ing industry and concur in the general conclusions set forth therein. There are, however, certain basic differences between the operations of so-called over-theroad carriers of property and those conducted by intercity bus companies which are pertinent to the matters before the subcommittee.

The vast majority of the employees engaged in intercity bus operations are employed by carriers designated by the Interstate Commerce Commission as class I carriers (i. e., those with annual revenues of $200,000 or more) who furnish some 80 percent of all such transportation subject to the jurisdiction of the Commission. The bulk of the remainder consist of small operators with very few employees-in many cases the entire business is operated by the owner and his family.

All of the employees of these carriers are subject to the minimum-wage provisions of the act. Slightly less than half of the employees are drivers who are exempt from the overtime provisions of the act under section 13 (b) (1). All the remaining employees, with the exception of relatively small numbers of mechanics whose duties affect safety of operation, are subject to the overtime provisions of the act. The vast majority of these employees are covered by collectively bargained agreements. During the year 1955, as shown by preliminary tabulations from official ICC reports, the weekly hours of the drivers employed by class I carriers averaged approximately 37 and their average annual earnings were about $5,000 or roughly $2.60 per hour.

It is the position of the intercity bus industry that the current limited exemption provided under section 13 (b) (1) of the act should be retained for the following reasons:

1. It is impossible to schedule bus operations, particularly those over longer routes, to conform precisely to a uniform workweek of 40 hours since we must provide round-the-clock service at times and on schedules that meet the needs of the public. While it is true that the average workweek for drivers is well below 40 hours, it does not follow that the week for every driver is under 40 hours nor is it true that every workweek for any given driver is of the same length. The runs assigned to some drivers are necessarily somewhat in excess of 40 hours because of the need for tailoring schedules to meet public demand. Conversely, other assignments involve fewer than 40 hours per week. However, individual drivers are permitted, on the basis of their seniority, to choose their runs; hence they have considerable freedom to select long or short ones as they may wish. In the case of individual drivers who select the longer runs with overnight layovers away from home, the hours worked one week are frequently more than those worked during the following week. In most such cases, the distances involved and the relative infrequency of schedules permit no other type of arrangement. Further, the vast majority of these drivers are paid on a mileage rather than an hourly basis. Any attempt to substitute statutory overtime provisions based on a standard week would involve serious complications and tend to destroy the effective system which has been developed over many years through the orderly process of collective bargaining. These conditions, largely peculiar to the transportation industry, were recognized by the Congress when the act was passed, and nothing that has occurred during the 18 years since affect the sound reasons for assigning to the Interstate Commerce Commission the responsibility for prescribing, in the public interest, proper limitations on the hours of service of such employees.

It should also be noted that substantial numbers of these drivers have assignments based upon a 5-day week. If they are offered, and choose to accept, work on either of the 2 days on which they would normally be off duty, they are customarily paid 11⁄2 times their regular mileage rates. They are also typically paid such premium rates for any work over and above their regular assignment on a given day.

2. Any necessity for modifying the existing wage structures and operating schedules would impose serious further burdens on the carriers whose current financial condition is already extremely precarious. The Interstate Commerce Commission has found that a financially healthy intercity bus industry requires that expenses, exclusive of income taxes, be not in excess of 85 percent of revenues. Out of 153 class I carriers, the expenses of all but 15 were in excess of this percentage for the year 1955. For the entire group, expenses averaged 91.6 percent of revenues and 50, or one-third of the total, actually finished the year in the red. It is obvious from the foregoing that the additional costs which would be involved in applying overtime provisions completely unsuited to such operations must necessarily be passed on in the form of higher fares. Should this be necessary, the impact would fall most heavily upon the lower income

groups who make up a large proportion of our passengers since intercity bus fares are well below those of other modes of travel.

3. The basic purpose of the Fair Labor Standards Act, briefly stated, was to eliminate substandard conditions of employment. Elimination of the motorcarrier exemption would have no effect on basic rates since the statutory minimum is already applicable to all employees. The fact that the current average workweek is appreciably below 40 hours indicates that substandard conditions in this respect do not exist. Nor are average earnings in excess of $5,000 per year for an average week of about 37 hours evidence of substandard conditions by any stretch of the imagination. It should also be noted that the premium-pay provisions applicable to the vast majority of the drivers result in increasing their take-home pay per mile by about 15 percent over the basic rates. Imposition of the provisions of section 7 of the act would not result in the employment of any additional. driver personnel. Its principal effect would be in the direction of increasing the premium pay of some drivers and decreasing it for others, a tremendous amount of confusion and expense in readjusting operating schedules and, we predict, considerable dissatisfaction among the employees.

The opportunity to present our views is greatly appreciated and we earnestly urge that, for the reasons outlined above, no change in respect to section 13 (b) (1) of the Fair Labor Standards Act be made.

STATEMENT BY STEPHEN SHERIDAN FOR THE VACUUM CLEANER MANUFACTURERS

ASSOCIATION

My name is Stephen Sheridan. I am assistant to the president of Electrolux Corp., 500 Fifth Avenue, New York City. I make this statement for The Vacuum Cleaner Manufacturers Association representing the leading vacuum cleaner manufacturers in the country. The sole purpose of my statement is to request the continued exemption of outside salesmen from the Fair Labor Standards Act. I respectfully submit that in the application of wage-hour legislation a distinction must be carefully drawn between

(a) employees who can be supervised because they work on the premises of a factory, warehouse, office or store and

(b) employees such as outside salesmen who invariably work away from their employers' place of business and whose activities and working time cannot be supervised or controlled.

Consider the utter unreasonableness of a bill which fails to exempt outside salesmen.

Because I am most familiar with the operation of our own company, I will use our outside salesmen for purposes of illustration although many other companies operate largely in the same manner and my statement is concurred in by the direct-selling industry.

Outside salesmen are not and cannot be supervised; their selling activities cannot be controlled.

They are continuously out in the field-working or not, as they choose; their time is their own.

A salesman may work 1 or 2 hours in the morning and quit for the day. He may not work at all that day; he may not work for a week. He may take a vacation for 2 weeks; we would not know; we could not know.

Frequently he will handle products for several companies. It is impossible for us or for any company selling through an outside salesman to know what he does or how he spends his time.

Our outside salesmen are not confined to any given territory. They may work any place they choose. They are not required to report to any headquarters point. which may be hundreds of miles from their homes and places of work. They work from their own residences, and work at times to suit their own convenience. On a typical workday, if he chooses to work on that day, the outside salesman leaves his home at the hour he chooses to leave his home-at 8 or 10 or noon. He goes directly to his field of work which is of his own choosing. When he decides that he has worked long enough for the day, at 3 or 5 or perhaps at noon, he stops work. His office doesn't know where he has been working, or how long he worked, or if he has been working at all. Only when he turns in an order for our products do we know that he has been working. Sometimes we don't see an outside salesman for weeks.

All our salesmen are paid solely on a commission basis.

No itineraries are prescribed for our salesmen, and the production of a minimum volume of business or sales quota is not required. Our salesmen are not required to submit reports of hours worked or customers called upon, for the simple reason that any such reports could not be verified and therefore would be valueless.

From time to time in the 20 years, we have tried, and member companies in our association and in the direct selling industry have tried various methods by which accurate reports from salesmen as to the number of calls and demonstrations made, etc., could be obtained, inasmuch as such reports would be of considerable aid to us in our business. All such attempts, however, failed completely by reason of the fact that a careful investigation disclosed that such reports were exaggerated and distorted. It is submitted that if reports of calls made on customers were found to be incorrect, it is not likely that reports of hours worked will be any more accurate, particularly since there is no way in which to check such reports and it would be to a salesman's advantage to report the maximum number of hours.

Salesmen could report that they worked 80 or 90 hours in a given week and we would have only the salesman's word for the number of hours he worked; obviously it would be to his great interest to report that he worked many hours when, as a matter of fact, he may not have worked at all at selling our products.

If it is impossible to keep accurate record of the hours spent at work, it would certainly be unreasonable to require compensation to be measured against the number of hours worked.

One of our member companies recently made an extensive and expensive experiment. The Hoover Co., of North Canton, Ohio, in the period February 1952 to July 1953 paid salesmen in 26 districts a salary of $50 plus commission and certain other benefits. This experiment extended to 20 percent of their sales organization covering sections of the country from the Atlantic to the Pacific.

At a cost in excess of $1 million the Hoover Co. found out that the plan was completely unworkable, that it is economically impossible to pay a man for time worked without knowing whether or not he has worked.

Obviously it would be highly impracticable to attempt to apply any wage and hour legislation to such an uncontrollable employer-outside salesman relationship. Salesmen could hold back all of their sales for a week or two or three and collect minimum wages for each of those weeks and then turn in all of their sales for a big fourth week. They would have their employer at a complete disadvantage.

Our salesmen do not work only for us. They may be working for several different employers or carrying products for several different companies at the same time. Many of them hold regular jobs with other companies. A great variety of enterprises encroach, generally without our knowledge, on the time presumably devoted to the sale of our products by our salesmen.

To illustrate how impracticable and unreasonable it would be to expect us to pay our outside salesmen an hourly rate, is this fact; consider this fact: several years ago, of 27 men working for us in Utah, we learned that 17 of them actually had other employment concurrently, and some of these are regular full time jobs. For example:

Mr. Baum owns and operates a motel.

Mr. Bartholomew works in a factory.
Mr. Bell sells electrical products.

Mr. Cutler is a city judge.

Mr. Dalley is a student at Snow College.

Mr. Everett is in the furniture and rug cleaning business.

Mr. Hansen bas an appliance store.

Mr. Hopkins drives a milk truck.

Mr. Judd is an insurance agent.

Mr. Lindman owns and operates a motel.

Mr. McBride owns an auto wrecking establishment.

Mr. Nuttall owns a radio shop.

Mr. Paulson is a furniture repairman.

Mr. Peterson owns a theater.

Mr. W. Peterson is a student.

Mr. Rasmussen is a schoolteacher.

Mr. Whitehead is a bookkeeper.

I recently cooperated with the Department of Labor in New York State, which was trying to determine methods of operation employed by outside salesmen and whether or not accurate reports of time worked could be obtained from them: I quote to you some comments that were drawn from outside salesmen who were interviewed at their homes by Department of Labor investigators. The Department of Labor decided that such reports could not be obtained:

Mr. Wise: "I work my own hours. The company does not set my hours. I work when I feel like working-as I damn please."

Mr. Gartmayer: "I don't know how a question of hours applies to us. We are in business for ourselves. What hours we work are our own affairs. I don't have any regular hours-sometimes I work 1 hour, sometimes 10 hours. It depends upon how much money I want."

Mr. Sperling: "Oh, yes, I sell Electrolux and washing machines, and toasters, and silver, etc. If the customer does not want an Electrolux, maybe she wants a toaster. If another customer doesn't want a washing machine, maybe she would want an Electrolux. I work about 4 hours a day. My company doesn't know how many hours I work a day, and I wouldn't tell them. If I was paid on an hourly basis-Oh, brother, would I report the hours!!"

The above may be verified by reference to records in the New York State Department of Labor.

There is a vast amount of persuasive precedent for the continued exemption of outside salesmen from wage-hour laws. Every examination made by the Government since first enactment of the Fair Labor Standards Act clearly justifies continuing the exemption.

Recognition was given to the unusual nature of the outside commission-paid salesman's occupation and the necessity for exempting him from minimum wage and maximum hour legislation as far back as the NRA period when it was proposed that outside commission-paid salesmen be excluded from wage-hour provisions. Hearings were held at that time and the record made before the NRA on this occasion is represented by three volumes containing 1,128 pages. As a result of these deliberations it was concluded by the various boards that NRA legislation should not be applied to outside salesmen and they were specifically excluded in the various codes. Bearing in mind that at the time of the NRA the desire was great to include everyone under its provisions, it is clear that the reason for specifically excluding outside salesmen must have been most persuasive. When Federal wage and hour legislation was introduced by Senator Black, now Supreme Court Justice Black, and Representative Connery, the question of exempting outside commission-paid salesmen was again given considerable consideration with the result that in the final enactment of the Fair Labor Standards Act of 1938 "employees" who are outside commission-paid salesmen were specifically excluded from the provisions of the act and are so excluded at the present time. Nothing has happened since that time to warrant any different treatment of outside salesmen.

At every review of the Fair Labor Standards Act, both legislative and administrative, and there have been a number of these, the exemption for outside salesmen has been continued unaltered.

Consider the States. As of this moment, eight States have minimum wage laws applying to men as well as women. In not a single one of these States are our outside salesmen subject to the minimum wage laws. Three States last year extended minimum wage coverage to men. In each of these-Wyoming, Idaho, and New Mexico, outside salesmen have been exempted. One State this year, Rhode Island, extended its minimum wage bill and Rhode Island exempted outside salesmen. In several other States such bills have received serious consideration. In every one of these, outside salesmen are exempted.

This universal exemption of outside salesmen from wage-hour and minimum wage laws is not casual or accidental; it is the consequence of thoughtful study and understanding.

Several years ago, the State of New York extended coverage of its minimum wage law without adequate opportunity being given to employers, such as ourselves, to present the peculiar problems of covering outside salesmen. When, after the legislation had been enacted, these matters were brought to the attention of the Commisisoner of Labor in New York, he embarked on an extensive investigation.

The matter was brought before the board of standards and appeals in New York a quasi-judicial body. After considerable analysis and review, over a period of more than a year, during which they had time to become thoroughly

familiar with the problem, the board of standards and appeals in New York found it "unreasonable" to apply wage and hour legislation to our outside salesmen and exempted them from coverage. I quote you a portion of their decision: "A realistic appraisal of the evidence in the record of these proceedings leads us to the conclusion that there is not present in the employer-employee relationship inherent in the above-mentioned described employment status the customary exercise of such authority and superintendence by the employer over the employee essential to feasible compliance with the record-keeping provisions demanded by the order. To legally comply with the provisions of the order, the employer must possess adequate means to direct, control and keep account of the working hours and working methods of those persons employed during their periods of employment. The burden of maintaining records as to the periods an employee is engaged in employment, the exact hours and so forth, are duties which devolve upon an employer *the employee's statements are the only source from which the employer could possibly obtain this vital and necessary data. Such conditions subject the employer to the control of the employee respecting the amount of earnings and the periods the employee is actually engaged in work for the employer. Experience establishes such conditions are neither desirable nor salutary. We are convinced that reliable and accredited representatives of labor and management are eager to maintain concord and amity in the business family, and are not sympathetic to any policy or instrumentality which may result in dislocating and destroying a commercial enterprise."

Still quoting:

"It is self-evident that to compel an employer to pay an employee for services which cannot, in accordance with feasible business practices, be verified or substantiated by the employer must ultimately fertilize an atmosphere of misgiving and distrust and culminate in fostering and promoting irritation and acrimony and discord, which will inevitably impair their mutual harmonious relationship so vital to the successful conduct of the commercial enterprise. The uncontroverted evidence in the record establishes that all bona fide efforts on the part of the petitioners to comply with the terms of the order, in its application to commission-paid outside salesmen, resulted in failure."

For all of these reasons, the fact that outside salesmen cannot be supervised or controlled, the fact that we cannot possibly know whether they are working or not, and cannot secure accurate reports of hours worked, and in view of the overwhelming weight of precedent for continued exemption, I respectfully urge that this committee continue the exemption in any revision of the Fair Labor Standards Act.

DEAR MR. CHAIRMAN: At the hearings before your subcommittee in 1955, this association presented testimony in opposition to pending legislation to extend coverage of the wage-hour law to include certain retail establishments.

We would like to renew our objections, and we respectfully refer the members of the subcommittee to the testimony of Mr. Charles B. Mahin, in behalf of the National Retail Lumber Dealers Association, part 2, at page 875 of the 1955 hearings, for our testimony in full.

Retail lumber dealers everywhere look upon the pending bills to extend coverage as the first step in a deliberate move toward eventual coverage of all retail establishments.

Regardless of statements of the proponents of this legislation that they want to cover only large interstate chains, we are confident that they will not be satisfied with such action and that they will be back to Congress again and again to insist upon broader coverage once the bars are let down as proposed in the bills before the subcommittee.

Since 1938, retail lumber dealers have been exempt from the wage-hour law. For the most part, retail lumberyards are relatively small establishments. Retail yards average about 7 or 8 employees per yard.