where we are also delving into some problems of intricacy. So I shall be content merely to outline some of the things which I have in mind with respect to this overtimeon-overtime issue.

My interest stems principally from the very genuine apprehension which some of my constituents on the east coast have by reason of the recent decision of the United States Circuit Court of Appeals, in which that court held that rate of pay, the language in the Fair Labor Standards Act, should be construed, not as it has been construed, I believe, in the formulating of many thousands of contracts now existing, as a purely basic rate, but that it must be construed under an interpretation of the Fair Labor Standards Act as the average hourly wage received by a given employee for a specific week.

People who are interested in that believe that, if that is the true interpretation of the law, and I suppose for the moment it is, then it means that every employer who has a contract or agreement in which wages and hours are taken up has a responsibility to look back over his pay roll for all the years which are covered by statute, to make certain whether or not there are certain statutory liabilities for overtime which have not been liquidated.

It has been estimated by those who have followed the 600 suits which have been filed on the Eastern Seaboard, largely against stevedoring and shipping companies, that, considering all the classes of business which may be involved-and there it has been estimated that there are 60 classes or categories of businesses which will be affectedthat the total liability, the total charges which may be run up, will run into the billions of dollars, and an estimate which seems to be fairly accurate is that it may amount to as much as $6,000,000,000.

We feel that here is portal-to-portal pay over again, that it is just as serious. My opinion is that what should be done, now is for the Congress to determine and declare what I believe and what nearly everybody understood was meant by the Fair Labor Standards Act, that there should be one basic rate of pay, that that was not to be used as the basis for one class of overtime and that then later on, after agreement between labor and management as to what the agreement meant, there was still a liability on the employer for statutory overtime. Your bill, Mr. Chairman, takes this situation up and includes it with some other things.

I have filed on the House side H. R. 4387, which is now in our Committee on Education and Labor, and I have submitted to a subcommittee of that House committee a suggested redraft, which gives a little different approach, and which may be preferable from some standpoints. If it would be pertinent, Mr. Chairman-I am not certain that it is under your procedure on the Senate side-I would like the privilege of introducing with my remarks a typewritten copy of that suggested redraft, because this has not been printed, nor do I know that it will be.

Senator BALL. Very well, Congressman. We will include it in the record.

(The document referred to follows:)

A BILL To clarify the meaning of certain terms used in the Fair Labor Standards Act of 1938, as amended, the Walsh-Healey Act, as amended, and the Eight-Hour Law, as amended, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Congress hereby finds that the Fair Labor Standards Act of 1938 (52 Stat. 1060; 29 U. S. C., ch. 8) has been interpreted administratively and judicially so as to require employers to pay time and one-half on overtime rates established by labor contracts and custom, thereby creating wholly unexpected liabilities, immense in amount and retroactive in operation, upon employers throughout the country for pyramided overtime compensation and for an additional equal amount as liquidated damages and attorney's fees; and with the results that, if the Act as so interpreted or claims arising under such interpretations were permitted to stand (1) the credit of many employers would be seriously impaired; (2) payment of such liabilities would bring about the financial ruin of many employers and seriously impair the capital resources of many other employers and would thereby result in drastically reducing industrial operations, curtailing employment and earning power of employees, and substantially burdening commerce and substantially obstructing the free flow of goods in commerce contrary to the purposes of said Act; (3) voluntary collective-bargaining agreements would be interfered with; (4) employees, having received overtime pay with the understanding and belief that they were already fully compensated for their work, would receive windfall payments, and liquidated damages and attorney's fees; (5) the Public Treasury would be deprived of large sums of revenues and public finances would be seriously deranged by claims against the Public Treasury on war contracts and for enormous amounts of refunds of taxes paid in prior years; (6) the cost to the Government of goods and services heretofore and hereafter purchased by its various departments and agencies would be

unreasonably increased; and (7) employers and employees would be unable to determine, without extensive, expensive, and prolonged litigation to final judgment in a court of last resort, the amounts owing to employees for overtime pay, among the results of such conditions being the stirring up of champertous practices and congestion of courts, extended and continuous uncertainty on the part of industry, both employer and employee, as to the financial condition of productive establishments with consequent halting of expansion and development, retardation of employment, the infliction of hampering restraints and restrictions on commerce and on the development thereof, Nation-wide industrial conflict, unrest and disputes between employees and employers and between employees and employees, and gross inequality of competitive conditions between employers and between industries, thereby interfering substantially with the free flow of goods in commerce, together with serious and adverse effects upon the revenues of the Federal, State, and local governments and with effects injurious to the national prosperity and general welfare of the United States of America.

The Congress further finds that all of the foregoing constitutes a substantial burden on commerce and a substantial obstruction to the free flow of goods in commerce, contrary to the purposes of said Act.

The Congress, therefore, further finds and declares that it is in the national public interest and for the general welfare, essential to national defense, and necessary to aid, protect, and foster commerce, that this Act be enacted.

The Congress further finds and declares that all of the results which have arisen or may arise under the Fair Labor Standards Act of 1938, as amended, or aforesaid, may (except as to the liability for liquidated damages) arise with respect to the Walsh-Healey Act (49 Stat. 2036; 41 U. S. C. 35, et seq.) and the Eight-Hour Law (27 Stat. 340; 40 U. S. C. 321, et seq.), and that it is, therefore, in the national public interest and for the general welfare, essential to national defense, and necessary to aid, protect, and foster commerce, that this Act shall apply to the Walsh-Healey Act and the Eight-Hour Law.

SEC. 2. As used herein:

(a) The term "overtime premium" means that portion of any overtime rate that is paid because the employee has previously worked a specified number of hours during a specified period or because of the time of day or the day of the week or year the work is performed.

(b) The term "overtime rate" includes any rate of at least one and onehalf times any lower rate, not proved to be a fictitious rate established by custom or individual labor contract, payable for the same work at other hours of the day or on other days, and includes any other true overtime rate. (c) The terms "employer," "employee," and "wages," when used in relation to the Fair Labor Standards Act of 1938, as amended, shall have the same meaning as when used in such Act of 1938.

(d) The term "employer," when used in relation to the Walsh-Healey Act, as amended, or the Eight-Hour Law, as amended, shall mean the contractor or subcontractor covered by such Act or Law, respectively.

(e) The term "employee," when used in relation to the Walsh-Healey Act, as amended, or the Eight-Hour Law, as amended, shall mean any individual employed by the contractor or subcontractor covered by such Act or Law, respectively, in the performance of his contract or subcontract.

(f) The term "State" means any State of the United States or the District of Columbia or any Territory or possession of the United States.

SEC. 3. No overtime premium shall be included in any "regular rate" as used in the Fair Labor Standards Act of 1938, as amended, or in any "basic hourly rate" as used in the Walsh-Healey Act, as amended, or in any "basic day rate" or "basic rate" as used in the Eight-Hour Law, as amended.

SEC. 4. Any compensation paid to an employee as an overtime premium shall be credited against any obligation his employer may have to pay him compensation in excess of the "regular rate" under the Fair Labor Standards Act of 1938, as amended, or in excess of the "basic hourly rate" under the Walsh-Healey Act, as amended, or in excess of the "basic day rate" or "basic rate" under the EightHour Law, as amended.

SEC. 5. No employer shall be subject to any liability or punishment under the Fair Labor Standards Act of 1938, as amended, the Walsh-Healey Act, as amended, or the Eight-Hour Law, as amended, in any action or proceeding commenced prior to or on or after the date of the enactment of this Act, on account of the failure of such employer to pay an employee overtime compensation on any claim therefor that is inconsistent with the provisions of this Act.

SEC. 6. No court of the United States or of any State shall have jurisdiction of any action or proceeding, whether instituted prior to or on or after the date of the enactment of this Act, to enforce liability or impose punishment for or on account of the failure of the employer to pay an employee overtime compensation on a claim therefor that is inconsistent with the provisions of this Act. SEC. 7. This Act may be cited as the "Overtime-on-Overtime Act."

Mr. GOODWIN. I think that is all. I do not want to go into the intricacies or the technicalities of this problem. I am quite certain that there will be others who will justify as to that. I merely want to declare my sincere purpose to do whatever I may be able to do to see to it that there is a resolution now-and it ought to be at this timeto the end that both management and labor will know where they stand on this controversial issue of overtime on overtime.

Senator BALL. Thank you, Congressman.

Our first witness is Mr. Peter T. Beardsley, attorney for the American Trucking Association, Inc. May I say before you start, Mr. Beardsley, that I will stay here until 1 o'clock, if necessary, but I would appreciate it if the witnesses would try to boil down their statements, aside from any questioning, to about 20 or 25 minutes, so that we can finish by 1 o'clock.

STATEMENT OF PETER T. BEARDSLEY, ATTORNEY, AMERICAN TRUCKING ASSOCIATIONS, INC., ACCOMPANIED BY JOHN LAWRENCE, AMERICAN TRUCKING ASSOCIATIONS

Mr. BEARDSLEY. I have tried to do that, Senator, and I have summarized a rather lengthy statement, which I hope will go into the record in full.

My name is Peter T. Beardsley. I am attorney for the American Trucking Associations, Inc. As you know, that organization represents motor carriers in all types of service, both for hire and private, with affiliated associations in all 48 States, the District of Columbia, and the Territory of Hawaii.

We thoroughly agree that the Fair Labor Standards Act needs amendment, and especially amendment to relieve our industry from what we consider to be unfair discrimination, but none of the bills which are before this subcommittee for your consideration would relieve us in any way.

As I say, we are subject to unfair discrimination. The provisions of section 13 (a) of the act exempt from both the minimum wage and overtime provisions: (1) All employees of air carriers subject to the provisions of title II of the Railway Labor Act; (2) all employees of street, suburban, or interurban electric railways; (3) all employees of local trolley or motorbus carriers; and, (4) all'seamen.

The provisions of section 13 (b) exempt from the overtime provisions of the act: All employees of railroads, pipe-line companies, and sleeping-car companies subject to part 1 of the Interstate Commerce Act.

Under this last exemption, the express company, the largest single for-hire operator of motortrucks in the country, is completely relieved of compliance with the overtime provisions of the Fair Labor Standards Act.

Senator BALL. I did not get that.

Mr. BEARDSLEY. Under the provisions of section 13 (b), the Railway Express Co., which is subject to the provisions of part 1 of the Inter

state Commerce Act, is relieved altogether from compliance with the overtime provisions of the Fair Labor Standards Act as to all of its employees. The express company utilizes motortrucks in these services, the same as those motor carriers who are subject to part II of the Interstate Commerce Act. They operate in practically the same manner.

It has been held by judicial interpretation that we have only a partial exemption from the overtime provisions of the act. That does not apply to the express company and to our other competitors who have complete exemption from the act. When the act was first passed, our industry thought, because of the rather broad exemption granted to transportation agencies, that for-hire motor carriers were completely exempt from the overtime provisions. It did not seem logical that Congress would exempt the railway express, the air lines, and all these other forms of transportation, and give us anything less than the same exemption.

I have gone into considerable detail in my prepared statement in outlining the steps by which that was gradually taken away from us, by what you might term a process of erosion. I will not repeat that, except to detail it very briefly. We thought this exemption applied to all for-hire carriers. The Interstate Commerce Commission took a different view. It held that its jurisdiction over employees of forhire carriers extended only to those whose duties affected safety of operation.

We were not satisfied with that. We brought suit before a threejudge court in the District of Columbia, which decided that the Commission's interpretation was wrong and that it did have jurisdiction over all employees of interstate motor carriers, that is, common and contract carriers. If that case had remained the law, we would not be here today asking that we be granted an exemption which is coextensive with that afforded to other modes of transportation.

The Interstate Commerce Commission appealed to the Supreme Court, and that Court in a 5 to 4 decision upheld the Commission's interpretation. That one vote brings us here, on that point.

Subsequent to the Supreme Court decision holding that the Commission's jurisdiction went only to employees whose duties affect safety of operation, the Commission again considered the matter, and determined that its safety jurisdiction applied to four classes of employees. I am sure you are familiar with those. They are the ones who are designated as drivers, driver helpers, loaders, and mechanics.

After that decision, we naturally assumed that employees who were bona fide classified in any one of those classes, would be exempt from the overtime provisions of the act. But the wage-hour Administrator took a different stand. He was not satisfied even with the limited jurisdiction which the Commission claimed. I might add that it is one of the few times I know of that a Government agency did not want all the jurisdiction it could have, rather than limiting itself. But the Administrator held that in addition to being bona fide classified as drivers, drivers' helpers, loaders, and mechanics, an employee had to spend a specified part of his time in any workweek to activities which formed the basis of his exemption, in order to be exempt from the overtime provisions of the act for that week.