3. It would not be possible to administer, enforce, or police the proposed legislation. Therefore, we urge that the present exemptions be continued. Hon. PAUL H. DOUGLAS, AMERICAN LIFE CONVENTION, LIFE INSURANCE ASSOCIATION OF AMERICA, Chairman, Subcommittee on Labor of Senate Committee on Labor and Public MY DEAR SENator Douglas: On May 9, 1956, we telegraphed Mr. Stewart E. McClure, staff director of the Senate Committee on Labor and Public Welfare, requesting an opportunity to appear at the current hearings of the Subcommittee on Labor for the purpose of opposing those bills which would amend section 13 (a) (1) of the Fair Labor Standards Act to eliminate the outside-salesman exemption. Mr. McClure replied by telegram that you had authorized him to inform us there is little or no chance the subcommittee will report out a bill containing any such amendment, and therefore the subcommittee did not desire oral testimony on this point. Mr. McClure added, however, that we could if we wished submit a written statement, and we are writing this letter for that purpose. The American Life Convention and the Life Insurance Association of America are 2 associations of life insurance companies with a combined membership of 253 companies, holding 98 percent of the assets of all United States legal reserve companies. We object to elimination of the outside-salesman exemption on the ground that to bring life-insurance agents within the wage and hour requirements of the act, which presumably would follow from any such amendment as this, would be wholly unworkable for the following reasons: (1) It would be impossible for insurance companies to ascertain the number of hours worked by their agents. These persons spend practically all of their time in the field, very little in the office. They determine for themselves the hours they work, and whether they will work at night or only during the day. Some days they may work long hours, other days short hours, usually depending on the convenience of their clients. Thus the companies could neither obtain knowledge nor maintain records of hours worked. (2) It would likewise be impossible to determine what constitutes an hour of work. The production of a life-insurance agent depends not alone on the time spent in actual sales efforts, but to a large extent on contacts developed through civic, club, and social efforts, but to a large extent on contacts developed should be classified as work, or the number of hours spent on such activities, would present an insurmountable problem. (3) In addition to not knowing, the companies cannot control the number of hours worked by an agent in any particular week. Some weeks an agent may work many hours, others only a few, depending on the vicissitudes of his business. He alone controls his time and the number of prospects he will call on. The company is concerned only with the volume of business he produces. And of course participation in social and civic affairs, which may be as productive as any other efforts, is completely beyond company control, (4) It would also be impossible to relate pay to hours worked. Most agents are paid on a commission rather than a salary basis. Commissions are customarily received when a case is closed, which may be many days or weeks after the major part of the work was done. Thus there is no correlation between the hours worked and the commissions received in any one week. Additional complications arise from renewal commissions, usually paid on the anniversary dates of policies and continuing for varying lengths of time. In many instances renewals are automatic, in others some work is necessary. There is no way in which these commissions can be related to the amount of work performed either at the time of renewal or retroactively to the time of initial sale. The outside salesman exemption was placed in the original statute after full consideration and for very practical reasons. So far as we have been able to determine, no specific grounds have been asserted in the current hearings for removal of this exemption. The life insurance agents are represented by the National Association of Life Underwriters, and to our knowledge neither that nor any other organization has ever requested their inclusion under the statute. We respectfully submit that no such revision should be made without thorough consideration of the impracticability of attempting to apply the act to particular classes of outside salesmen such as life-insurance agents and perhaps others, and we feel certain that any such consideration would lead to the conclusion that blanket elimination of the exemption is wholly unjustified. We would appreciate your incorporating this letter in the printed record of the hearings. Very truly yours, AMERICAN LIFE CONVENTION, CLARIS ADAMS, Executive Vice President and General Counsel. LIFE INSURANCE ASSOCIATION OF AMERICA, General Counsel. Hon. PAUL H. DOUGLAS, THE RETAIL MERCHANTS ASSOCIATION OF ALEXANDRIA, Chairman, Subcommittee on Labor and Public Welfare, United States Senate, Washington, D. C. MY DEAR SENATOR DOUGLAS: We respectfully bring to the attention of the members of the Senate Subcommittee on Labor and Public Welfare the opposition of the Retail Merchants Association of Alexandria to the elimination or changes in the present retail exemption under the Fair Labor Standards Act. We wish to point out that retailers and the service trades are not engaged in interstate commerce but are local in nature and operations and therefore subject to local conditions. Retailers and service trade firms, such as belong to our association, serve only the geographical area in which they are located and our operations must necessarily be flexible enough to supply goods and services at prices our customers will pay during shopping hours convenient to them. We believe that elimination or changes to any extent in retail exemption under the Fair Labor Standards Act would definitely result in increased costs-and necessarily decreased services to our customers who are the general public. And, we believe, the public should have major consideration in any legislation. It seems to us that the economy of our city and of our Nation would be contracted, not expanded, by elimination of the present retail exemption. We urge you and the other members of the committee to reject the legislative proposals currently being made in connection with this section of the Fair Labor Standards Act as not being in the public interest and as endangering a vital part of our Nation's economic system. We request that this letter setting forth our association's position be made part of the subcommittee's record. Sincerely yours, JOSEPH A. ELLIS, President. NORTHEASTERN RETAIL LUMBERMENS ASSOCIATION, Re proposal to include retail establishments under the wage-hour law. Chairman, Labor Subcommittee, Senate Labor and Public Welfare Committee, DEAR SENATOR DOUGLAS: On behalf of the retail lumber dealers of New York and the New England States, we wish to record their thinking and opinion with reference to the proposal to extend the wage-hour law to include some retail establishments. We do not believe that the extension of the law to retail operations per se would be of benefit to the employees of the retailers or to the buying public. On the contrary, we have many reasons for thinking that the ultimate effect would be harmful to the employees, to the small business establishments in our industry, and to the customers they serve. Following are some of the reasons which dealers tell us are vital in the consideration of this matter: 1. Retailing is essentially a local function. The business of retail lumber and building material dealers in the towns and villages, in farm communities, and even in our cities cannot be compared with the operation of a factory which produces goods on an assembly line. The retailer is bound by local conditions. His primary function is service to his customers. He knows that he must serve farmers who insist on buying on Saturdays, and before or after work on weekdays. Builders come in for materials at unusual hours. As a result, he cannot operate on a schedule as do manufacturers. There is no semblance of similarity between interstate commerce in materials produced by a factory and the local service function performed by the retailer in the storage, sale, and use of building materials. 2. Wage coverage would markedly increase the operating costs of retail dealers. This would not be so much because of the higher wages paid but would come about as a result of the record and timekeeping requirements that would make higher costs inevitable. Compulsory coverage would subject these retailers to visitation by an army of wage-hour inspectors. Their books, records, and place of business must be open for inspection, employees may be interrogated, and the burden of administration vastly increased. The result will be to increase operating costs and to place a heavy burden on retail dealers whose time is already taxed to the limit to give service to varying types of customers. The enactment of such a law would further tend to eliminate the small-business man, particularly the retail dealer, and turn the business over to large corporations which have the capital and the organization to carry the burden incident to administration of a business under compulsory coverage. 3. If such a law is adopted, one result will be that employees who are now kept on the payroll during dull periods will be laid off when there is no work for them. As it is now, hundreds, probably thousands of employees, are carried on the payroll doing what might be termed “made work” during quiet seasons. Few retail dealers are equipped to comply with the requirements of regulation, inspection, and record-keeping required by wage-hour coverage. They do pay the going wage in their respective communities which is actually higher than the wage-hour law requires. However, they do not have to carry the burden of technical requirements, of computing overtime, keeping records, and answering inquiries which we believe would severely cripple the service of the retail dealer to his customer-the consumer. We earnestly hope, therefore, that your committee will conclude after its study that retailing is essentially a local function and that Federal control over local affairs should not be extended. We are submitting this statement to be included in the record of your hearing. Very truly yours, PAUL S. COLLIER, Executive Vice President. STATEMENT OF HAROLD R. HOSEA, DIRECTOR OF RESEARCH, NATIONAL ASSOCIATION OF MOTOR BUS OPERATORS My name is Harold R. Hosea, and I am director of research for the National Association of Motor Bus Operators. This association represents, directly or through affiliated State associations, the vast majority of intercity motor carriers of passengers who also transport express, mail and baggage in the same vehicles. Some 40,000 communities throughout the Nation are dependent upon intercity buses for their only means of common-carrier passenger transport and, in many cases, for the delivery of small shipments of medical and industrial supplies, first-class pouch mail, and allied services. Our comments will be limited, in the main, to the provisions of S. 662, S. 770, and other realted bills before subcommittee which would eliminate the existing limited exemption from the overtime provisions of the Fair Labor Standards Act (sec. 13 (b) (1)) applicable to certain classes of employees of motor carriers subject to the jurisdiction of the Interstate Commerce Commission in respect of safety of operation. In the interest of brevity, I shall not summarize the legislative history of the motor-carrier exemption nor the extensive litigation related thereto, since these phases of the subject are treated in detail in the records of many similar hearings conducted over the past several years. I have reviewed the presentation made before this subcommittee by Mr. Benjamin R. Miller in behalf of the truck 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. |